Is it a hobby or is it a business?

Usually we start our businesses up as we have a great idea in mind and would love to share it with the world. It would start in your back yard, garage or study. When it comes tax time you wonder if you need to declare it in your tax return or not.

What the ATO says…

There are some guidelines available from the ATO website related to how they define whether things we do fall under hobby or business:

The ATO defines hobby as “pastime or leisure activity conducted in your spare time for recreation or pleasure.” It is something that is for your personal enjoyment and satisfaction and you can gift or sell your work for the cost of materials.

The ATO also stated business is “commercial with an aim to make a profit.”  If you are running a business you will need to apply for an ABN and maybe GST. GST registration is voluntary for businesses with turnover up to $75,000.

If you need help identifying this, the following link will provide you with a tool to determine whether the work that you’re doing is a hobby or a business.

https://start.business.gov.au/

Alternatively give us a ring or email and see if we can help!