Appendix B

The definition of an enterprise for GST and ABN purposes includes:

An activity or series of activities done:

  • in the form of a business, or
  • in the form of an adventure or concern in the nature of trade.

But does not include an activity or series of activities done:

  • as a private recreational pursuit or hobby, or
  • by an individual or partnership (mainly of individuals) without a reasonable expectation of profit or gain.

The main indicators of carrying on a business for income tax purposes are:

  • significant commercial activity
  • purpose and intention of the taxpayer in engaging in the activity
  • an intention to make a profit from the activity
  • the activity is or will be profitable
  • repetition and regularity of activity
  • the activity is carried on in a similar manner to that of the ordinary trade
  • the activity is organised and carried on in a business like manner and systematically - records are kept
  • size and scale of the activity
  • not a hobby or recreational activity
  • a business plan exists
  • commercial sales of product
  • taxpayer has knowledge or skill.
    Last modified: 17 May 2013QC 16398