• Are you in business?

    It is important to understand the differences between a hobby and a business for tax and other purposes.

    Your tax and other obligations start once you are in business.

    The following video will help you work out whether you are in business yet.

     

    Duration 3m:18s

    Characteristics of a business

    There is no single factor that determines if you are in business, but some of the factors you need to consider include:

    • You've made a decision to start a business and have done something about it to operate in a businesslike manner, such as
      • registered a business name, or
      • obtained an ABN.
       
    • You intend to make a profit – or genuinely believe you will make a profit from the activity – even if you are unlikely to do so in the short term.
    • You repeat similar types of activities.
    • The size or scale of your activity is consistent with other businesses in your industry.
    • Your activity is planned, organised and carried out in a businesslike manner. This may include    
      • keeping business records and account books
      • having a separate business bank account
      • operating from business premises
      • having licenses or qualifications
      • having a registered business name.
       

    If you aren't in business yet, it is important to keep these factors in mind as your activities change or grow, so you'll know when you need to register for tax and other business responsibilities.

    Hobby

    If you determine your activities are a hobby then you do not have any additional tax or reporting obligations.

    If your activities are a hobby but you supply goods or services to businesses, they may request your ABN when they pay you.

    Because you do not have an ABN and your activity is done as a hobby, you should use the 'Statement by a supplier' form. This will avoid the business you are supplying having to withhold an amount from their payment to you.

    See also:

    Last modified: 10 Nov 2016QC 31733