Online selling - hobby or business?


If you sell products or services online, you need to understand whether you are doing it as a hobby or carrying on a business.


A hobby is a spare-time activity or pastime pursued for pleasure or recreation.

A business requires some form of investment and enough customers to whom its goods or services can be sold on a consistent basis with the intention of making a profit.

When selling online becomes a business, the income you earn from it is subject
to tax. If this is the case, you may also be eligible for tax deductions.

Quick checklist

There are questions you can ask yourself to work out if you are undertaking a hobby, or carrying on a business that should be declaring income:

  • Did you set up your online sales with the intention of being a business?
  • Do you pay for your online-selling presence?
  • Is your main intention to make a profit?
  • Do you make repeated or regular sales?
  • Do you sell your online items for more than cost price?
  • Do you manage your online selling as if it were a business?
  • Is what you are selling online similar or the same as what might be sold in a 'bricks and mortar' business?

Each time you answer 'yes' to a question the likelihood that you are carrying on a business increases. However, all of the questions need to be considered together to get an accurate picture of your personal situation.

Do you sell or trade shares online?

A share trader is someone who carries out business activities for the purpose of earning income from buying and selling shares - this is considered a business. If you simply hold shares to earn income, this is not considered a business.


Further Information

For more information, see Carrying on a business of share trading.

End of further information
    Last modified: 12 Mar 2013QC 28130