• Hobby or business?

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    It is important to determine whether you are carrying on a business or pursuing a hobby, sport or recreational activity that does not produce income.

    In general, you are considered to carry on a business if the activity:

    • has commenced
    • has a significant commercial purpose or character
    • has a purpose of profit as well as a prospect of profit
    • is carried out in a manner that is characteristic of the industry
    • is repeated, regular or continuous, and
    • cannot be more accurately described as a hobby, recreation or sporting activity.

    For additional information, see 'Are you carrying on a business?' in the publication Tax basics for small business (NAT 1908-6.2005). Primary producers should also see Taxation Ruling TR 97/11 - Am I carrying on a business of primary production?

    Note:

    When you have completed your Business and professional items schedule for individuals 2005-06, you will need to transfer your:

    • net PSI (personal services income (PSI) amount (if any) from A item P1 on your schedule to A item 13 on page 9 of your tax return (supplementary section)
    • net income or loss from business amounts from Y and Z item P8 on your schedule to B and C (respectively) item 14 on page 10 of your tax return (supplementary section).
     
    Last modified: 01 Sep 2006QC 18499