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Hobby or business

Last updated 12 February 2019

It is important to determine whether the trust is carrying on a business, as distinct from pursuing a hobby, sport or recreational activity that does not produce assessable income.

The factors or ‘business indicators’ various courts and tribunals have taken into account in determining if a business exists for tax purposes include whether the activity:

  • has actually started
  • has a significant commercial purpose or character
  • is undertaken with a purpose of profit as well as a prospect of profit
  • is carried out in a manner that is characteristic of the industry
  • has repetition, regularity or continuity
  • is planned, organised and carried on in a business-like manner
  • is of a sufficient size, scale and permanency to generate a profit
  • is not more properly described as a hobby, recreation or sporting activity.

For more information, see Are you carrying on a business? in Tax basics for small business (NAT 1908).

If you are a primary producer, see TR 97/11 Income tax: am I carrying on a business of primary production?