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Hobby or business?

Last updated 31 August 2006

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 in business?. 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).

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