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 - Income tax: am I carrying on a business of primary production?
Note:
When you have completed your Business and professional items schedule for individuals 2007, you will need to transfer:
- your Net PSI amount (if any) from A item P1 on your schedule to A item 13 on page 9 of your tax return (supplementary section)
- your 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).