Edited version of your private ruling

Authorisation Number: 1012526535326

Ruling

Subject: Business - Am I in business or is it a hobby

Question 1

Are you in business?

Answer

No.

Question 2

Are the amounts you received assessable income?

Answer

No.

This ruling applies for the following periods:

Year ended 30 June 2013

The scheme commenced on

1 July 2012

Relevant facts and circumstances

You received less than $X US from suggesting business/website names and slogans.

You earned approximately $X each time your ideas won.

You received $X from completing an online survey.

You received $X from tutoring students.

You charged $X each tutoring session.

You did not advertise for your students.

You received $X, plus food and drink for participating in a discussion forum about a new supermarket.

You received an $X gift certificate plus food and drink for participating in a discussion forum about a shopping centre.

Relevant legislative provisions

Income Tax Assessment Act 1997 Subsection 6-5(1).

Income Tax Assessment Act 1997 Section 995-1.

Reasons for decision

Section 995-1 of the Income Tax Assessment Act (ITAA 1997) defines 'business' as 'including any profession, trade, employment, vocation or calling, but not occupation as an employee'.

Taxation Ruling TR 97/11 incorporates the general factors that are considered important in determining the question of whether a business activity is being carried on:

· whether the activity has a significant commercial purpose or character

· whether the taxpayer has more than just an intention to engage in business

· whether the taxpayer has a purpose of profit as well as a prospect of profit from the activity

· whether there is regularity and repetition of the activity

· whether the activity is of the same kind and carried on in a similar manner to that of ordinary trade in that line of business

· whether the activity is planned, organised and carried on in a businesslike manner such that it is described as making a profit

· the size, scale and permanency of the activity, and

· whether the activity is better described as a hobby, a form of recreation or sporting activity.

Having regards to your full circumstances and the above principles, we do not consider the activities you are undertaking to represent that of a business.

Subsection 6-5(1) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a taxpayer includes income according to ordinary concepts, which is called ordinary income.

Relevant factors in determining whether a payment is ordinary income include whether the payment is for services rendered, such as from personal services, and the character of the payment in the hands of the recipient.

Taxation Ruling IT 2639 defines income from personal services as income that a taxpayer earns predominantly as a direct reward for his or her personal efforts by, for example, the provision of services, exercise of skills or the application of labour.

Other characteristics of income that have evolved from case law include receipts that:

· are earned

· are expected

· are relied upon, and

· have an element of periodicity, recurrence or regularity.

In your case, although the payments you received are earned as a result of service rendered they are not relied upon and are more in the nature of a recreational hobby. Therefore, the various payments you received are not regarded as assessable income.

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