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Edited version of private advice
Authorisation Number: 1051814545917
Date of advice: 11 March 2021
Ruling
Subject: Am I in Business?
Question
Are you carrying on a business in relation to your collection of items?
Answer
No. After considering the factors in TR 97/11, your activity does not amount to a business, since you do not have an intention to engage in business or to derive profit, your activities are not carried out in a business-like manner, there is not repetition and regularity of the activity and the activities are better described as a hobby.
Therefore, any money earned from the activity is not assessable income and you are not entitled to deduct expenses incurred in earning these amounts. Further information on whether an activity is a hobby, or a business can be found on our website: ato.gov.au by searching quick code QC 31733.
This ruling applies for the following periods:
Year ending 30 June 20XX
Year ending 30 June 20XX
Year ending 30 June 20XX
Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
You have a collection of collectible items.
The collection was commenced by your parent who died.
The majority of the items were gifted to you.
You have no receipts in relation to the purchase price of some of the items.
You have sold many items over the past few years at a loss.
You have not recently purchased any items for your collection.
It was your original intention to pass the collection on to your children; however, they have not shown any interest. The majority of items have now been sold, some are taking longer to sell.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 6-5
Income Tax Assessment Act 1997 section 108-10
Income Tax Assessment Act 1997 section 118-10
Income Tax Assessment Act 1997 section 995-1
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