Hobby or business

It is important to determine whether the partnership 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’ that 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 'Business or hobby?' in Starting your own business.

    Last modified: 10 Aug 2016QC 48217