Tax Blogs

Hobby or Business Tax Return?

June 7, 2021

Its pretty important to understand the difference between a hobby and a business because, if it is a business, you must include it in your income tax return, and it may affect your tax refund.

It's important to determine whether you are running a business or hobby when completing your income tax return. Both options can have two completely different conclusions.

It is most likely a business if the following are true

  • You decided to start a business, registered a business name and obtained an ABN

  • You intend to make a profit in the long term

  • The size of the business is like other businesses of the same type

  • Your activity is planned, organised and carried out in a businesslike manner for example this may include keeping records, having a separate bank account, business premises, having licences or qualifications and/or a business name.

You should keep the above in mind if it is not yet a business, as your hobby may grow to become a business.


If the above do not apply, then you most probably have a hobby.

If you have a hobby, you do not have to report your earnings to the tax office, but you can’t claim any of your expenses relating to it either.

If you supply goods or services to a business from your hobby, they may request an ABN when they pay you. Because you don’t have one, you will need to supply them with a ‘Statement from supplier’ form or they will have to withhold tax from your payment.  


Also read our blog on 'Online Selling - Hobby or Business?'


Still not sure? Drop us a line at (07) 3881 0942 to speak to one of our Business Tax Specialists


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Note that the information provided is general in nature and subject to change, please contact one of our professionals who can evaluate your circumstances and provide more accurate advice to your current situation.

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