Hobby or Business — When Does the ATO Treat What I'm Doing as a Business?

There's no dollar figure that draws the line. The ATO looks at the nature of the activity — whether you intend to make a profit, how organised and repeated the activity is, and whether it's run in a businesslike way — not how much you've earned from it. A hobby that earns a substantial amount can still be a hobby; a new business earning very little can still be a business.

• Profit intention. You intend to make a profit — or genuinely believe you will, even if that hasn't happened yet.

• Businesslike conduct. You've taken active steps to operate in a businesslike way — an ABN, a business bank account, record-keeping, a business name, marketing.

• Repetition and regularity. You repeat similar activities, rather than a one-off or occasional sale.

• Scale. The size of the activity is consistent with other genuine businesses in the same space, not clearly smaller and more casual.

No single factor decides it on its own — the ATO looks at the whole picture together.

• Tax. Business income is assessable and must be declared; genuine hobby income generally isn't.

• Deductions. A business can claim genuine expenses against that income. A hobby can't claim any deductions — not even if you're spending more on materials than you're earning in sales.

• GST. A business may need an ABN and, above the turnover threshold, GST registration. A hobby doesn't.

• Insurance and legal obligations. A business generally carries obligations and risk exposure a hobby doesn't.

Someone makes candles occasionally, selling a handful at a local market a few times a year, mostly to cover the cost of supplies — this looks like a hobby, even if it earns a few hundred dollars. The same person, once they've registered a business name, built a regular online store, and are actively marketing and fulfilling orders weekly with the intention of making a genuine income, has moved into business territory, regardless of whether profit has arrived yet.

If your activity is genuinely a hobby, you may still be asked for a “Statement by a supplier” when dealing with a business, to confirm you're not required to have an ABN — otherwise, the business paying you may be required to withhold tax at the top rate from what they pay you.

This is often gradual, not a single moment — which is exactly why it's worth periodically reviewing your own situation rather than assuming the answer never changes. As soon as the factors above start pointing more clearly toward “business” — growing regularity, genuine profit intent, businesslike conduct — it's worth registering for an ABN and treating the activity as a business from that point, rather than waiting for certainty that may never arrive on its own.

• Am I doing this with a genuine intention to make a profit, even if I haven't yet?

• Have I taken businesslike steps — an ABN, records, marketing — or is it still genuinely casual?

• Is what I'm doing repeated and regular, or occasional?

• Is the scale of what I'm doing consistent with a genuine small business in this space?

The Australian Government explains the key differences between a hobby and a business, and where to get further guidance.

business.gov.au — Difference between a business and a hobby https://business.gov.au/planning/new-businesses/difference-between-a-business-and-a-hobby

• you're not sure whether your activity has crossed into being a business;

• you want a private ruling or formal advice on your specific situation;

• your hobby has grown and you want to transition it to a properly structured business; or

• you're being asked for an ABN by a business you're supplying and aren't sure how to respond.

→ I've Decided to Start a Business — What Do I Actually Need to Set Up?

→ Do I Need to Register for GST?

→ ABN, ACN, TFN and GST — What Do All These Numbers Actually Mean?

SKC Accounting | Knowledge Centre | Knowledge Guide 050

Last reviewed: August 2026

General information only. This guide does not take into account your individual circumstances and is not a substitute for professional accounting, taxation, legal or financial advice.