It's important to understand whether your activities are classified as a hobby or a business for tax and legal purposes.

What is a hobby?

A hobby is a leisure activity or pastime that you do for reasons such as enjoyment, relaxation or skills development. Your activities may start as a hobby and develop into a business as you grow.

Examples of hobbies that can turn into businesses include:

• art and creative endeavours such as photography or jewellery-making
• gardening
• repairing and handy services
• creating or designing websites
• blogging or social media influencing

How to know if you're running a business

Whether your hobby is a business depends on factors such as your purpose and how you operate. It doesn’t matter how much you earn – there's no financial threshold to tell you if your hobby is a business.

As a hobby you:

• can recoup the costs of materials when gifting or selling your work as long as you are not intending to make a profit
• don't need to declare the income you make from your hobby to the Australian Tax Office (ATO).

You're most likely in business if you:

• intend to make a profit from your activities
• undertake the activity regularly and in a structured and businesslike manner
• have registered a business name or secured an Australian business number (ABN)

If your business is a hobby, you can continue operating as you are.

If you're still unsure, read Are you ready to start a business? on business.gov.au.

Benefits of turning your hobby into a business

There are several advantages to having a business. As a business you can:

• apply for an ABN
• register a website that ends in .com.au
• claim tax deductions for business expenses against your taxable income
• access government services and support for businesses

If your activities constitute a business, find out how to set up and become a business owner.