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 claim the costs of materials when gifting or selling your work
  • 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:

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

If you're still unsure, read Hobby or business for online sellers on the ATO website or use the Business or hobby tool for creatives 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.