Guide
Hobby or business? Where the line is, and what changes when you cross it
Selling at a market, taking commissions or earning from a side project raises a question with tax, ABN and insurance consequences: is this a hobby or a business? The ATO and the Australian Business Register look at intention, repetition, scale and how businesslike the activity is. Here is how the test works, what changes once you’re in business, and why a hobby can still need public liability.
- The signs the ATO and ABR look for
- What changes for tax, GST and your ABN
- When a hobby still needs insurance
There is no single test, but the signs are consistent
The Australian Business Register says there is no single test for carrying on a business. The features it lists are a significant commercial activity of reasonable size and scale, an intention to make a profit (which it contrasts with a hobby), repetition, a systematic and organised approach with records, operating the way others in the industry do, and relevant knowledge or skill. The ATO describes a hobby as an activity done mainly for personal enjoyment, recreation or leisure rather than to make a profit.
One sale doesn’t make a business. A plan to sell every weekend, a price list, stock bought to resell and a social media page that takes orders usually does.
The indicators, side by side
| Indicator | Looks like a hobby | Looks like a business |
|---|---|---|
| Intention | Enjoyment first; any money is incidental | You intend to make a profit and can show how |
| Repetition | Occasional, when you feel like it | Regular and planned |
| Scale | Small and personal | Similar to others who do it commercially |
| Organisation | No records, no plan | Records, a plan, a separate account |
| Marketing | Word of mouth | Advertising, a website or a social account that takes orders |
| Skill | Done for the love of it | Relevant training or experience applied commercially |
You don’t need every sign in the business column. The ABR says you’d be expected to have taken at least some commencement steps, such as advertising, buying stock, or obtaining licences and insurance.
What changes once you’re in business
Once it’s a business
- Income is assessable and expenses are deductible, with records to prove them.
- You’re entitled to an ABN and must register for GST once turnover reaches $75,000.
- Consumer law applies to what you sell, including guarantees and product safety.
- Insurance becomes a business decision, with public liability, product liability and stock cover on the table.
While it stays a hobby
- Income isn’t assessable and expenses can’t be claimed.
- No ABN, so a business paying you may ask for a Statement by a supplier form, or withhold 47% of the payment.
- No GST credits on what you buy.
- Insurance is still worth asking about, because markets and venues often require public liability regardless.
Why a hobby can still need public liability
Councils, markets and venues rarely care whether the ATO calls you a business. They ask every stallholder for a certificate of currency, usually with $10 million or $20 million of public liability, because a trip over your table or a reaction to your product is their problem too. Some market operators hold a policy that covers casual stallholders for a fee; others require your own.
If you make or sell a product, product liability sits alongside. Food, cosmetics, candles, children’s items and anything with a cord carry the highest exposure. Our market stall insurance page covers what operators ask for and how annual and one-off cover compare.
If you’re crossing the line: what to do
- Apply for an ABN through the Australian Business Register, which is free.
- Open a separate account and keep records from the first sale.
- Check whether your council or the market needs a permit, a food licence or a certificate of currency.
- Decide the covers: public liability first, product liability if you make or sell goods, stock and equipment if a loss would stop you.
- Register for GST once turnover reaches $75,000, or straight away if you drive rideshare.
Compare cover for your stall or side business
Hobby or business questions
How much can I earn from a hobby before it becomes a business?
There is no dollar threshold. The ATO and the ABR look at intention, repetition, scale and how businesslike the activity is, not the amount. A small but regular, profit-seeking activity can be a business; a large one-off sale can still be a hobby.
Do I need an ABN for a hobby?
No. You’re only entitled to an ABN when you’re carrying on or starting an enterprise. If a business pays you for a hobby supply, you can give them a Statement by a supplier form so they don’t withhold tax.
Is hobby income taxable in Australia?
Income from a genuine hobby isn’t assessable, and the costs aren’t deductible. Once the activity is a business, the income is assessable and the expenses are deductible.
Do I need insurance to sell at a market as a hobby?
Usually the market operator decides. Most ask every stallholder for public liability, hobby or not, either through their own stallholder policy or your own certificate of currency.
Can I get business insurance without an ABN?
Most business policies ask for an ABN because it identifies the insured entity. Casual stallholder cover through a market operator, or a one-off event policy, are the usual routes for a hobby.
What is a Statement by a supplier?
An ATO form a hobbyist gives to a business that pays them, declaring the supply is a private recreational pursuit or hobby. Without an ABN or the form, the payer must withhold 47% of the payment.
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