IS MY SIDE HUSTLE A HOBBY OR A BUSINESS?

Side hustles in Australia may still require you to register an ABN, business name and even register for tax depending on how much you plan to earn. To ensure your side hustle is a legal and keeps you out of trouble, you first need to determine whether your side hustle will be a ‘hobby’ or a ‘business’ to know the steps from here.

HOBBY VS BUSINESS

It’s a hobby if… 
it’s something you do for fun and recreation in your spare time (such as painting). You may sell your work to cover the cost of materials or gift your work, however the ultimate aim is NOT to make a profit in a hobby.

For hobbies, you don’t need to have an ABN or declare the income to the ATO.

It’s a business if…
Your ultimate goal is to make a profit and income from the activity. If is it done regularly with specific time put aside to making sure it succeeds – then you may be leaning more towards a business.

For a business you will need to apply for an ABN and declare any income at tax time. A benefit is that you can claim for deductions for business expenses. Records do need to be kept. 

I have recently been looking into this for this blog specifically, as currently it is just a hobby – however I have had to register for an ABN to allow me to purchase the domain name mamahustles.com – which would technically place me in the business category.

In the future, this blog may become profitable through affiliate links and sponsored posts which would definitely place this within the business category. I’m keeping all records so I can discuss with my accountant at tax time, and will follow her guidance on whether this is a business or hobby for now and will keep this post updated. However, as I have an ABN, and expenses such as domain name and hosting, I believe can claim these as business expenses for the tax year.

If you’re still not sure if your side hustle will be classed as a hobby or a business, there is a great tool on the business.gov.au website to help you determine if your side hustle will be a hobby or a business with some easy and clear guidance.

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

Please note this is not legal advice, but just trying to help steer you in the right direction.
For more information visit the ATO website, the business.gov.au site or speak to your accountant to find out more information.