It is important to determine whether you are carrying on a business or pursuing a hobby, sport or recreational activity that does not produce income.
In general, you are considered to carry on a business if the activity:
- has started
- has a significant commercial purpose or character
- has a purpose of profit as well as a prospect of profit
- is carried out in a manner that is characteristic of the industry
- is repeated, regular or continuous, and
- cannot be more accurately described as a hobby, recreation or sporting activity.
For additional information, see Are you in business?. Primary producers should also see Taxation Ruling TR 97/11 – Income tax: am I carrying on a business of primary production?