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  • #982535
    radge
    Member
    • Total posts: 22
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    Hi,

    I’m new on here and hoping that I will be able to find some answers and support from the forum :)

    I think I have come to a point where my hobby is no longer a hobby however trying to determine if it is/isnt is doing my head in today so hopefully I will be able to find some answers on here. I am an artist, designer making jewellery, artworks, graphic design – which I am currently studying and almost finished which I think will finally push my hobby into being a business.

    I know thats all a bit cryptic for today but I’m just going to find my feet here first if that is ok :)

    #1137321
    Divert To Mobile
    Member
    • Total posts: 2,751
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    Hi Radge,

    Welcome to the forum.
    From the sounds of your post you might qualify either way.
    Determine which classification best suits your needs then roll with that untill your activities make it obvious.

    Steve

    #1137322
    radge
    Member
    • Total posts: 22
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    Thanx Steve :)

    After thinking about it more last night I think due the things I have done recently its talking it further towards a businss than being simply a hobby; it appears that the ATO has changed their definition of a hobby as well since I last looked into it and asked the accountant about it.

    Recently I have started going to a few markets, which meant I needed insurance, I already have a website (which I have had for a while) and a trademark and I have applied for another trademark as well as recently opening an online store at hand-made.com.au and I have branded it all as well as developing a ‘contract’ for my design services as I am almost finished studying.

    It would be so much easier to leave it as a hobby but the more I think about it I don’t know how the ATO would view it and don’t really want to get stung in the future if I dont do it right (even though at the moment it would be making a loss).

    #1137323
    Anonymous
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    • Total posts: 11,464
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    Hi Radge,

    Welcome to the forum :)

    I’m sure you will find your feet in no time at all.

    The definition of a hobby is something that comes up around here all the time, and it is well worth having another chat with your accountant about it. You might even want to contact the ATO for more advice.

    Good luck with it all,
    Jayne

    #1137324
    GoldBear
    Member
    • Total posts: 12
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    Hi Radge,

    I am not a tax agent but I can point you in the right direction.

    I think it’s best that you check out the ATO Non-commercial business losses legislation found here. http://www.ato.gov.au/businesses/content.aspx?doc=/content/19785.htm

    There are certain tests your biz must pass to be constituted as a business venture as opposed to just being a hobby. The ATO put this law in place to stop people from offsetting their hobby losses against their assessable income. The tests are largely determined by looking at your hobby’s income, profit level and assets used.

    If you have an ABN and GST registered is also looked at by the ATO as a determining factor. It may be worth keeping all your hobby tax invoices since you can sometimes defer the loss and claim it in future years. I can help you with this so let me know…

    I suggest you get your own tax advice from a qualified tax agent with regards to your business classification, but perhaps check out the link I mentioned above first.

    Doug

    #1137325
    CindyK
    Member
    • Total posts: 155
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    Hi,

    As mentioned already there have been a few posts with the same query over the last six months. We have had it come up for a few prospective clients recently also.

    I know you probably already have but take a look at the ‘Am I in business?’ page with the ATO.

    It’s very much about the overall nature of your business and whether you are aiming to make a profit. As it mentions there: Each time you answered yes to the questions above, it increases the probability that you are in business though no one indicator is decisive, they must be considered in combination and as a whole.

    It would seem reasonable to many that you were aiming to run as a business with the goal of profit and commercial activity, to expand your customer base etc. You have mentioned: insurance, trademarks, .com.au website and ‘contracts’, which all fit in the vein of commercial activity.

    If you did decide that you were still a hobby – you need to be able to soundly justify that decision to the ATO. So you would need reasoning, evidence and sound explanations why others in the same situation may be a business but why you would not be.

    As to the part about the loss, many businesses – particularly in the early years run at a loss. Focus instead on the growth and how you mitigate that loss and increase your sales – (if you are operating as a business).

    Also as mentioned, it can affect your tax obligations for the business (if you are one) and for you personally. By seeking professional assistance, they tailor the advice exactly to your circumstances with a ‘whole of situation’ approach.

    I would definitely advise from the little you mentioned, that it is time to revisit the issue with your existing Accountant or go on the search for a new one. They can set your mind at ease and help you make the right decision.

    Good Luck whatever you decide – either way it sounds like you have commitments to make and decisions to ponder.

    #1137326
    LucasArthur
    Participant
    • Total posts: 3,171
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    Hi Radge,

    Just postsing to say G’Day..

    Cheerio
    Jason

    Jason Ramage | Lucas Arthur Pty Ltd | E: [email protected]   P: 61 3 8324 0344    M: 61 412 244 888
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