Is it a Hobby or a Business?
A hobby is a spare-time activity or pastime pursued for pleasure or recreation; and
A business generally requires some form of investment and enough customers to whom its products or services can be sold on a consistent basis with a profit-making intention.
The distinction between a hobby and a business is important as the carrying on of a business requires a taxpayer to: declare sales income, claim tax deductible expenses, keep accurate records, register for an ABN and register for GST if turnover reaches $75,000 or more in the financial year.
If you are merely pursuing a hobby, you do not need to report the income from the hobby.
Go to my website for access to the Tax Office’s guide to determine whether your activity is a hobby or a business, or contact me for assistance.
The ATO substantiation requirements for employees travel expenses do not apply to “travel expenses” incurred by an employee who receives a travel allowance for travel within Australia and the claims for costs of accommodation, food, drink and other incedentals do not exceed the reasonable amounts as determined by the ATO. A travel diary is required for travel of 6 or more nights in a row.
Please make sure your employer states the travel allowance amount paid to you, as a separate item called “travel allowance” on your payslips and year end summary.
This is an issue for many employees; so if you incur travel expenses in your employment, please talk to your employer now.
The A.T.O. uses small business benchmarks to identify businesses that may not be reporting some or all of their income.
Input benchmarks (income to labour and materials used) apply to tradespeople who undertake domestic projects and are responsible for purchasing their own materials.
Performance benchmarks provide financial ratios for your industry that compare your business performance to others in your industry. They are updated with new financial-year data on an annual basis to ensure they reflect the performance of businesses over time.
The ATO review the following performance ratios:cost of sales to turnover, total expenses to turnover, rent to turnover, labour to turnover, motor vehicle expenses to turnover, non-capital purchases to total sales, GST-free sales to total sales.
It is very important to review your business benchmarks regularly.