Hi all
I have read the ATO pages to decide whether I need an ABN but I can't get my head around the hobby/business so I have come to all of you.
I intend to make profit from my landscape photography (who wouldn't?) but I don't make any sales (I have an unrelated daytime job). I don't claim any expenses and so far all costs over the past few years have out of my own pocket.
My question is, do I need an ABN for my "business"? TIA
I have read the ATO pages to decide whether I need an ABN but I can't get my head around the hobby/business so I have come to all of you.
Unfortunately the answer is not as simple as "no".
The test is: Is this a hobby or a business? If it is a hobby (paying hobby even) the answer is no, you don't need one. But that's not to say you can't get one. (this is a cost / benefit question better answered by an accountant).
Also you cannot register a business name without an ABN...
If conversely it is a "business" (and you do NOT need to make a profit to be considered a business) yes, you should get one.
I intend to make profit from my landscape photography (who wouldn't?) but I don't make any sales (I have an unrelated daytime job). I don't claim any expenses and so far all costs over the past few years have out of my own pocket.
This is a separate issue. To make a claim for deductions, you need to be earning money (income).
But you do not need to declare income from a hobby....
Short answer see a good accountant.
My question is, do I need an ABN for my "business"? TIA
I intend to make profit from my landscape photography (who wouldn't?) but I don't make any sales
How will you make a profit if you don't make any sales?
Mr tax man would not be very happy if you get an ABN to reclaim GST but to your credit that hasn't been mentioned as a reason. Mr tax man considers any activities that will never make a profit are hobbies and doesn't want to know about them. Just wastes everyone's time.
The only other reason you need to get an ABN would be to register a business name which unfortunately can now no longer be done without an ABN.
If it is a hobby (paying hobby even) the answer is no
Yea that's the part that confuses me. If income is generated from a hobby, and there is no real distinction between an income generating hobby and business, at what point should I consider my hobby has changed into a business?
To make a claim for deductions, you need to be earning money (income).
This is crystal clear now, thank you.
Short answer see a good accountant.
Yea I think I may have to..
How will you make a profit if you don't make any sales?
That's the million dollar question isn't it. I don't make sales not because of the lack of trying. Perhaps it's a catch 22, visitors to my website don't see an ABN anywhere and they think I am a Nigerian prince trying to con them with me landscape shots..
Mr tax man considers any activities that will never make a profit are hobbies and doesn't want to know about them. Just wastes everyone's time.
That makes sense. I am pretty sure there are plenty of stay-at-home mums who have craft businesses online that are unregistered and don't have an ABN.
Guess I will be speaking to an accountant. Thank you all
at what point should I consider my hobby has changed into a business?
It comes down to intent. Once you start needing to set aside time for things like administration, book keeping, etc might be an indicator. The other reason might be when you start actively attempting to generate more sales. If you are generating income, you can start to offset your overheads. To offset overheads you need to register.
but as advised, a 30 minute consultation with an accountant will give you all your answers and more to think about. all the best with it.
Also generally it's best to avoid GST for as long as legally possible because for any business that generates net profits you'd generally be receiving more GST than you pay out
As stated above, profit making intent is the determination of whether your activities are a hobby or business, irrespective of if you make profits or not
For example, if you take a few paying gigs a year moreso for fun and experience, and get paid some incidental amount for your troubles e.g. your acquaintance throwing $200 your way or something, it's unlikely that will be considered a business.
If you set up a ABN, business name, advertise for customers and end up getting like 1 customer and you make a loss, that'd probably be considered a business even though you didn't make a profit.
Also generally it's best to avoid GST for as long as legally possible because for any business that generates net profits you'd generally be receiving more GST than you pay out
What he said!
Seriously good advice
That makes sense. I am pretty sure there are plenty of stay-at-home mums who have craft businesses online that are unregistered and don't have an ABN.
Whether you must have an ABN is based on income from the business. A business that is solely internet based does not need to have the business name registered, or at least that was the case in NSW before business name registration was centralised for the whole of Australia.