Selling photos: hobby or business?

Selling the occasional print is sometimes a hobby and sometimes a business in Australia. The classification matters because business activity triggers obligations under the Income Tax Assessment Act 1997 (Cth) and, beyond the relevant turnover threshold, registration under the A New Tax System (Goods and Services Tax) Act 1999 (Cth).

The ATO's hobby vs business factors

The Australian Taxation Office publishes guidance (currently in TR 97/11 and subsequent rulings) that identifies factors courts have applied: the commercial nature of the activity, profit intention, regularity and repetition, organisation and planning, size and scale, keeping records, and whether the activity is conducted in the same way as others in the industry.

No single factor is decisive. Someone selling a handful of prints to friends once a year is generally a hobbyist. Someone with a website, regular sales, marketing, and a profit motive is generally carrying on a business.

Consequences of being in business

Income tax

Business income is assessable. Hobby income generally is not (though the threshold question of whether something is genuinely a hobby is one the ATO scrutinises). Expenses incurred in carrying on a business are generally deductible; hobby expenses are not.

ABN

If carrying on an enterprise in Australia, you are entitled to apply for an Australian Business Number under section 41 of the A New Tax System (Australian Business Number) Act 1999 (Cth). Many buyers (especially businesses) will withhold tax at the top marginal rate on payments where no ABN is provided.

GST

If GST turnover from the enterprise is or will be A$75,000 or more in a 12-month period, GST registration is compulsory under the A New Tax System (Goods and Services Tax) Act 1999 (Cth).

Stock or licensing platforms: withholding and disclosure

Overseas platforms may withhold tax on payments. Australian platforms may require ABN and GST status declarations under Single Touch Reporting. Keep records of every sale and licence.