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ashuunii(Newbie)Newbie
15 July 2024

Im a very small YT creator that received around less than $1500 from adsense this year (i do gaming if this helps). I looked up the ato list on whether or not this is considered a hobby or not. I dont have an actual schedule for uploads (some took 2 weeks to a month per upload), I didnt have an ABN, and when I signed those w8ben papers, I signed it off as an individual. Most of my answers lean towards a hobby with the exception of one. Intent.


Everyone who earns money of youtube has to apply for monetization, make an adsense account and when everything is good to go, give their tfn and bank details. This is a clear cut case of it being cosidered an intention to make money, right? well, apparently not?


I bought up these concerns to my tax agent. I told them that I dont have an ABN, I told them that I dont have a schedule (i think I uploaded like 16 videos and then I just stopped cold turkey), I told them about the "intent" and they ruled it out as a hobby. I had my doubts so I went for a second opinion and sure enough, they did tell me it was a hobby and dont get too overworked by it.


What are the possible ramifications of thinking that this was a hobby when ATO thinks its not? I will keep the records that google sent to me just in case but I'm kinda lost on what to do

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1,598 views
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ZebN(Champion)Champion
15 July 2024

an ABN and what you wrote on the w8ben papers has no relevance to whether or not you are conducting a business. Also, if you were making movies in Hollywood then obviously making 16 movies per year would be a business rather than a hobby. In fact, since your activity is media & entertainment, making one excellent video could earn much revenue on YouTube. There are single videos of an individual playing a guitar and doing a music reaction video with 50 million views on YouTube.


What makes you a business is not only your intent but also your potential for profit. Profit is the difference between earnings/revenue/sales & costs. For example, lets say you earned $1500 from adsense this year. However, you also spent $3,000 on a laptop that is used 50% of the time for your YouTube work. If your laptop lasts you three years, you can claim a deduction of $500 per year over three years for your laptop. So now your profit is $1,000. Then there are other costs.


In summary, for you to be able to claim a tax loss in your activity, under tax law, your activity must earn at least $20,000 in revenue per year. Therefore, it is difficult to claim business losses on a small activity.


But if earnings are easily made on Youtube with minimal costs and if your goal is to make as many videos & as much money as you can on Youtube; such an activity can easily be a business. For example, if you made 24 videos per year, if your costs were $3,000 per year and your earnings were $6,000 per year, I guess that might be a business. Its a difficult call but the High Court of Australia once ruled a business was being carried on "in a small way" with the use of one goat for breeding purposes.


If you enjoy reading, this relevant link may help you: https://www.ato.gov.au/law/view/document?LocID=%22TXR%2FTR20051%2FNAT%2FATO%22&PiT=20240214000001


For now, $1500 from adsense is a negligible amount of possible income therefore not much to worry about because if it happened to be deemed as income then the ATO would charge you a penalty of paying extra tax on that $1500.


I'll try to read the link I posted later. But this link is about "artists" and I recall refers to preliminary activities for developing a reputation, etc.

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Most helpful reply

ZebN(Champion)Champion
15 July 2024

an ABN and what you wrote on the w8ben papers has no relevance to whether or not you are conducting a business. Also, if you were making movies in Hollywood then obviously making 16 movies per year would be a business rather than a hobby. In fact, since your activity is media & entertainment, making one excellent video could earn much revenue on YouTube. There are single videos of an individual playing a guitar and doing a music reaction video with 50 million views on YouTube.


What makes you a business is not only your intent but also your potential for profit. Profit is the difference between earnings/revenue/sales & costs. For example, lets say you earned $1500 from adsense this year. However, you also spent $3,000 on a laptop that is used 50% of the time for your YouTube work. If your laptop lasts you three years, you can claim a deduction of $500 per year over three years for your laptop. So now your profit is $1,000. Then there are other costs.


In summary, for you to be able to claim a tax loss in your activity, under tax law, your activity must earn at least $20,000 in revenue per year. Therefore, it is difficult to claim business losses on a small activity.


But if earnings are easily made on Youtube with minimal costs and if your goal is to make as many videos & as much money as you can on Youtube; such an activity can easily be a business. For example, if you made 24 videos per year, if your costs were $3,000 per year and your earnings were $6,000 per year, I guess that might be a business. Its a difficult call but the High Court of Australia once ruled a business was being carried on "in a small way" with the use of one goat for breeding purposes.


If you enjoy reading, this relevant link may help you: https://www.ato.gov.au/law/view/document?LocID=%22TXR%2FTR20051%2FNAT%2FATO%22&PiT=20240214000001


For now, $1500 from adsense is a negligible amount of possible income therefore not much to worry about because if it happened to be deemed as income then the ATO would charge you a penalty of paying extra tax on that $1500.


I'll try to read the link I posted later. But this link is about "artists" and I recall refers to preliminary activities for developing a reputation, etc.

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