Hi I am looking to start releasing music on Spotify. I will be doing some advertising for my music however am unlikely to be making substantial income through royalties from my music as it is more of a hobby. I am very confused with if I need an ABN, if I need to declare an income for this hobby and what the threshold is for this income where I would need to start recording all of this.
Any guidance would be much appreciated
When releasing music on Spotify, whether you need an ABN and must declare income depends on whether your music activities are considered a hobby or a business.
Do You Need an ABN?
Since your music is primarily a hobby and not expected to generate substantial income, you generally don’t need an ABN. However, if you begin earning consistent revenue or actively promote your music with the intention of making a profit, you may be considered to be running a business and would need to apply for an ABN.
Do You Need to Declare Your Income?
Even if your music is a hobby, any income earned from Spotify royalties, merchandise, or live performances must still be declared on your tax return. The ATO does not have a specific income threshold that determines when hobby income becomes taxable—rather, it depends on whether you are operating a business. If your expenses exceed your income, you cannot claim deductions unless you are running a business.
When Does a Hobby Become a Business?
Factors that indicate you are running a business include:
If your music becomes a business, you may need to:
Next Steps
For now, if your music remains a hobby, you do not need an ABN but should still declare any income earned. If your activities expand into a business, consider applying for an ABN and keeping proper financial records. Consulting an accountant or the ATO can also help clarify your obligations.
When releasing music on Spotify, whether you need an ABN and must declare income depends on whether your music activities are considered a hobby or a business.
Do You Need an ABN?
Since your music is primarily a hobby and not expected to generate substantial income, you generally don’t need an ABN. However, if you begin earning consistent revenue or actively promote your music with the intention of making a profit, you may be considered to be running a business and would need to apply for an ABN.
Do You Need to Declare Your Income?
Even if your music is a hobby, any income earned from Spotify royalties, merchandise, or live performances must still be declared on your tax return. The ATO does not have a specific income threshold that determines when hobby income becomes taxable—rather, it depends on whether you are operating a business. If your expenses exceed your income, you cannot claim deductions unless you are running a business.
When Does a Hobby Become a Business?
Factors that indicate you are running a business include:
If your music becomes a business, you may need to:
Next Steps
For now, if your music remains a hobby, you do not need an ABN but should still declare any income earned. If your activities expand into a business, consider applying for an ABN and keeping proper financial records. Consulting an accountant or the ATO can also help clarify your obligations.
Income from royalties can be declared at Other income label on tax return
myTax 2024 Other income | Australian Taxation Office
Can also be declared at foreign income (if payment is from overseas) or business income (if you think this is a business activity). - see information in link
If you are not required to have an ABN to do this activity then you would not apply for one unless you were intending it to be a business. Only businesses are entitled to an ABN.
As to the activity being a hobby you need to keep in mind what a hobby actually is.
"A hobby is a pastime or leisure activity conducted in your spare time for recreation or pleasure."
(from business.gov.au)
22 Apr 2024 · 6 min read time
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