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Do I need to declare income from my hobby on my tax return?

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I used to sell jewellery at my local markets, but a friend of mine is helping me set up a store on Etsy. Do I need to put any of the income I make from my Etsy sales on my tax return?

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Hi @Peridot-dreams, @Wizzzzard and @PeteyP,

Great question, @Peridot-dreams! If you’re running a business, then yes, you’ll need to include that income on your tax return – but if your jewellery-making is just a hobby, then no, you won’t.
It can be tricky sometimes to work out if your hobby is actually a business. There is no one “thing” that decides if you’re running a business – we usually look at a few different factors to help us work it out.

You’re probably in business if:

  • You’ve decided to start a business and you’ve done something about it – like registering a business name or getting an ABN.
  • You honestly think you’ll make a profit – even if that’s not happening right now.
  • You’re doing the same thing all the time – so selling items regularly or ordering items, for example.
  • You’ve built planning or organisation into your activities – that is, you’re keeping business records, have a separate bank account for your business, have a shopfront, have a license or qualifications.

Once you start running a business, you’ll need to make sure you have all your registrations in place. @Wizzzzard's point – that you’re in business if you’re earning more than $75,000 a year – probably relates GST registration rules.

Check out https://www.ato.gov.au/business/starting-your-own-business for more information about business registrations and reporting.

If your jewellery-making is a hobby, then you don’t have to declare any earnings on your tax return or lodge activity statements. However, if you supply items or services to a business as part of your hobby, that business has to ask for an ABN when they pay you and may need to withhold more tax from your payment. Have a look at https://www.ato.gov.au/business/starting-your-own-business/before-you-get-started/are-you-in-busines... to find out more.

 

Hope that helps! BreeH

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I never did – it’s just a hobby, right? I asked someone when I was selling upcycled furniture, and they said that as long as I didn’t earn more than $75K I didn’t need to do anything about it.

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Um, if you’re selling something, then you’re running a business.

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Not necessarily. I used to spend a lot more than I made when I was upcycling furniture, so I wasn’t “making” money

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Exactly! Most of the pieces I make cost me $10+ more than I sell them for.

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So charge $10 extra… I don’t think you quite understand how the economy works.

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Like @Wizzzzard says, it’s a hobby.

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Not if you’re selling stuff to other people to make money it isn’t. Besides, businesses can run at a loss.

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Ok, so what’s the difference between a hobby and a business?

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The person I was talking to said your hobby only becomes a business once you earn more than $75,000.