Private ruling: Am I in business
Published: July 2012
Ruling period: Year ending 30 June 2012 | Year ending 30 June 2013 | Year ending 30 June 2014 | Year ending 30 June 2015 | Year ending 30 June 2016 | Year ending 30 June 2017
Date scheme commenced: 1 January 2012

Ruling: Q1: Are you carrying on a business? | A1: No | Q2: Are the non-monetary amounts assessable? | A2: No. | Q3: Is the income received from the activity assessable income? | A3: No | Q4: Are the expenses an allowable deduction for this activity? | A4: No.


Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 6-5(1). | Income Tax Assessment Act 1997 subsection 8-1(1) | Income Tax Assessment Act 1997 subsection 8-1(2) | Income Tax Assessment Act 1997 section 995-1.

Reasons for decision: Summary: Subsection 6-5(1) of the Income Tax Assessment Act 1997 (ITAA 1997) states that your assessable income includes income according to ordinary concepts. This 'ordinary income' includes amongst other things, income from salary and wages and business operations. Subsection 8-1(1) and (2) of the ITAA 1997 allows you to claim a deduction for a loss or outgoing that is incurred in gaining or producing your assessable income, or necessarily incurred in carrying on a business to gain or produce assessable income. These deductions are limited by the exclusion of losses or outgoings that are capital, private or domestic in nature. Taxation Ruling TR 97/11 provides the types of criteria established by the courts that would need to be satisfied in order to be considered to be carrying on a business. It should be noted that TR 97/11 specifically deals with the carrying on of a business of primary production, but the criteria established can be applied to most activities. The list of criteria includes, but is not limited to: · whether the activity has a significant commercial purpose or character · whether there is more than just an intention to carry on a business · whether there is the purpose and prospect of making a profit · whether there is repetition or regularity involved · whether the activity has the same characteristics as other businesses in the same field · whether the activity is carried on in a business-like manner; and · the size and scale of the activity No one indicator is decisive. They should be considered in combination and as a whole. Generally, whether a business is carried on depends on the large or general impression given. All of the above factors have been considered in light of your circumstances and the following conclusion has been reached. The activity of providing your services to the community, members of the church, friends and family has little or no significant commercial purpose. Currently you have not undertaken any jobs to receive any money or non monetary benefits as a result of providing your services. There is no indication the activity being carried on is a business. This is supported by the fact that you are undertaking the activity for personal satisfaction as you do not intend to make a profit, nor have you any business plans for the activity. Further from the information provided it is doubtful that the activity you are undertaking is being carried on in a systematic, business-like manner. Currently there is no repetition or regularity to the activity. The size and scale of the activity appears to be very small as you are only intending to provide your knowledge and expertises in an ad hoc or a casual fashion into the future. While you may devote a large amount of your time to this activity into the future, the information you provided suggests that the activity is a hobby or pastime for you. Based on the information you have provided we do not consider that the activity has the necessary characteristics of a business for taxation purposes. Therefore, any income you may receive in relation to this activity will not be assessable under section 6-5 of the ITAA 1997 as ordinary income or under any other provision of the tax law. Similarly any non-monetary benefits would also be non assessable. In addition, any expenses that may be incurred in relation to this activity will not be deductible under section 8-1 of the ITAA 1997.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | Relevant facts: You are an individual who wishes to help persons around you in an adhoc or casual fashion by applying your knowledge to help others. | You are not intending to make a profit from the activity as you are not expecting anything in return. If you do receive something it is often non-monetary or a personal favour. | You are prepared to make some loss from the activity if you think that your help is worthwhile. | Your reason for undertaking the activity is for the personal satisfaction you gain in helping others. | You do not have a registered business name or a business plan and you have no business premises or specific area allocated to carry out this activity. | You do not intend to keep business records if the activity continues to be an activity which is not a business. | At this stage you have not invested any money into the activity or received any income or non-monetary amounts. However you may be investing money at a later time. | You have not paid to advertise this activity. However you will be inviting people to seek your help or be engaged in person-to-person marketing activities or networking or there may be word of mouth advertising or advertising through social or informal marketing related activities. | You do not intend to employ anybody in this activity.