Is it a Business or a Hobby?

This one is quite easy to answer.

It’s perfectly fine to have a hobby, but not every hobby is going to earn you money (sadly). You might love making Christmas trees out of pinecones, covered in essential oils that remind you of Christmas back home, but is there a demand for this product?

From a tax perspective, if you’re making any money from your hobby/business, it’s taxable. There isn’t a threshold of ‘if you earn under $xx from it, it’s classed as a hobby’. ANY profit (income minus expenses) that you make is taxable, in the same way as if you were employed.

The easiest way to get started if you’re taking money from your hobby / small business, is to be a sole trader (recommended for most small businesses, at least initially, but check with your accountant if you have a partnership, lots of personal assets, are taking on a lease etc).

Then all you need to do is keep a note of all the money that you make, and all the expenses (costs) that you have. It doesn’t need to be anything fancy, an xls spreadsheet or even a written notebook is fine - whatever is easiest for you to keep up to date with. Then at the end of the financial year, you add together any income that you have from the business and / or employment, then minus any expenses that you’ve had through the business (website, stock, marketing, logo etc). The number that is left is your profit (or loss), and THAT is the number that you are taxed on, at the same rate as if you were an employee. If you’ve also earned money as an employee during that period, you will already have paid some tax automatically, so you may be due some back, depending on how much you’ve made in the business in that period.

Here is some more information from the ATO on assessing hobby vs business.