The difference between hobby and business isn't about how much you make — it's about intention and activity.
A business exists when there is an intention to profit combined with commercial activity. The ATO considers eight key factors: size and scale of the activity, intention to make a profit, repetition and regularity, business planning, commercial manner of operation, associated expertise, purpose of the activity, and record keeping.
Hobby: You sell 10 old items from your wardrobe on Depop. You don't buy items to resell. You have no intention of ongoing selling. This is clearly a hobby — not taxable.
Business: You visit op shops weekly, buy items to resell, maintain an eBay store with 50+ active listings, track what sells and what doesn't, and reinvest profits. This is clearly a business — taxable income must be declared.
Grey area: You occasionally buy items at markets when you see bargains and sell them on Facebook Marketplace. It's sporadic, not systematic, but profitable. This is where professional advice is valuable.
As a business, you must declare all income, can claim deductions for expenses, should register for an ABN, and may need to register for GST (if turnover exceeds $75k). As a hobby, none of these apply — but you also can't claim any deductions. The risk of misclassification is real: calling a business a hobby to avoid tax can result in penalties, while calling a hobby a business is less risky but unnecessary. See our reseller tax guide and ABN guide.
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