Guide 1 of 5 · All three lanes
Hobby or business: how the ATO weighs a creator’s activity
There is no single test. The ATO weighs a set of factors together and goes by the overall impression of the activity; a creator doesn’t need to meet every factor, and some count for more than others depending on the circumstances.
General information about the ATO’s published guidance, not tax advice, and never a view on one person’s situation. The official place to check is the Australian Taxation Office.
The factors, as the ATO applies them to creators
The ATO’s guide for content creators sets out seven factors, each with signs drawn from creator work.
A significant commercial purpose or character
The activity aims at income from ads, sponsorships, subscriptions or affiliate marketing, and is made with a business mindset rather than for personal enjoyment or for family and friends. Modelling for brands, negotiating partnerships, signing contracts and running campaigns all point to a commercial purpose.
More than an intention
Plans are not enough on their own. The ATO looks for active effort, such as producing content consistently, marketing it, engaging with an audience, networking with brands and investing in software and services, and for ongoing commitment.
A profit intention, and a reasonable prospect of profit
A creator who is not yet profitable may still be carrying on a business if the motivation is profit and there is “a genuine plan to earn income from your content creation activities in a future income year.” This is more likely, the ATO says, with a structured plan and ongoing efforts to monetise.
Repetition and regularity
A consistent posting schedule, engagement with followers and planned series and campaigns, rather than occasional posts.
Planned, organised and business-like
Documented strategies, content calendars and performance tracking; contracts with brands; records of income and expenses. The ATO says the more structured the activity, the more it shows a business.
Size and scale
“A small following or modest revenue does not automatically mean it’s a hobby.” Other signs the ATO names are several platforms used to reach a broad audience, significant reach and engagement, and a team such as editors or talent managers.
Beyond a pastime
“Your activity may have started off as a hobby, however it becomes a business once you demonstrate commitment to these factors.”
The ATO’s general page on being in business asks similar questions of every activity, among them whether it is repeated and continuous, and whether the size or scale is enough to make a profit. For a deeper look at individuals, partnerships and trusts it points to Taxation Ruling TR 97/11: written about primary production, its principles “can be applied more broadly.”
Four creators, four answers
The ATO’s creator guide works through examples. Four of them show how far apart the answers can sit.
| Creator | What they do | The ATO’s answer |
|---|---|---|
| A beauty creator | Posts three to four videos a week on several platforms, plans with a calendar, invests in lighting, cameras and editing software, keeps records, then earns from sponsorships, brand collaborations and advertising. | Carrying on a business once she began operating in a structured, commercially focused way. |
| A casual dancer | Posts dance videos irregularly for friends and family, with no sponsorships, affiliate links, advertising revenue or plans to earn. | A hobby, so amounts are generally not assessable and expenses generally not deductible. |
| A travel blogger | Posts occasionally about her own holidays, then accepts a one-off $500 from a hotel to feature it. | Not a business, but the $500 is still assessable income. |
| A retired reviewer | Stops making technology reviews and ends his sponsorships, while old videos keep earning advertising revenue. | No longer a business, yet the advertising income from the old videos remains assessable. |
A fifth example, a lifestyle creator paid in flights and a resort stay, is in the guide to gifts and free products.
When the business starts, and when it ends
For creators, the ATO says a business has started “when you have moved beyond planning and begin actively creating content with the intention of earning income.” That is typically once there is a clear decision to start, the equipment and assets needed are in hand, and the activity has actually begun. In its beauty example, the months spent researching equipment and learning video editing were preparation, not yet the business.
The start date matters because, the ATO says, it affects the registrations you must have and when to apply for them.
A business has ended when there is no longer an intention to continue it. The ATO’s signs include inactivity, cancelled contracts, assets disposed of, and registrations such as an ABN or GST cancelled.
In between, the ATO says a major change in an activity means reassessing whether it is a business. One of its examples of such a change: “your activity was originally a hobby, but you make arrangements to make money from it, such as monetising online content you created”.
What the lane changes
A hobby. business.gov.au says a hobby is not eligible for an ABN. A business that pays a hobbyist may ask for one; a Statement by a supplier form tells the payer the sale is part of a hobby, so that no amount is withheld for the missing ABN. Records of a hobby aren’t needed for the ATO, though it calls keeping them good practice in case circumstances change.
Earning, but not a business. Income is generally assessable and eligible deductions can be claimed, but the ATO’s table says business obligations such as ABN and GST registration don’t apply.
A business. Business records must be kept for tax and other obligations. The ATO’s creator guide lists registering for an ABN among the things a creator carrying on a business needs to do. business.gov.au says an ABN is not compulsory for a business but is free, and that without one, other businesses must withhold 47% from payments they make to you. GST is covered in the GST guide, and expenses in the deductions guide.