There's no income threshold that turns a hobby into a business. It comes down to whether you're carrying on an enterprise. If you're operating in a repeated, organised, businesslike way with the intention of making a profit, you're in business and you need an ABN, no matter how small the takings. If you're doing it for pleasure or recreation and any money is incidental, it's a hobby, no ABN, and the income isn't taxable.
What actually separates a hobby from a business
The question almost everyone asks is "how much can I earn before it counts?", and it's the wrong question. There is no dollar line. You can sell $10,000 of woodwork a year and still be a hobbyist, or make your first $200 and already be in business. What the ATO and business.gov.au look at is how you're operating, not how much you're bringing in.
The core test is whether you're carrying on an enterprise: an activity done repeatedly, in a businesslike and organised manner, with a genuine intention and prospect of profit. A one-off sale of a painting is a hobby. Painting to commission most weekends, advertising your work and reinvesting to grow is a business.
| Hobby | Business | |
|---|---|---|
| Main reason you do it | Enjoyment, personal interest, recreation | To make a profit |
| How often | Irregular, one-off or occasional | Regular and repeated, in an organised way |
| Set-up | No real system, personal account, no records | Records kept, separate bank account, invoicing, maybe a business name |
| Do you declare the income? | No, hobby income isn't assessable | Yes, all of it is assessable income |
| Can you claim deductions? | No | Yes, against your business income |
| Need an ABN? | No | Yes |
The indicators the ATO weighs up
No single factor decides it. It's the overall picture. The more of these that apply, the more likely you're in business rather than pursuing a hobby:
- You intend to make a profit, or genuinely believe you will, even if you're not there yet
- You repeat similar activities regularly and run them in a planned, businesslike way, records, a separate account, maybe a registered business name
- Your activity is a reasonable size and scale for that industry, and organised the way others in it operate
- You advertise or market what you do and actively seek customers
Do it purely for love, with any income an accidental by-product, and it stays a hobby. Start steering it toward profit and structure, and the same activity crosses the line. Many side hustles begin as one and quietly become the other. See our 2-minute decision test if you're not sure which side you're on.
Why the ABN matters before the money does
Here's the trap that catches side hustlers out: the ABN often matters the moment you invoice a business, not once you hit some income level. When a business pays you for goods or services and you can't quote an ABN, the law requires them to withhold 47% of the payment and send it to the ATO. You eventually get it back at tax time, but it's a rough surprise on a first invoice.
So even a modest, genuinely-in-business side hustle usually wants an ABN early, to invoice cleanly, look legitimate to clients, and avoid nearly half the payment being held back. The ABN itself is free from the Australian Business Register; what an agent charges for is getting the application right and reviewed. If you're operating as a sole trader, that's the structure almost every side hustle starts with.
"But I only made $500": does the amount change anything?
Correct, the amount doesn't decide hobby versus business. What the amount does affect is GST. Being in business means you should have an ABN and declare the income; it doesn't automatically mean you charge GST. You only need to register for GST once your business turnover reaches $75,000 in a rolling 12 months (rideshare and taxi drivers are the exception. GST applies from the first dollar). Under that, you have an ABN but no GST to worry about.
So a small side hustle that's genuinely a business needs an ABN but usually not GST. A hobby needs neither. And a hobby that grows into a serious business may eventually need both. The trigger for each is different, which is exactly why people get tangled up.
How to register once you've crossed the line
If the indicators point to a business, registering is quick. Our ABN application is a short online form, reviewed by registered tax agents and lodged directly with the ABR, often same day. If your turnover is heading past $75,000 you can add GST at the same time as a $27.50 add-on, so it's all set up in one pass. Not certain yet whether you've tipped from hobby into business? Call us on 1800 546 526. It's usually a two-minute conversation.
Common questions
How much can I earn from a hobby before I need an ABN?
There's no dollar figure. A genuine hobby can earn thousands and stay a hobby, while a business can earn nothing in its first year and still be a business. What matters is whether you're carrying on an enterprise (operating repeatedly, in a businesslike way, intending to make a profit) rather than the amount you take in.
Do I have to declare hobby income on my tax return?
Genuine hobby income isn't assessable, so you don't declare it, and you can't claim deductions against it either. Once the activity is a business, all of it is assessable income you report each year, but you can then deduct your business costs. The line between the two decides both.
Can a hobby become a business without me noticing?
Yes, and it usually creeps up. You start selling regularly, advertising, and chasing a profit. There's no single moment it flips, but once the indicators point to a business you're expected to have an ABN and to declare the income from that point on, so it's worth checking in on where you sit each year.
Do I need an ABN to sell on Etsy, eBay or at markets?
Only if what you're doing amounts to carrying on a business. Occasionally selling your own second-hand goods or genuine hobby output can stay a hobby. Regular, profit-driven selling (buying to resell, making to sell, running it like a shop) is a business and needs an ABN.
What's the risk of getting it wrong?
If a business customer asks for your ABN and you can't quote one, they must withhold 47% of the payment and send it to the ATO. And if the ATO later decides you were in business, unreported income can be reassessed with penalties and interest. Registering an ABN once you're genuinely in business is cheap insurance against both.
Crossed from hobby into business? Sort the ABN in five minutes.
Reviewed by registered tax agents, lodged direct to the ABR, tax deductible. Free help on 1800 546 526.