Just wondering what are the requirements of paying tax to be able to claim small business expenses?

And is it worth it or is it better to run it as a hobby? I'm approaching my 1st year and also working a job and a mum. I's be happy to keep it simple as a bit extra pocket money but I have spent over $3000 in the past 12 months so of course woukd love to get some back?

Top voted answer
George Grimekis CPA

George Grimekis CPA, Accountant at Alpha Omega Accounting & Business Solutions

Hi Jeanette,

It seems from your wording that you are already running a business. A hobby is a spare time activity pursued for pleasure or recreation whilst a business is run with the intention of making a profit.

Indicators of a business include but is not limited to:

- Having an ABN/Business Name

- you are keeping records

- you genuinely believe you you will make a profit even if you do not do so

- repeating nature of transactions

In saying that, if what you are doing is a hobby then the $3000 you have spent is not deductible. If you are running a business and you have not made any turnover, then you will need to pass the non commercial losses tests before the losses can be deducted against your income.

Any losses made that do no pass any of the tests in the non commercial losses rules will have to be rolled over until such time the tests are passed and you can claim them in future years.

If you need further clarification please send me a private message or you can google "non commercial losses"and click on the A.T.O link.