Am I running a Business or a Hobby?
As a Pet Sitter in Australia, you need to be aware of any tax obligations you might have.
Key questions to consider:
- Is the activity being undertaken for commercial reasons?
- Is your main intention, purpose or prospect to make a profit?
- Do you regularly and repeatedly undertake your activity?
- Is your activity planned, organised and carried out in a businesslike manner?
If you answered yes to most of these questions, you're likely to be running a business, although it depends on your individual circumstances. The ATO website provides further questions, information and examples to help you understand the differences between a hobby and a business.
To get an answer specific to your circumstances, you can:
- talk to a legal, accountant or business adviser in your area who can help you decide whether you’re running a business or a hobby.
- get a private ruling from the ATO, which will provide an answer that protects you from penalties and interest.
As a rough guide, if your payments for pet sitting have hit the $18K level in one complete financial year from 1 July - 30 June (the threshold is $18,200), then this is also evidence for the to suggest that there is enough repetition in your activities for it to be considered a "business" rather than a "hobby" and therefore, if you don't supply PetCloud with an ABN, before your next pet sitting job, the Australian Tax Office require us to withhold 47% from your next payments. You can prevent this by applying for an ABN.
Refer to the Australian Taxation Office website for more info or you may wish to call them on the Personal Tax Info Line 132 861 or the Small Business Info Line: 132 866.
Further Reading: What Expenses can I claim as a Pet Sitter?