Pursuing a hobby is different from running a business or having a job. Lots of artists engage in creative activities and make art in their spare time for enjoyment, without intending to rely on the income or make a profit.
Hobbyists can still make money from their art, but profit isn’t the primary objective or expectation.
Some creatives may start out as hobbyists but transition to running a business.
Knowing whether you’re a hobbyist or carrying on a business is not about what kind of art you make. What matters is the main reason for doing the activity, and how the activities are designed and carried out.
Why it matters
Knowing if you’re a hobbyist or operating a business is important because there are different laws that apply to any money you make from the creative activities.
The differences are usually related to tax. There may be penalties or tax implications for not declaring income you received from your creative work if you are actually running a business.
Only a hobbyist can use a Statement by a Supplier tax form to be paid.
Knowing if you’re a business will also help you work out whether you need to do other things, such as holding any relevant licences or insurances.
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Working it out
There are things that will indicate whether you are pursuing a hobby or running a business.
Each of these indicators are taken into account, and will be based on the activity as a whole as well as the intention of the individual.
| Indicators of a hobby | Indicators of a business |
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In practice:
Maya upcycles old furniture and discarded materials into one-of-a-kind functional art pieces
She finds joy in making these pieces. Her home is filled with a mix of vintage finds, hand-painted décor, and custom-made furniture that she’s transformed with her own hands.
She often shares her work on her social media page and sometimes sells them at craft markets, where she connects with a community of other creatives who also value sustainability. She sometimes doesn’t sell anything.
During the week she earns her income as an art teacher at a primary school. She has no idea how much time or money she has spent over the years on her work, and is happy to spend her disposable income on collecting old pieces and buying art supplies.
Maya’s crafting and upcycling projects is a hobby.
James is a trained singer who sometimes sings at wedding ceremonies
He studied music at university and had dreams of becoming a professional singer one day.
After a few years, he decided he decided he wasn’t cut out for the competitiveness and retrained in marketing. He let his ABN lapse and established a new small business as a marketing consultant.
But James didn’t want to give up the craft that he loved. He no longer had musical career ambitions, but he continued to sing in choirs and in musicals at his local theatre company.
Occasionally he gets a call from an old contact asking him to sing at a wedding ceremony, which he is paid for. He loves weddings, with all the people dressed up, and is a sucker for singing a love song.
James’s singing is a hobby.
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Statement by a supplier
A Statement by a Supplier is a tax form that can be used to pay a hobbyist. Only a genuine hobbyist can use a Statement by a Supplier form.
