Do You Need an ABN for a Hobby? (2024 Update)

An Australian Business Number (ABN) is a unique number which is allocated to registered businesses in Australia. Sole traders, partnerships and companies must all have a valid ABN to trade legally. However, the question of whether you need to apply for an ABN becomes more murky when it comes to hobbies. In this article, we’ll discuss whether you should register for an ABN if you’re practicing a lucrative hobby.

Table of Contents

Key points

  • You should apply for an Australian Business Number (ABN) if you intend to operate as a sole trader, partnership or company
  • ABNs are also legally required for ventures which bring in $75,000 or more a year
  • You also need an ABN to apply for GST, PAYG Withholding and other taxes

Australian Business Numbers (ABNs)

ABN stands for Australian Business Number. They are a unique 11-digit number used to identify your business and are issued by the Australian Business Register and operated by the Australian Tax Office (ATO). If you wish to operate a legally registered business in Australia, you must have one. However, not just businesses are required to hold ABNs. For example, you will need one if you are establishing a self-managed super fund. When applying for one, you will need to provide relevant details about your business to the ATO.

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Do You Need an ABN for a Hobby?

Simply put, no. An ABN is not needed for a hobby.  A hobby is a pastime or leisure activity conducted in your spare time for recreation or pleasure. The key element of this is that a hobby is conducted for pleasure, not for commercial gain. If your hobby becomes a vehicle through which you earn income, it will be necessary to apply for an ABN. An ABN is also important for tax purposes and will ensure that you’re not inadvertently breaking tax rules. Further, other businesses you work with can withhold payments from you if you are not meeting your obligations to the ATO.

Not sure whether you’re conducting a simple hobby or commercial venture? Here’s some simple questions you can ask to determine if your activity is a business or hobby:

Is the activity being undertaken for commercial reasons?

‘Commercial reasons’ simply means to earn money and profit. If you’re hobby has evolved from being for fun to being something through which you earn money, it’s safe to say you’re now running a business.

Is your main intention, purpose or prospect to make a profit?

Why are you conducting your hobby? Are you marketing the fruits of your labour to friends and family? This question is especially important if your hobby has become your main vocation.

Do you regularly and repeatedly undertake your activity?

How often do you conduct your hobby? Although a hobby is defined as a regular activity done recreationally for pleasure, if you do it regularly enough this can also be an indication that your hobby has become a business.

Is your activity planned, organised and carried out in a business-like manner?

Some factors that go into this are:

  • What marketing efforts you’ve gone to (if any)
  • How much money you have earned from your hobby
  • How you plan to conduct your hobby in the future
  • Whether you receive any help from other people (whether paid or unpaid) in conducting your hobby

If you answered yes to most of these questions, you’re likely to be running a business and you will need an ABN. Once you have an ABN, you can get to work on building your hobby into a lucrative business.

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