Assessment 1 of Blo2206 Taxation Law and Practice Essay
Topic:Distinguishing a hobby from a business, explaining how legislation and case laws determines whether an activity is a business or hobby. Further to make a comment on the impact of a determination by the ATO on whether a taxpayer’s activity is actually a business.
Distinguishing a Business from a Hobby
Activities are classified in terms of a business or a hobby and it is important that the two are separated. The difference depends on whether the activity is being carried for tax purposes or not. It is of great importance for the taxpayer to take into a consideration whether an activity they are involved in is for commercial purposes or whether it is situated in an …show more content…
The Statutory rules that determine whether an enterprise qualifies as a business are provided in the Australian Taxation law and it further outlines the exemptions on activities that do not apply according to the law. The common statutory rules that can be used to determine whether an enterprise qualifies as businesses are; the Goods and Services Act (GSA) and the Capital Gains Act (CGA), which give guidelines as to how the financial supplies are taxable through the financial institutions and provides clear rules and regulations that can be used to qualify enterprises as business provided an individual acts within the regulations.
Exceptions to the statutory rules
There are a few exceptions to the ruling which are concerned with the acquisitions connected to issuing of input tax supply. Where the acquisitions are not connected to supplies that would be input