From what I can find the ATO does not take any dollar amount into account when deciding whether something is a business or a hobby. They say that if you are carrying out a business & earn over $75,000 you need to apply for an ABN? Makes what they told you a bit confusing?
They take a range of factors into consideration in determining if you are a business & I doubt most would tick too many if any boxes. They don't want to declare your hobby activities as a business if it means you will only use it to claim business loss offsets against other income. On the other hand they also don't want you to be making sustainable tax free profit. I doubt they would pursue the majority of fossickers/prospectors.
1. Does your activity have a significant commercial purpose or character?
Do you fossick/prospect for commercial reasons and in a commercially viable manner?
2. Do you have a purpose of profit as well as a prospect of profit?
To be deemed a business (if you wanted to become one) & thus claim expenses etc. you would need to show how fossicking/prospecting can make a profit, even if it does not make a profit in the short term. This would require exploration, sampling & professional reports on an areas potential returns vs. costs to fossick/prospect - hard to do on allowable fossicking/prospecting land. How do you show that you can get x amount of gold fossicking over x amount of time.
I wish they would deem my activities as a business. The business loss tax offsets would see me get some nice tax returns & I'd still get to enjoy my hobby + get a return regardless of finds
3. Is there repetition and regularity to your activity?
Do you fossick/prospect on certain days for a set amount of time in order to get a return? Or is it more sporadic - a day here, a couple of hours there, a week on holidays etc?
4. Is your activity planned, organised and carried on in a business-like manner?
Have you registered a business name, whether you have the intention of making a profit rather than just earning some income, have set up a separate bank account for the business, do you keep accounting records for the activities of the business, and whether you operate from business premises.
5. Is your activity better described as a hobby, recreation or sporting activity?
If the manner in which you fossick/prospect shows that it is more properly considered a hobby, recreation or sporting activity, then it will not constitute a business.
