Clients who conduct irregular activity that generates income but nil profits are often not aware that they may have a hobby as opposed to a business, and may be unable to claim GST credits on their purchases.
The ATO is encouraging tax professionals to remind their clients they need to be able to show they are in business with intention to make a profit. Supporting factors can include documenting a business plan, commercial sales and marketing and advertising their activity to gain clients.
For those clients who are conducting a hobby, the ATO encourages tax professionals to cancel the GST registration of those clients.
Further, past activity statements should be amended if the clients have claimed GST credits for purchases associated with their hobby.
Other items on the ATO’s priority list for this year again include work-related deductions, which you can read more about here.
The not-to-be-missed Accountants Daily Strategy Day will travel through Melbourne and Sydney in August to equip accounting professionals with the latest industry updates and tips for modern practice management as well as the latest cutting-edge technology, processes, strategies and trends shaping the future of accounting. Visit the website for more information: www.accountantsdaily.com.au/strategy-day