Is your writing a business or a hobby?

books beside window during sunsetWhen it comes to self-publishing your book, you may – hopefully – start earning some money from it. Even if it’s not that much – the average self-published author makes less than $1,000/year from their book(s) – you will probably still need to declare it in your tax return.

The big question for many authors is whether their writing is a  hobby or a business. The ATO (Australian Taxation Office) offers various guidance about this.

The ATO is quite clear that all income streams must be declared, even if your writing is “just a hobby”, see this 2021 answer to a self-published writer:

“It is up to you to self-assess whether you are in business or not, but based on the information you have provided, it sounds like more of a hobby. Even if this is the case, you will need to declare any income you make in your tax return.”

If you do decide you’re a business, there can be many beneficial tax deductions you can claim, such as any publishing services you pay for, cover design or images and any marketing or advertising costs. Getting an ABN is free – you don’t have to actually incorporate a company, you can simply be a sole trader.

Whatever you decide, it’s highly advisable to keep clear records of everything you spend and earn on your writing pastime. And if  you’re serious about writing as an ongoing, income-generating experience, it’s best to consult a tax accountant to ensure you’re compliant and claiming everything available.