Business income is the net income you receive from carrying on a business. It is assessable income and the ATO requires that you report it on your tax return. Business income includes income you make as a sole trader (self-employed), partnership income, and trust income.
- Sole Trader: An individual owns a business and reports this on their personal income tax return on a separate business schedule.
- Partnership: Two or more people start a business to share profits and losses. You must lodge a separate partnership income tax return. Each partner must report their share of the partnership’s net income and pay tax on it.
- Trust: A third party has legal control of a business and runs the business to benefit someone else. You must lodge separate trust income tax returns. Trust income is taxable to the beneficiaries entitled to receive that income and they must report it on their returns.
- Company: Legally, a company is separate from its shareholders. This income includes salary, wages, directors fees, dividends, etc. and should be reported on your return in the relevant areas. You must lodge a separate company income tax return.
Note that business income is distinct from employment income, which you earn primarily through salaries and wages.
There are differences between hobbies and a business. Learn the difference here.