Similarly, expenses incurred in relation to a hobby are not allowable as deductions.  In Ferguson's case, the Court said....

"if what he is doing is more properly described as the pursuit of a hobby or recreation or an addiction to a sport, he will not be held to be carrying on a business, even though his operations are fairly substantial'.

TR 97/11 states that the following factors will often indicate that an activity is a hobby:-

• it is evident that the taxpayer does not intend to make a profit from the activity;
• losses are incurred, because the activity is motivated by personal pleasure and not to make a profit and there is no plan in place to show how a profit can be made'
• the transaction is isolated and there is no repetition o regularity of sales;
• an activity is not carried on in the same manner as a normal, ordinary business activity;
• the activity is carried on a small scale;
• there is an intention by the taxpayer to carry on a hobby, a recreation or a sport rather than a business; and/or
• any produce is sold to friends and relatives, and not to the public at large.

Note:  Because expenses incurred in carrying on a hobby are not deductible, such an activity cannot give rise to a tax loss.