What is a taxable activity NZ: hobby vs business for GST

Taxable activity definition (GST)

Section 6 of the GST Act is the legal home of the taxable activity definition. In plain English, a taxable activity is any activity you carry on continuously or regularly, whether or not for a pecuniary profit, that involves or is intended to involve supplying goods or services to another person for consideration. It includes activity in the form of a business, trade, manufacture, profession, vocation, association, or club.

IRD’s GST guide IR375 puts it the same way: you need a taxable activity to register for GST. The Commissioner’s current view sits in IS 25/21: GST taxable activity (issued 8 October 2025). That statement replaced older Tax Information Bulletin items on taxable activity versus hobby.

Registration and filing basics live in the GST Basics Guide category. For add or remove maths once you are charging GST, use the free GST calculator.

The four building blocks

IS 25/21 breaks the statutory test into pieces that matter in practice.

• An activity: a course of conduct, not a single isolated act sliced into fake “steps”.
• Carried on continuously or regularly: continuous means ongoing over time without a lasting stop; regularly means at reasonably short intervals or on a definite pattern. Occasional or intermittent activity usually fails this test.
• Whether or not for profit: GST does not need a profit motive. A non profit body can still have a taxable activity.
• Supply (or intended supply) for consideration: you must be supplying, or intending to supply, goods or services to another person for consideration (usually money, sometimes barter or other value).

It is the activity that must be continuous or regular, not every individual sale. Courts have accepted that a long project can still be continuous even if there is only one eventual supply, for example building then selling a commercial property. One off private sales of your own belongings usually do not create a taxable activity.

Hobby vs business for income tax

People often mix GST taxable activity with the income tax hobby versus business test. IRD’s Is your hobby a business? page is the income tax starting point.

On that page, a hobby is something you do in spare time for enjoyment. You may earn occasional money (family, friends, a market stall) but you do not intend to put a lot of time, effort, and money into it, and you do not intend to make a profit. Hobby receipts are not income. You cannot claim hobby expenses or hobby losses.

IRD says you are generally in business when you provide or sell goods or services with a sufficient level of activity and you intend to make a profit. Indicators include profit intention, time and money invested, regular customers, financial records, income from the activity, running it like others in the same trade, long term commitment, and relying on the income for living costs.

IRD examples: Quinn’s quilt making (gifts and cost contributions, no profit aim) is a hobby. Will’s retired builder work (regular jobs, quotes, records, living costs) is a business. Common hobby examples IRD lists include occasional craft sales to family and friends, occasional market sales, and children or young people earning less than $2,340.

GST taxable activity is not the same as income tax “business”

This is the trap many side hustles miss. For income tax, profit intention usually decides whether you have a “business”. For GST, a taxable activity can exist whether or not you aim for a pecuniary profit. A club or association can still have a taxable activity if it supplies for consideration on a continuous or regular basis.

There is still a GST hobby gate. Section 6(3) of the GST Act says a taxable activity does not include, for a natural person, any activity carried on essentially as a private recreational pursuit or hobby. The same idea is extended to companies and other entities where, if a natural person did it, it would be a private recreational pursuit or hobby. IS 25/21 stresses the word “essentially”: enjoying the work is not enough. The activity must, in essence, be private recreation rather than organised commercial supply.

Taxable activity examples

Use these as pattern checks, not as bright line rules. Facts and degree decide each case.

Usually a hobby (not a GST taxable activity)

• Making ten teddy bears a year for family, with occasional cost reimbursement and no retail plan
• Selling upcycled furniture now and then because you enjoy the project, with no advertising and no profit aim
• One off Trade Me clear out of your own household gear
• Giving away produce with no consideration attached

Usually a taxable activity

• Regular building or trade work for customers, with quotes, records, and an organised pricing approach
• Ongoing online sales with stock, a storefront or website, and repeated customer supplies
• Short stay accommodation run as a continuous letting activity (separate from long term residential rent, which is generally exempt)
• A side hustle that moved from occasional gifts to retailer contracts, bulk materials, and planned production runs

Contractors and sole traders often sit on the taxable activity side once they invoice clients regularly. See GST for contractors basics and contractors vs employees. If income tax withholding also applies on invoices, use the withholding tax calculator.

When a hobby becomes a taxable activity

Many NZ home businesses started as hobbies. The change is usually a shift in how you organise the activity, not a single magic dollar figure. Signs include regular sales, advertising, dedicated tools or stock, retailer supply agreements, bookkeeping systems, and a clear intention to supply for consideration on an ongoing basis.

Preparatory steps alone (reading a book, vague plans, early chats with advisers) may not yet start a taxable activity. Concrete steps that begin a continuous project can. IS 25/21 walks through that line with development and startup examples. Ending an activity can also matter: temporary pauses for renovations may keep continuity, while a long closedown can mean the taxable activity has ceased.

If you are about to formalise registration, work through how to register for GST in NZ and the new business GST compliance roadmap.

What a taxable activity means for GST registration

On IRD’s registering for GST page, you must register if you are an entity that carries out a taxable activity and either:

• turnover was at least $60,000 in the last 12 months, or you expect it will be at least $60,000 in the next 12 months, or
• you add GST to the prices of the goods or services you sell.

No taxable activity means GST registration is not available on the normal path. If you do have a taxable activity and sit under $60,000, you can still register voluntarily. Detail on the threshold sits in the $60,000 GST threshold guide. Under threshold strategy is in should I register for GST voluntarily.

Once registered, you charge GST on taxable supplies made in the course or furtherance of the taxable activity, claim input tax on related costs, file returns, and keep records. Paperwork rules now focus on taxable supply information: see taxable supply information and the GST invoice generator.

Regular GST refunds without sales

Input tax claims only work where goods or services are acquired for making taxable supplies in a taxable activity. If returns show repeated refunds with little or no taxable sales, IRD can ask whether a taxable activity exists at all. That is a compliance risk, not a loophole. Keep contemporaneous evidence of your activity, intended supplies, and commercial organisation.

Other exclusions you should not confuse with hobbies

Hobby is only one exclusion. Section 6(3) also keeps certain other things outside taxable activity, including to the extent an activity involves making exempt supplies (for example long term residential rent or many financial services). Exempt versus zero rated treatment is covered in exempt vs zero rated supplies. Employees on wages are outside GST because salary and wages are not a taxable activity of the employee.

If your activity later slows or stops, cancellation rules matter. See cancelling GST registration. Late filing risk can be estimated with the late GST penalty calculator.

Practical checklist

• Write down what you supply, how often, and for what consideration.
• Compare that pattern to “continuously or regularly”, not to how you label the activity.
• For income tax, separately test profit intention and IRD’s hobby indicators.
• For GST, remember profit is not required, but a private recreational pursuit can still be excluded.
• Track rolling 12 month turnover against $60,000 once a taxable activity exists.
• Keep records that show organisation, sales, and costs if you treat the activity as commercial.
• Get advice from a tax agent if the facts sit in a grey zone (losses, seasonal work, land projects).

Wider orientation sits in the ultimate guide to GST in New Zealand. Publisher details and contact path are on About Us and Contact Us.

FAQs

What is a taxable activity in New Zealand?

Under the Goods and Services Tax Act 1985, a taxable activity is an activity carried on continuously or regularly that involves, or is intended to involve, supplying goods or services to another person for consideration. It can exist whether or not you aim to make a profit.

Is a hobby a taxable activity for GST?

No. The GST Act excludes an activity carried on essentially as a private recreational pursuit or hobby. Occasional sales for enjoyment, with no continuous or regular commercial activity, usually sit outside GST taxable activity.

Do I need a profit intention for a GST taxable activity?

No. GST taxable activity does not require a pecuniary profit. That is different from the income tax idea of a business, where profit intention is usually central.

When must I register for GST if I have a taxable activity?

You must register if you carry on a taxable activity and turnover was at least $60,000 in the last 12 months, or you expect it will be at least $60,000 in the next 12 months, or you add GST to your prices. Below $60,000 you can still register voluntarily if you have a taxable activity.

Can I claim GST refunds without a taxable activity?

No. GST registration and input tax claims rest on making taxable supplies in the course or furtherance of a taxable activity. Regular refund only returns with little or no taxable sales are a red flag for Inland Revenue.

Last verified 26 August 2026 against Inland Revenue hobby and business guidance, registering for GST, GST guide IR375, IS 25/21, and the Goods and Services Tax Act 1985. Ads may fund this free site. Not Inland Revenue. Not tax advice.