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The Australian Taxation Office (ATO) has issued Draft Ruling MT 2004/D3, which sets out its views with the respect to the definition of enterprise. The ruling identifies specific exclusions to the definition that includes activities done by employees and activities done in pursuit of a recreational pursuit or hobby.xml:namespace prefix = o />
The ruling explores the meaning of “an adventure in the nature of trade”, for which there is no definition in the GST Act or other taxation legislation. Ordinarily, the term ‘business’ would encompass trade engaged on a regular or continuous basis, while an adventure or concern in the nature of trade may be an occasional or one-off transaction that does not amount to a business but which has the characteristics of a business deal: para 170. Therefore, there are wide-ranging circumstances where ‘occasional or one-off’ activities still fall within the meaning of enterprise and entitlement to an ABN. Isolated, one-off property transactions are examples of such circumstances including land originally purchased with a view to resale at a profit and subdivisions of land.
Once an activity is characterised as an “enterprise”, the entity carrying on the enterprise may either be required to be registered or entitled to elect to be registered for GST.
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