What is a business?

There is no clear definition of "business". The Australian taxation legislation is drafted in highly detailed and complex terms. However, the best a draftsperson could come up with was the following definition:

business includes any profession, trade, employment, vocation or calling, but does not include occupation as an employee.

This definition appears in s 995.1 of the Income Tax Assessment Act 1997 (Cth). The same definition is adopted by s 6 of the Income Tax Assessment Act 1936 (Cth). Section 195.1 of a New Tax System (Goods and Services Tax) Act 1999 (Cth) also adopts the same definition.

Of course, there is a vast body of judicial authority dealing with businesses. However, there is no single accepted definition, nor, could there be, as what constitutes a business will vary from one case to the next.

When dealing with the sale or purchase of a business, the “business” is treated as being everything required to earn income which the vendor has been enjoying. Of course, this will vary from business to business. Sometimes, the physical aspects of a business will be its essence. For example, in selling a service station or a hotel, the essential asset to be transferred will be the physical premises, whether the vendor’s rights are by way of ownership or lease.

See What is a business?