Are You a Home Based Business-Dec05

7/29/2019 Are You a Home Based Business-Dec05

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0037/Draft Reports/Guide for HBB

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Are you a home-based business?

Home based business are defined as a business that has no other f ixed business address other thanthe home, although business activity may or may not occur at that location.

The importance of home based businesses

All levels of Government support and acknowledge that Home Based Business are the highest growthsmall business, with the number of these business growing 24% between 1999 and 2001 in SA, 13%higher growth than other small business. At recent research survey in the Northern region showedhomes based businesses were the largest employer group, and were significant businesses with 11%generating revenues in excess of $500,000.

This issue will become more significant, given the high growth in the number of these businesses andthe reality that the recent research found the average age of the business to be 10 years, and thatover 90% of them were not intending to move their business out of their home.

The use of this guide

This guide is designed to help home-based businesses to establish themselves as viable, sustainableand successful businesses. It provides basic information about the critical issues important to homebased business, with contact details for the next steps to address these issues.

Any information in this guide is not advice for a specific business or situation. In every instance,

prospective or current business owners should seek further information and advice relevant to their needs.

The information in this guide is correct at the time of publication but details regularly change and usersmay find that some contact details will alter.

Home based business may be

Art, craft and design

Trades, building and construction

Business and property services

Personal services

Consultants and contractors

Professionals

Family day care

Food and cateringTourism and home accommodation

Franchisees



Licences, Registration & Approvals

Business Licences

Some types of small businesses require

licences, permits or approvals for their

operation. The need for these approvals is

dependant on the nature of their operation

and the regulations of their industry.

The Business Licence Information Service

has up to date information regarding the

requirements for Australian, State and Local

Government Departments. This free serviceis accessed through Business Enterprise

Centres, Regional Development Boards and

the Department of Trade and Economic

Development. (see details at the end of this

guide)

To find out what is required for your

business, simply provide the kind of

business to the above organisations. They

will provide a print out, including actuallicence forms.

Once you have obtained information about

the licence required, you must submit

applications and fees directly with the

department or agency nominated.

For occupational licensing (plumbers,

builders, travel agents etc.), you will need to

contact The Office of Consumer and

Business Affairs. (see contact details at the

end of this guide)

Business Name Registration

Under The Business Names Act, you are

required to register any trading name for

your business that is not your own name.

The purpose of registration is to provide a

public register that identifies persons

operating a business. It is not for the

purpose of protecting names or conferring

rights to use names.

It is an offence under the Act to operate a

business under a name that is not

registered.

The registration of business names is

administered by the Office of Consumer and

Business Affairs, or OCBA (see details at the

end of this guide).

Before applying to register a business name,

you can check availability with OCBA.

Registration of a business name is generally

for 3 years and is then renewed every 3

years. There is also a fee involved with

registering a business name.



Taxation Issues and Home Based Business

The following is a brief overview of taxation information pertinent to home based business. For moredetails, please refer to the Australian Taxation Office (ATO) publication “Tax and the home-basedbusiness” (product ID NAT 10709-03.2004) available at any ATO office or Australian Governmentbookshop.

Home Based Business Issues

Ensure that you are carrying on a business,

and not just a hobby. Taxation issues do not

apply if you are a hobby – seek advice from

the ATO regarding this determination.

If you are in business, a home based

business is generally entitled to claim similar

expenses to other businesses. There are 2

types of expenses relating directly to home

based business:

1. expenses relating to the area of your

home used for business, and

2. travel expenses between your home and

business

The first category includes:

Occupancy expenses such as rent,

mortgage, interest, house insurance, rates,

and

Running expenses such as electricity, gas,

cleaning and office furnishings

Calculations for these expenses are

demonstrated on the next page.

For travel expenses, a business may be able

to claim costs of trips from home for

business purposes if your home is your

principle place of business or you have an

area of your home set aside exclusively for

business.

General Business Tax Issues

All businesses need to register for an

Australian Business Number (ABN).

Businesses may also need to register for tax

obligations, including a tax file number

(TFN), good and services tax (GST), pay as

you go (PAYG) withholding and fringe

benefits tax (FBT).

As with other businesses, a home based

businesses tax obligations may include:

• Income tax

• Goods and Services Tax (GST)

• PAYG withholding

• Superannuation for employees

• Submitting reporting and payments,

such as Business Activity

Statements, Income Tax Returns

• Capital Gains Tax (see the next

page)

Home based businesses will still have the

same record keeping requirements as other

businesses.

It is recommended that any homes based

business seek advice and assistance from

the ATO or a tax professional to ensurecompliance with all taxation requirements.



What expenses can I claim?

You may be able to claim the following expenses:

What you can claim Home is your principal place of business andyou have a homework area

Home is not your principal place of business but youhave a homework area

You work at homebut don’t have ahome work area

Occupancy ExpensesCost of owning or renting the house(rent, mortgage, interest, insurance,rates)

Yes No No

Running Expenses

Cost of using a room (gas, power)

Business phone costs

Decline in value of office equipment

(desks, chairs, computers)

Decline in value of curtains, carpets,

lighting, etc.

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

No

This table has been reproduced from the Australian Taxation Office publication “Tax and the home-based business”.

For further information about home business tax obligations and the calculation of expenses asallowable deductions, please refer to the Australian Taxation Office (ATO) publication “Tax and thehome-based business” (product ID NAT 10709-03.2004) available at any ATO office or AustralianGovernment bookshop.

Capital gains tax issues

Generally, there are no capital gains tax implications when you sell your main residence. However,you may have capital gains tax obligations when you sell your main residence if you have used anypart of your home to produce income.

For home based business, this means that there may be capital gains tax implications on the sale of your main residence if:

• your home is your principal place of business, and

• you have a home work area set aside exclusively for business use and is clearly identifiable

as such (for example, a doctor’s surgery located in a doctor’s home

The ATO have a information sheet titled – “Main Residence Exemption – the effect of using your hometo produce income while still living in it” that contains further details about calculation of this tax.

If there are capital gains tax implications regarding the sale of your home or your business, it isstrongly recommended to seek advice from the ATO or from a tax professional.



Local Councils – Their role with home based businesses

All councils have the role of planning for future development in their area and the role of thedevelopment process authority. Thus, councils need to be informed of home based business activityto assist in their duties with these two roles.

Can You Operate a Business From Home?

You can operate a small scale business from your home, provided it does not detract from theenjoyment of the area for your neighbours and it complies with State legislation, particularly theDevelopment Regulation’s definition of “home activity”.

Is a Council Application Necessary?

No approvals are required under the Development Act if the home business fully complies with thecriteria established by the definition of a “home activity” in the Development Act.

However, other legislation may need to be considered depending on the type of business and thenature of its operations. For example, a food preparation business, a business involving the use andstorage of hazardous chemicals, or a business that uses more than 10% of the home’s floor-space asa dedicated work area.

Internal structural modifications that would be defined as “building works” will require a buildingapproval even if a development application is not required.

Regardless of whether a planning approval is required or not, all home based businesses that employstaff have all the obligations of other employers, including the requirement to provide a safe workenvironment and to meet the requirements of the Disability Discrimination Act 1992. The ProductivityCommission has found the cost of complying with the DDA should be quite small for manyorganisations.

Council can advise you in respect to these issues.

What Sort of Activity Can Cause a Problem?

Please keep in mind that a “home activity” should not create a problem for your neighbours. Counciloften receives complaints from residents about activities which:

• create repeated, prolonged or loud noise;

• increase traffic in the street with delivery vehicles or customer car parking;

• produce smoke, smells, fumes, dust, etc; and

•

operate outside normal working hours (eg in the range of 9 am – 5 pm for some activitieswhich may have noise or traffic implications).

Mechanical repairs, panel beating, spray-painting, and activities which involve noisy machinery do notgenerally fit into the definition of a “home activity”.

You must at all times operate within the above guidelines to be considered a “home activity”. If youcannot comply with these requirements, you will need to look at non-residential premises to establishyour business or speak to Council’s planning officers to consider preparing and lodging aDevelopment Application for your business.



What’s an Appropriate Home Business / Home Activity?

A home business / home activity must comply with the following home activity criteria:

Home Activity Definition What it may mean?

A business that does not detrimentally affect theamenity of the locality or any part of the locality

For instance:• Vehicle traffic to and from the house or

parking should not exceed that whichcould ordinarily be expected from aprivate home

• the parking of the vehicles, as a result of the activity should not unreasonablyexceed that which could ordinarily beexpected from a private home

• noise generated by the activity and/or fumes emitted should not unreasonably

exceed that which could ordinarily beexpected from a private home

A business that does not require or involve any of the following:

• assistance by more than one person whois not resident in the dwelling

• use (even if temporarily or permanently)of a floor area exceeding 30 square

metres

• the imposition on the services providedby any public utility organization of anydemand or load greater than that which isordinarily imposed by other users of thatservice in the locality

• the display of goods in a window or aboutthe dwelling or its curtilage

• the use of a vehicle exceeding threetonne tare in weight

• For instance, several residents of thehome can be employed by the homeactivity definition, but only one non-resident

• This requirement relates to “floor area” inthe home, rather than the area external to

the dwelling

• For instance, not overloading the localelectricity supply network. Some foodrelated activities may require theinstallation of a grease trap involvingapproval by SA Water’s Trade Waste.

• Do not display goods related to the homeactivity outside or within the home whichcould be construed as a public display

• Ensure the property of the home activitydoes not contain a vehicle exceeding

three tonne tare in weight



In addition to the Schedule 1 of the Development Regulations, Councils would normally need toconsider Schedule 3 – Acts and Activities which are not Development, in particular Clause 1 relating to Advertising Displays. The following type of advertising display does not require a Development Application.

Advertising Display What does this mean?

1. The commencement of an advertising displaycontaining an advertisement:

a) (not applicable)b) (not applicable)c) that is on enclosed land or within a

building and is not readily visible fromland outside the enclosure or the building;or

d) that is display for the purpose of identification, direction, warning or other information in relation to a detached,

semi-detached, row or multiple dwellingor residential flat building, subject to thefollowing conditions:

I. that the advertisement area is notmore than 0.2 square metres; and

II. that the advertising display- A. does not move; andB. does not flash; andC. does not reflect light so

as to be an unduedistraction to motorists;and

D. is not internally

illuminated; andIII. that not more than two such

advertisements are displayed inrelation to the same building.

Advertising displays (eg signs) less than 0.2metres that comply with the mentioned criteria arenot deemed to be development and therefore, donot require approval. This is consistent with therequirement of the home activity definition. Larger advertising displays (including name plate signs)which do not comply with the mentioned criteriawould require Development Approval by Council.

Activities Involving Food

If you intend to establish a business which involves the preparation, transportation or storage of foodfor sale, you will be required to seek a separate approval from the Council’s Environmental HealthDepartment.

Activities Involving Storage and Use of Hazardous Chemicals

If you are using and storing hazardous chemicals, you will need to comply with the DangerousSubstances Act 1979 and Regulations which specify the license requirements for business. For specified substances the Australian Standards apply. For more details you can access the regulationson www.safework.sa.gov.au or contact your local Council and speak to an Environmental HealthOfficer.



What if Your Neighbour Complains to Council?

Council recognises that many residents become concerned about home business as they believe anybusiness is prohibited. Council is often called upon to explain to neighbours and other local residentsthat small scale home businesses are both legitimate and encouraged in residential areas providedthat they don’t cause actual detriment to neighbours’ residential lifestyle.

Ideally you will have advised your neighbours that the home business operates with Council’sknowledge as a home activity, or has been approved by Council.

In practical terms, Council will consider whether the impact is any worse than that typically associatedwith residential activity, such as:

• operating personal office equipment (computers, fax machines); or

• operating small power tools; or

• preparing meals; or

• growing flowers or vegetables.

If Council believes from the complaint that you may be adversely affecting a neighbours’ quality of l ifein respect to the residential character and ambiance of their neighbourhood through operating outsidethe home activity, Council will indicate whether you need to modify the operation to conform to thehome activity definition, or whether you need to make a development application for an expanded or different operation.

What Happens if I can’t Comply with the Home Activity Definitions?

If any of the home activity criteria are not met, then you are operating outside of the DevelopmentRegulations’ definition of home activity, therefore the activity may be regarded as “development” in itsown right and not something that is ancillary to the residential use of the land.

In this event, a formal Development Application would have to be made to the Council for assessmentunder the provisions of the Development Act and associated Development Plan. Council’s processingof such an application may involve giving public notice to neighbors. Council has the right to approveusually with conditions, defer or refuse your Development Application.



Useful Information & Support can be found at…

BUSINESS LICENSING OFFICE OF CONSUMER AND BUSINESS AFFAIRS (Occupational licensing) Business and Occupational Services Level 3 Chesser House91 – 97 Grenfell Street Adelaide SA 5000 Builders: 8204 9644 Plumbers, Gas Fitters and Electricians: 8204 9696 Security and Investigation Agents: 8204 9686 Land Agents: 8204 9686 Conveyancers: 8204 9686 Second hand Vehicle Dealers: 8204 9686 Travel Agents: 8204 9686 SA Country Callers: 13 18 82 Website: www.ocba.sa.gov.au

BUSINESS REGISTRATION OFFICE OF CONSUMER AND BUSINESS AFFAIRS Business Name Registry Ground Floor, Chesser House91 – 97 Grenfell Street Adelaide SA 5000 Telephone: 1300 138 918Website: www.ocba.sa.gov.au

CORPORATIONS AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION Level 8, 100 Pirie Street, Adelaide SA 5000 Info line: 1300 300 630 Website: www.asic.gov.au **Information available on company obligations, directors’ duties, risk management, investment andother general tips for small business.

EMPLOYMENT (laws, awards, acts) EQUAL OPPORTUNITY COMMISION Level 2, 45 Pirie Street, Adelaide SA 5000 Telephone: 8207 1977 Freecall: 1800 188 163 TTY: 8207 1911 (callers with hearing or speech impairment) Website: www.eoc.sa.gov.au



SAFEWORK SA Level 3, 1 Richmond RoadKeswick SA 5035 Telephone: 1300 365 255 Mobile & Interstate: 8303 0400 Website: www.safework.sa.gov.au **including Occupational Health & Safety, Awards and Enterprise Agreements etc

EXPORTING AUSTRADE (Australian Trade Commission) Ground Floor, 50 Hindmarsh Square, Adelaide SA 5000 Export Advisory Service : 13 28 78 Telephone: 8202 7811 Website: www.austrade.gov.au AUSTRALIAN INSTITUTE OF EXPORT 136 Greenhill Rd, Unley SA 5061 Telephone: 8300 0085 Website: www.instex.com.au

EXPORTERS CLUB North West AdelaideBuilding 16, 35-37 Stirling Street, Thebarton SA 5031 Telephone: 8443 7688Website: www.exportersclub.net

Onkaparinga209 South Rd, Morphett Vale SA 5162Telephone: 8326 6511Website: www.exportersclub.net

FAIR TRADING / UNCONSCIONABLE CONDUCT AUSTRALIAN COMPETITION AND CONSUMER COMMISSION 14th Floor, 13 Grenfell Street, Adelaide 5000 Information: 1300 302 502

Adelaide Office: 8213 3444 Website: www.accc.gov.au OFFICE OF CONSUMER AND BUSINESS AFFAIRS Level 4, Chesser house91 – 97 Grenfell Street, Adelaide 5000 Telephone: 8204 9777 SA Country Callers: 13 18 82 Website: www.ocba.sa.gov.au



FINANCIAL ADVICE SMALL BUSINESS EMERGENCY SERVICE Telephone: 1300 360 306 **This service operates weekdays from 9.00am to 3.00pm only (access to financial, business andemotional advice including referrals to a network of accountants and lawyers. GENERAL

DEPARTMENT OF TRADE AND ECONOMIC DEVELOPMENT

Small Business Officers: 1800 188 018General Telephone: 8303 2400Website: www.southaustralia.biz

BUSINESS ENTERPRISE CENTRES (SA) Hotline: 13 18 91 Website: www.becsa.com.au **Metropolitan Businesses – contact a Business Enterprise Centre nearest you

EASTSIDE BEC31 The Parade, Norwood SA 5067Telephone: 8132 0377Website: www.eastsidebec.com.au

INNER SOUTHERN BEC

Morphetville Racecourse79 Morphett Rd, Morphetville SA 5043Telephone: 8294 1181Website: www.isbec.com.au

INNER WEST BEC

Adelaide University Research ParkLevel 1, 30-32 Stirling St, Thebarton SA 5031Telephone: 8159 8700Website: www.bec.org.au

NORTHERN ADELAIDE BEC

95 Womma Rd, Elizabeth West SA 5113Telephone: 8256 0910Website: www.nabec.com.au

SOUTHERN SUCCESS BEC

5/209 South Rd, Morphett Vale SA 5162Telephone: 8326 6511Website: www.ssbec.com.au



TEA TREE GULLY BEC

571 Montague Rd, Modbury SA 5092Telephone: 8397 7417Website: www.becttg.sa.gov.au

WESTERN AREA BEC

6 Todd St, Port Adelaide SA 5015Telephone: 8440 2440Website: www.wabec.com.au

INTELLECTUAL PROPERTY / INNOVATIONS (Patents, trademarks and designs) IP AUSTRALIA Level 10 Origin Energy House 1 King William Street, Adelaide SA 5000 Telephone: 1300 651 010 Website: www.ipaustralia.gov.au

LABELLING / QUALITY PRODUCT SAFETY STANDARDS AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

14th

floor, 13 Grenfell Street, Adelaide SA 5000 Information: 1300 302 502 Adelaide Office: 8213 3444 Website: www.accc.gov.au

DEPARTMENT OF HUMAN SERVICES (Food Labeling) Food Section, Environmental Health BranchLevel 2, 50 Grenfell Street, Adelaide SA 5000 Telephone: 8226 7107 Website: www.dh.sa.gov.au/pehs/food-index.htm **Also refer to your local council environmental health officer

OFFICE OF CONSUMER AND BUSINESS AFFAIRS 8 West Thebarton Road, Thebarton SA 5031 Trade Measurement: 8234 2036

Product Safety: 8152 0732 SA Country Callers: 13 18 82 Website: www.ocba.sa.gov.au

SAI GlobalPREFERRED RESELLER: Standards & Technical Publications 45D Sussex Terrace, Hawthorn SA 5062 Telephone: 1300 654 646 Website www.standards.com.au



LEGAL ADVICE LEGAL SERVICES COMMISSION OF SA 82 – 98 Wakefield Street, Adelaide SA 5000 Advice Line: 1300 366 424 General: 8463 3555 TTY: 8463 3691 (callers with hearing or speech impairments) Website: www.lsc.sa.gov.au

www.lawhandbook.sa.gov.au

PLANNING / BUILDING / ZONING Contact your local council, or…

PLANNING SA Roma Mitchell House 136 North Terrace, Adelaide SA 5000 Telephone: 8303 0600 Website: www.planning.sa.gov.au

RETAIL AND COMMERCIAL TENNANCY OFFICE OF CONSUMER AND BUSINESS AFFAIRS Level 1 Chesser House 91 – 97 Grenfell Street, Adelaide SA 5000 Telephone: 8204 9533 SA Country Callers: 13 18 82 Website: www.ocba.gov.au TAXATION

AUSTRALIAN TAXATION OFFICE (Federal) 91 Waymouth Street, Adelaide SA 5000 Tax Reform Information Line: 13 24 78 (PAYG, GST, ABN, Activity Statements) Business Information Line: 13 28 66 (Business Inquiries on accounts, lodgments & payments) A Fax from Tax: 13 28 60 Tax Basics: 1300 661 104 (Free Seminars for people who are new to business) Superannuation: 13 10 20 Excise: 1300 657 162 (Diesel fuel grants/rebates etc)

Translating and interpreting Services: 13 14 50 TTY: 1800 806 215 (for people with a hearing or speech

impairment) Website: www.ato.gov.au

www.taxreform.ato.gov.au



WORKPLACE HEALTH AND SAFETY WORKCOVER CORPORATION SA 100 Waymouth Street Adelaide SA 5000 Telephone: 13 18 55Website: www.workcover.com

SAFEWORK SA Level 3, 1 Richmond Road Keswick SA 5035 Telephone: 1300 365 255 Mobile & Interstate: 8303 0400 Website: www.safework.sa.gov.au

Are You a Home Based Business-Dec05

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