I'm currently working on a web application on the side to turn into a business one day.
I probably spend upwards of 20-30 hours a week working on it (I would like to spend more but not ready to quit my full time job yet) but the thing is we’re in the process of marketing and building it, so its not actually turning a profit. Like a lot of startups out there, the idea requires a critical mass before it can be monetised.
Anyway, the question is, I’ve spent a bit of money on things like new computer equipment, buying domain, server space, software licenses, ads to attract users, travel etc.
I want to be able to claim these on my tax return as a business expense. The question is would the tax office accept that this as a business instead of a hobby?
Since I don’t turn a profit yet, how would I differentiate this case from say another person who just pretends to be starting a business so that they can claim some “business expenses”.
At the same time, there must be tons of startups, in particular in the tech space, who has costs at the start and may not make money for years - a lot may fail and never make money.
PS - I'm in Australia if that helps.