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17th Mar 2022, 06:30 PM #1Senior Member
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Recommended home insurer if your hobby turns a profit?
G'day all, I sometimes make a bit of cash from my cnc, and it's just moved home with me from the workshop I had it at. I have an ABN though I earn very little from it.
Can anyone recommend an insurer that won't bend me over for continuing my occasional side business at home? Budget direct won't insure me anymore if I do any sort of business at home, and I would like to be above board on everything.
The CNC incidentally has about a $50,000 replacement cost (new) and I'd like to insure it too. My manual lathe and mill probably come to almost 10k, then there's the tooling.........
FWIW I work at another job full time so this is very much a side income, but perhaps one day I could get say 5k-10k a year from it, and maybe more depending on how much time I allocate.
Thanks!
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17th Mar 2022, 08:28 PM #2Most Valued Member
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In the same boat if I find anything I’ll let you know.
And if I can make north of $30/yr without a CNC and without really trying or advertising I’m pretty sure 5 to 10 with a commercial grade CNC will not be difficult at all.
Speaking of which, I need some templates cut from some 10mm ply if you’re interested.
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17th Mar 2022, 08:33 PM #3Diamond Member
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I can see you unneccesarily creating strife for yourself here, stay right away from the notion that you make any money out of your hobby.
If you have a full time job that is perfect cover. It is quite feasible for you to have 100k of toys for you to pursue your home machining hobby, insuring them along with your other contents should not be a problem.
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18th Mar 2022, 12:59 AM #4Most Valued Member
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And if I can make north of $30/yr without a CNC and without really trying or advertising I’m pretty sure 5 to 10 with a commercial grade CNC will not be difficult at all.
Once you set yourself up to run as a business, it really opens a can of worms. About 4 different types of insurance required, Public Liability, Product Liability, Theft, plus another I can't think of. The cost is a LOT more than normal H&C insurances.
All your hobby equipment should be able to be covered under your home and contents insurance. If they ask, as to WHY an expensive CNC machine, reply, "I like to play with stuff like that!!!" It'll be up to them to prove it's a business, just because you like to make things for "friends", doesn't mean it's a business.
Then, if/when the local council finds out, you're not allowed to do this, that, or another, as it's a residential area. BTDT
Stay in the HOBBY field for as long as you can. Once you've been paid enough to cover the costs of machines, equipment, tools, material, etc, THEN and ONLY then consider it a business.
DAMHIKT.
KrynTo grow old is mandatory, growing up is optional.
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18th Mar 2022, 08:31 AM #5Most Valued Member
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The problem with the quaint idea of not declaring things is that it just plain doesn’t work.
A commercial CNC will have a replacement cost far in excess of the item limit coverage on nearly every contents policy in Australia
If you then ask for it to be written in separately (in the same way you normally have to write jewellery and watches and high end bikes etc onto it separately) they may refuse as it’s a machine that could be classified as a tool of trade, or business related.
Assuming you do get it written onto a contents policy as a listed/declared item, if you do have a total loss event in the shed like a fire and go to make a claim for replacement the claim will likely be denied once they search the ABN register and find out the policy holder has an ABN (keep in mind the ABN register is a matter for public record and freely available to search by anyone with an internet connection). It is also likely that any other claims such as under your building policy will be denied also because there is some level of proof that a business was being run at that property, which is generally not allowed under most home and contents policies.
There are things that trigger additional diligence on claims, listed or declared items is one of those things..
So.. it’s a nice idea saying declare it as a hobby only..
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18th Mar 2022, 11:10 AM #6
Maybe get rid of the ABN and declare it as a hobby.
I agree most every council won't let you run a machine shop from home.
Also if there is a fire etc and the accessor see's 100 to 1000 parts stacked up he is going to know it's a business, as there sent out to look for an excuse not to pay you.
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18th Mar 2022, 02:53 PM #7Golden Member
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I was under the impression that a hobby is allowed to generate some income up to a certain point before requiring ABN’s etc?
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18th Mar 2022, 04:03 PM #8Member: Blue and white apron brigade
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$75000.
Of course if you don't register you cannot claim back any GST paid on inputs.
It gets harder to claim hobbyy expenses as a tax deduction
Maybe have a read of this
https://business.gov.au/Planning/New...ss-and-a-hobby
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18th Mar 2022, 04:58 PM #9Senior Member
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Thanks for this yes for these reasons I'm not really interested in lying about it being a hobby. I'll either be forced to do it as a hobby and bow out of doing it for money or I'll do it legitimately. I would be interested in those plywood parts but unfortunately not for a while it seems as I need to do all this red tape hah.
The council may not approve formally of a machine shop but I intend to sound insulate the hell out of it so basically you won't know. If the neighbours don't complain and why would they if I don't bother them I'll be fine. I'll be far less noisy than the guy next door who regularly does drumming practice with his band. I only intend on doing it for say 4 hours a week to begin with at most (actually running the machines, so maybe 3 hours setup + programming time). At 80/hour charged out that's a decent cash injection. If it moves beyond these hours and neighbours get hissy it will be worth it to hire out an external space.
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18th Mar 2022, 11:32 PM #10Most Valued Member
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Just to clear up some some misinformation..
75K is the point at which you MUST register for GST reporting. That refers to business turnover that is ex GST, NOT what you put in your pocket as a wage.
GST reporting thresholds are not relevant in answering Neds question.
Under ATO guidelines, as a hobby you are only supposed to gift or on sell at cost of material. It specifically doesn’t mention financial return on labour. It is a hobby, not a business.. In the strictest sense of the ATO reporting, if you make something and charge profit on material and/or labour costs you should be reporting it as income on your tax return. Lucky the cash economy doesn’t exist…
A business charges labour and margin on parts or materials.
In either instance.. if you make something and sell it on, even as a hobby for cost of material, you are on the hook for warranty and any other statutory requirements the purchaser has under consumer law..
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19th Mar 2022, 12:00 AM #11Member: Blue and white apron brigade
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19th Mar 2022, 09:14 AM #12Most Valued Member
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Jd3dprints - do you use an accountant?
This is one of those questions that they can likely provide some guidance on as it relates to your income and protection of it.
They likely have relationships with insurance brokers and can recommend someone appropriate to discuss with.
Steve
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19th Mar 2022, 12:46 PM #13Most Valued Member
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19th Mar 2022, 01:00 PM #14Member: Blue and white apron brigade
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One of the things I "do" is I provide advice about dust extraction, mainly for Mens sheds.
I charge nothing for the consultation but if I go to a country shed I ask for a contribution towards the cost of travel, usually just fill my tank with fuel - although these days that can add up to a bit.
I have thought about making it into a business and charging for my time but give I dislike anything to do with business operations and that I would then need to take out professional indemnity insurance etc - the thought of all this in my retirement puts me off and so I have continued it as a "free" service.
I realise its unlikely any dust related "injury" could be result from the advice I give - especially as my advice is very conservative - but I was wondering what if any my obligations would be.
The same would apply to anyone selling a product or service - if they "fail" and the buyer sues, you could be up for a lot of money.
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19th Mar 2022, 04:03 PM #15
No insurance company is going to cover you for running a part time manufacturing business from home without council approvals (read the fine print) Council wont approve manufacturing from home in normal residential areas full stop. The exception is if you live on a rural property or a residential property with 4a zoning.
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