Julez has his specialist expertise in Information Technology and has emigrated from Germany with his wife Joelle. Joelle wants to take care of her young children and sets up a business making fine chocolates using her knowledge and experience from the family business back in Belgium. Joelle buys the necessary plant and equipment including a fridge, table, mixer, stove top, trays and storage containers, and shelving racks, knives, moulds, spatulas, thermometers, colourful foils, cellophane, ribbons, boxes, computer and printer for labelling, which are set up in one of the bedrooms in her home. Joelle makes her first batch and is delighted with the taste and texture. In a matter of days, Joelle has developed six different chocolates and then she builds a client base and sells the chocolates to different restaurants once a week. Joelle also decides to sell her chocolates at the markets and invests in a collapsible stall and tables. It is a family event visiting the markets and selling the chocolates each weekend. Joelle is very artistic and sculpts novelty chocolate decorations to draw customers to her stall and buy the chocolates. Julez is pleased sales are quick and suggests expanding their activities by moving the plant and equipment into the larger family room. Now Joelle can increase capacity, have more table space with marble bench tops and introduce a large sink. In addition, on the weekends when there are no markets, Joelle introduces a one day sculpting class (up to10 people) to novices, given she had so many compliments at the markets for her novelty sculptures. She is lucky and receives a feature article in the Gourmet Traveller magazine.

PART 1 Is Joelle carrying on a business? Refer to the 8 factors established from Ferguson's case to make your decision.

1. Introduction - Identify and advise the relevant tax ruling which outlines the 8 factors

2. Discussion - Address the 8 factors - use the following table to discuss whether the factors point to a business or not

3. Conclusion - Weigh up the factors, and decide on balance, whether Joelle is carrying on a business.

PART 2

What 3 considerations do you see impact most when transitioning from a hobby to a business and why?