httpwebwitch - 2:35 pm on Jul 2, 2010 (gmt 0)
In Canada, a business is "any activity that you do for profit". This applies even if you don't have any profit left after expenses at the end of the day. A net loss is still profit... the negative kind.
The moment you put an affiliate link on your personal blog: KAPOW! it's suddenly a business.
We even have a special tax form for it. T2125 [cra-arc.gc.ca].
Doesn't matter if, in your heart, you think of it as a hobby. The government says, money moves toward you, therefore it's a business. Then the word "hobby" is merely an emotional distinction, not a taxation category.
Running a business with a net loss is one of the many ways a salary-earner can lighten their income tax burden. Treating hobby projects that generate income as legit businesses is usually beneficial, because true "hobbies" always cost more than they earn.