In most jurisdictions this would be considered a change of use by the local council so it is to them that you should complain.
Regarding the smoking, do you have your “non-smoking agreement” enshrined in a by-law. If not you can still look at state health regulations regarding smoking at or near a business.
Under section 21 of the standard Qld tenancy agreement (below) the tenant need special permission from the owner to use the property as anything else than a residence. If the owner hasn’t given that permission, then they have grounds for eviction
You also have to ask if this business is using separately metered water and if its presence affects your insurance.
Sir Humphrey is right to say that plenty of people use their homes or garages for small business – I am doing it right now – but one of the key questions is if that business has any impact on residents and, especially, if there in increased foot traffic through the scheme because of it.
That said, there can be compromises. Free hair-dos for the residents, perhaps? I have heard of a townhouse where one owner illegally kept a race horse in his yard – but repaid the flexibility of his neighbours with hot betting tips.
21 Tenant’s use of premises – ss 10 and 184
(1) The tenant may use the premises only as a place of residence or mainly as a place of residence or for another use allowed under a special term.
(2) The tenant must not –
(a) use the premises for an illegal purpose; or
(b) cause a nuisance by the use of the premises; or Examples of things that may constitute a nuisance –
• using paints or chemicals on the premises that go onto or cause odours on adjoining land
• causing loud noises
• allowing large amounts of water to escape onto adjoining land
(c) interfere with the reasonable peace, comfort or privacy of a neighbour of the tenant; or
(d) allow another person on the premises to interfere with the reasonable peace, comfort or privacy of a neighbour of the tenant.