Tax office contact eBay about my store because its soled over $10t in the last year

[0411james]

Hi 

A couple of weeks ago eBay sent me a message that the ATO contacted them about my store(0411james)

The main reason is that it has generated more than $10000 in sales

I mainly use the money to buy more stock couldn't live on it

The kicker is that I have never declared it to centre link 

Would like to turn into a business they will get you a loan on a centre link benefit

Thanks

James

[dazzledayz]

James you do need to report any income to Centrelink but it won't cost you any benefits.

All they will ask you to do is submit a profit and loss statement periodically.

You can even register an ABN if you wish (probably a good idea).

The joy of going upfront is that you can claim a heap of things against profit that you normally would not think of.

Just a few:

Internet connection 100%

Postage expenses 100%

Car expenses (you will need to do a logbook but only once every 3 years?) or % business use.

car depreciation % business use

Insurances % business use

Rents or rates %

Power %

Water  %

ebay fees 100%

PayPal fees 100%

Stock cost 100%

Stock writeoffs 100%

Equipment costs 100%

etc etc etc

Your $10k earnings will probably represent a financial loss by the time you add everything up!

Don't worry abiut that though as any well run business minimises their tax.

Also, if you are on Centrelink benefits, you may even be able to talk to them about some small business options.

I think there was a scheme for startups a while ago - NEES or something?

[daydreams_12]

Centrelink need to be advised of all earnings whether they affect your entitlement or not..  Hard to believe that your accountant has not notified you of that fact.  I think I would be sorting out what you have at present before borrowing anything.  You may find that you owe Centrelink for some over payment. 

[clarry100]

The deductions that Centrelink allow are not the same as those allowed by the ATO.

So even if you don't have to pay any tax you can still end with a reduction in Centrelink allowances as they may see your profits differently.

The centrelink Profit and Loss statement shows you all the deductions they will allow. You will need to ask them for clarification on some of the items to ensure you get it right. It is your responsibility to get it right.

If you have not declared your sales income to both the ATO and to Centrelink both of them will not be happy, especially Centrelink as they may have overpaid you based on what you did declare from other sources, if any.

When they do find out (and they will) you will be asked to explain why you have done what you have. If the explanation is unacceptable then you can expect trouble. Now that ebay will be reporting your sales to the ATO this information will automatically be passed to Centrelink. They both share information.

It's always best to declare all sales income, your accountant should have told you this up front.

[joethenuts]

mate even if you earn $10 profit for the whole year and you are buying to sell must go to your tax return and must go to centrelink , over $10.000 is reported to the ato automaticaly .but anything under $10k is still taxable ,if you use your profits to buy stock ,thats fine but eventuly ,you will have to stop buying and your tax will be huge as you wont be spending for stock and your profit margin will be 100% less expences . see an accountant.,   I am sure you get questions every so and so from centrelink did you earn any money in so and so time. [if you buy and sell anywhere a shop a market on the net, its an income.

[digital*ghost]

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@dazzledayz wrote:

Also, if you are on Centrelink benefits, you may even be able to talk to them about some small business options.

I think there was a scheme for startups a while ago - NEES or something?

---

That's the New Enterprise Incentive Scheme, and it is still available (my cousin is currently on this scheme), and what basically happens is that you receive the Centrelink benefits as normal, and any profit the business generates does not affect the payment rate (though if it works out that tax is payable, you're still obligated to pay that). You study as well, so earn a certificate in business at the end of the year. 

It's a pretty serious scheme, though, I spoke to someone about it a couple of years ago and they told me it's primarily geared towards start-ups that haven't started yet (which I had) and that if I participated in the scheme, I wouldn't be allowed to trade as a business until I had met certain requirements, so you have to be prepared to cease selling until you tick some boxes (everything from written council approval if it's a home-based business, to appropriate licensing, registrations and insurances - most are the sort of thing that in all reality should be done, but are often overlooked or deferred, some aren't wholly necessary, just bureaucratic procedure). 

[chameleon54]

James, did you purchase the stock on ebay  ( you may be able to track details through paypal payments ) or keep receipts if purchased from somewhere else ? If not you may have a little bit of trouble convincing the ATO and Centrelink that this is what you did with your profits. As others have mentioned, it may be best to talk to an accountant.

[lane-ends]

If this is your only income then odds are actual profits realized will be below threshold and will make no difference. I send centrelink (for carers pension) my income tax return and profit.loss statement each year, often submitted way late. Never been enough to reduce payment. As long as you submit something centrelink will go by whatever tax return is (though be careful its not final taxable income as things like say super contributions aren't covered).

If you are nowhere near tax threshold ATO wont audit you and centrelink wont do anything as long as its all on tax return and you supply a profit/loss statement. I had to do 4 year update in arrears once, and they didn't make a fuss as it was on my tax return, so it obviously wasn't hidden centrelink had simply not asked for an update and was still using 4 year old figures.

By the way everyone who sold over $10,000 got that email

[asporty]

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@lane-ends wrote:

By the way everyone who sold over $10,000 got that email

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If you mean that email about a week ago, then it went to most sellers as it was a SPAM. I checked it out with ebay.

[lane-ends]

That info gets reported to ATO every year