Australian Tax Office requirements

[wests1952]

Some time ago Ebay informed everyone that it must advise the ATO of all sellers that had sales in excess of $20,000 pa.  Recently I heard that the ATO has asked Ebay to advise them of all sellers that have sold in excess of $10,000 pa.  Has anyone else heard of this and if so when did Ebay send out the advice.  Thanks.

[lyndal1838]

You will only be in trouble if you have not been declaring your income to the ATO.  Do you realise that the ATO request is for last year's income, not this years?

All ebay income has to be declared but by the time you actually do your tax and take into account your expenses you may well find you have not made a taxable income.

If you are in any doubt you should see an accountant.....it may mean you have to amend last year's tax return.

If you had a gross turnover of over $20000 that is the reason your details were given to the ATO...ebay has no access to your expenses etc.  All they can do is report your gross turnover, which is all the ATO can go on until you declare your expenses on your tax return.

[kittyshome4]

Thanks, I know my expenses and I'm no where near the $18,200 threshold, which is why I never declared anything.

It will be a pain to collect all the information though for 12 months.

[lyndal1838]

While you know your expenses the ATO doesn't.

You need to do a tax return declaring all your income including such things as postage and then you declare your expenses again including such amounts as postage....one cancels out the other to get your taxable income.

[cq_tech]

If you're operating on a hobby basis as opposed to a business, can things like partial telephone expenses, computer expenses and packing consumables be used to offset one's income? Then of course, there's also the cost of one's stock.

[lyndal1838]

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@cq_tech wrote:
If you're operating on a hobby basis as opposed to a business, can things like partial telephone expenses, computer expenses and packing consumables be used to offset one's income? Then of course, there's also the cost of one's stock.

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The quickest answer to that CQ  is if you are buying stock to sell on ebay you are more likely to be classed as a business rather than a hobby seller.   I think you would have to convince the ATO that it was just a hobby.

But hobby or business, you should be able to claim postage costs, packaging and computer costs.  Not too sure about the telephone costs....how many calls would you need to make for a hobby?  And computer costs would have to be commensurate with the amount of use it had in relation to your ebay selling as against private use.

If there is any doubt about whether it is business or hobby I think a visit to an accountant would be in order....they can often come up with some claims that the average person would not think of.

[gbal1332]

Yes, that is correct. eBay notified me last week that it would be sending details of people with sales over $10,000 in 2014 financial year.  text as follows:

The Australian Taxation Office (ATO) has issued eBay with a formal request for information relating to sales by Australian eBay members who sold over $10,000 worth of goods on eBay.com.au during the tax year ending June 2014.

The ATO has requested the following information in relation to affected sellers:

• Account name
• Account identification
• First name
• Last name
• Business name
• Address
• Telephone number
• Date of birth
• Email address
• Registration date
• Number of annual sales transactions
• Value of annual sales transactions
• Number of monthly sales transactions
• Value of monthly sales transactions
• Internet Protocol (IP) address
• Seller status - tier type
• Store indicator

eBay is legally required to comply with this request for information. We confirm that disclosure will be made to the ATO by 29 May 2015 and in accordance with required timeframes.

For further information regarding the ATO, please visit www.ato.gov.au. Affected sellers may also wish to consult with their professional legal or tax adviser.

Regards,

The eBay Team

[073niceguy]

I have never sold anything on ebay only buy, but i have a question, say you only see between 1-4 items on ebay/yr, really just as a hobby, do you still have to tell the tax man?

What about if you got those items from eg. your auntie that gave them to you as a gift, how do you prove to the tax man how much you bought them for??

Say you sell many items on ebay, is your accountant really going to go through all your items and check exactly how much you bought them for, and how much you sold them for? what happens if you have no official evidence of how much you bought an item for?

how does the ATO prove how much of it was profit or not?

what if you bought something at a flee market and they cant give u a receipt, how does the max man work that one out??

thanks guys.

[073niceguy]

what happens if you sell say 2-3 items a yr and make say $500 profit, and you wont tell the tax man, whats the MAXimum fine you could get? has anyone here been fined by the ATO??

Say you do your taxes on your actual JOB but you dont tell your accountant about ebay at all for the above example, what are the chances the ATO would find out and chase you up??

What if they did find out and you told them look im a courier i work 80hrs/wk and i sold 2-3 items on ebay a yr as not even a hobby, but i had a few things i got from an old aunt and i sold them because i didnt want them anymore, would the ATO still fine you?

would it be in the hundreds of $$ or thousands?

does anyone seriously know??

thanks

[lyndal1838]

You don't half ask a lot of questions do you, niceguy?

You are asking about the difference between selling as a business and selling as a hobby.

To be on the safe side you should declare all income on your tax.  If it is hobby selling you will not pay tax but if it is a business you may pay tax, depending on your other income and your expenses.

The example you gave of selling something given to you as a gift....that is hobby selling and you don't have to know what it cost in the first place.   You did not buy it.   If you sell some second hand clothes or shoes or furniture or ornaments that have been kicking round your house then it is also classed as hobby selling and no need to know what you paid for it.

However, if you go to markets or garage sales and buy something with the intention of selling it on then you are classed as a business seller.

You can leave all the receipts in a shoe box and let your accountant sort them out but it will cost you a fortune. If you are intending to sell as a business I would advise you to see an accountant and get some advice on what sort of records he wants you to keep.

A lot of small sellers keep a spread sheet of costs and revenue.    Even an exercise book should do the trick in the early days.

If you pick up something at a garage sale or market just keep a record of what you paid and where you bought it....a receipt is ideal but not always possible.  There are plenty of other expenses you can claim as a business seller, which is why I suggested seeing an accountant right at the start.

Believe me, you don't want to run foul of the ATO.  Many, many years ago my husband had an investment bank account which he closed to invest elsewhere.  He forgot about the account as the book had fallen out the back of a drawer.  The following year the book surfaced and there was a significant amount of interest to be added to it.   He took it to the accountant who submitted a revised tax return for the previous year.  We were gobsmacked when assessment came back....there was the tax payable, a fine for late lodgement of a tax return, a fine for tax avoidance, and some other penalty which I can't remember now.  All in all, by the time we paid the accountant we had lost all the interest in the bank book and it also cost us.

All this was in the days before the ATO had all their data matching tools and the accountant made the comment that we should not have amended the first tax return....we should have just put the interest in the current year's return.

It is far easier to get it right first time.

[dark_parade]

Do you have to declare income if you have an ABN ON EBAY or even if you are selling nic knacks that you no long what from around the house? Anyone know what the declaration amount is for FY 14/15?