topic Re: taxation in Selling

taxation

lmckec2009 — Wed, 04 Jun 2014 01:19:25 GMT

I believe ebay recently was asked by the tax dept to give details of sellers selling over $10,000 p.a. ( it used to be $20,000)

My postage is often $300-$400 per month if ebay includes the postage as a sales amount (now they have changed the rules)

Lots of us with much less than $10,000 actual sales will be on that list.

Thoughts please

Re: taxation

bigbrickshop — Wed, 04 Jun 2014 01:37:24 GMT

My thoughts ..

If your monthly postage costs are $300-$400 and you are buying stock to resell then you are operating as a business and your sales should be declared to the Tax Office (and Centrelink if applicable) regardless of what data eBay has to send to the ATO.

Re: taxation

putney32 — Wed, 04 Jun 2014 01:42:04 GMT

no matter what figure ebay report to the tax office, if you are a seller you would need to declare all your income to the ATO

that includes wages if you have a job

all sales and the income you have from charging your buyers postage.

you offset that with the cost of your item / ebays & paypal fees and the cost of your postage you buy from the PO as well as the cost of your packing materials etc.

thats it pretty simply put, your accountant will sort out the finer details for you but yes

postage received is an income

postage and packing purchased is an expenditure

Re: taxation

chameleon54 — Wed, 04 Jun 2014 08:15:20 GMT

With over 250 fixed price clothing items in your store and several hundred dollars in postage per month you would have a hard time convincing the ATO you where not running a business. SORRY but it is what it is.

P.S The new ten thousand dollar limit has been applied retrospectavily for the last two financial years.

Re: taxation

lane-ends — Wed, 04 Jun 2014 09:00:07 GMT

OP is not asking whether they have to pay tax or not, rather whether they may be on ATO audit list.

In short turnover as far as ATO is concerned is money coming in inclusive of post. Listings whether as post added or free post may make the difference as to whether you are on Ebays supplied list.

Ultimately if you are around the 10,000 mark you are unlikely to be audited on Ebay reasons alone. They know 10,000 raises not much profit. So if you have other income they will just want to see you have declared something. TBH I believe they reduced it to 10,000 mainly to "frighten" lots of small sellers to actually get in the habit of declaring.

If this frightens off a lot of potential little sellers from thinking it is all too easy, then all the better to reduce my competition.

I am sure most people would prefer not to on an audit list regardless of how up to date their records are.

Re: taxation

asporty — Wed, 04 Jun 2014 10:47:15 GMT

Surprising how many people jump for posting such as these trying to prove how honest and straight forward they are when dealing with ATO. In the course they forget what the original query was about, they just want to show off.

As for OP's query, I am also wondering about the same thing as ebay used to exclude postage costs in reporting to ATO. Would be worthwhile posing this question to ebay. Where did you hear about the lowering of limit?

Re: taxation

davewil1964 — Wed, 04 Jun 2014 11:14:49 GMT

It was advertised about a month ago. And a lot of members received emails to that effect. I assume you are not trying to divert attention by questioning the legitimacy of the notice.

Regardless of people trying to divert attention, if you make $1 from eBay or Facebook, or the markets, it should be declared as income if the purpose of the sale was to make a profit.

Re: taxation

chameleon54 — Wed, 04 Jun 2014 14:19:53 GMT

@asporty wrote:
Surprising how many people jump for posting such as these trying to prove how honest and straight forward they are when dealing with ATO. In the course they forget what the original query was about, they just want to show off.

asporty, Its not a question of "showing off " or "proving how honest I am ". People come to the boards seeking answers to questions which have legal reprucussions. If I am going to offer an opinion that people may act on, I do my best to advise what the legal position is. This does not mean I always agree 100 % with the ATO's position. My concern is if people offer their own interpratations of the law based on personal opinion of " what should be law " instead of " what is law " people may read and act on the advice. If the advice is innacurate it could be very expensive and traumatic for the people concerned. I have expressed my own personal opinion on other threads which is, if a low income family make a few dollars to pay the school fees, or a pensioner makes some money to have a snitzchel at the RSL on Thursday night, good luck to them. If some-one is running a proffesional business turning over a reasonable amount, they should declare it. Obviously my personal opinion does not meet every single letter of the law, and I try not to let it influence opinions or advice I express on legal matters. I am not a trained accountant, but over the years have done extensive study in business management including taxation matters. Many of the regular posters who take the time to answer questions are highly experienced people with a combined knowlege over a wide range of subjects. I will admit that some regulars become a little bit "comfortable" on the boards at times but in most cases I believe they share their experiences out of a genuine desire to assist other members rather than as a means of "showing off"

Re: taxation

asporty — Thu, 05 Jun 2014 00:05:22 GMT

Thank you for the long reply.

Do note that most people here were not even coming close to answering what the OP asked for, Which has still not been answered re the postage part. Ebay historically did not include postage as part of the delared income to ATO. So it was always left up to individual members to work it out. I have been declaring it as income and my postage costs as expenses. So will be interesting to see how ebay reporting to ATO changes.

As for the change in thresholds, no I did not receive an email from ebay and I don't give two hoots about it as my reporting income is way above that margin. Still, I would like to keep an eye on what happens re tax situation given that ebay does not pay a cent to ATO in taxes.

So, does anyone here have an answer to ebay including postage in reporting? I guess not. I sent ebay an email yesterday so lets see what they have to say about that.

Cheers till then.

Re: taxation

chameleon54 — Thu, 05 Jun 2014 01:00:47 GMT

Posts on other threads on this subject indicate that other members believe once the postage is built into the sale price it will be classed as income for ATO purposes and subject to taxation ( and expenses claims ) and included in the current ATO $10,000 threshold for ebay to report sellers income to the ATO. I am 98% sure this is right but hav'nt commented specifically before as I am not 100% certain. Lane ends made a very good point about the ATO using the $10,000 reporting limit to frighten and train people to be compliant. Is it possible that in future ( maybe even today ) the ATO will have the computing capacity to cross reference ALL income recieved by people and will be able to do much more detailed and accurate cross referencing Could they be training us up for the future digital ( cashless ) age when taxation and social security payments are managed with much more surgical precision than the blunt instruments currently used ? So long as the appropriate safety nets are in place this could actually be much fairer, but may stifle the incentive for those on benefits and low incomes to improve their personal financial positions through small scale ebay trading..

Re: taxation

ejholden1963 — Thu, 05 Jun 2014 17:24:30 GMT

From a high contact in a low place .... or a low contact in a high place ... (compliance)

The ATO require that the data provided by ebay is true & accurate, Ebay's Australian officer has to statutory declare to this.

The only way ebay is able to comply is based on the FVF charged during the requested period.

This is why data from no fee sites like Gumtree & particularly quicksales is not requested.

Prior to the introduction of shipping FVF, the data was based on sale value FVF.

It will now be provided on total (sale + shipping) FVF as it automatically includes ALL income stream.

A bit of a catch there for those who boost shipping costs ....

I was also advised of a little reminder ....

The Dept of Human Services (formerly known as Centrelink) has full information sharing with the ATO. Any non declared income, even "schnitzel money", that is uncovered is forwarded on to the Centrelink recovery compliance officers who have more staff & more severe penalties than the ATO.

Re: taxation

colic2bullsgirlore — Thu, 05 Jun 2014 21:16:31 GMT

"The ATO require that the data provided by ebay is true & accurate,

Prior to the introduction of shipping FVF, the data was based on sale value FVF.

It will now be provided on total (sale + shipping) FVF as it automatically includes ALL income stream."

I don't understand your rationale given that the ATO have not changed ebay reporting requirements save for the $ figure being reduced.

It would appear that the shipping component should always have been included in the income total whether ebay charged a FVF on that component or not is superflous as it was prior to the change and still is now considered income by the ATO.

If an ebay member sells a car on ebay then the FVF charged is $60. Whether the car sells for $1 or $100 000 is superflous except that the $100000 sale will mean ebay will inform the ATO because the reporting ceiling had been reached and surpassed.

So it would have been impossible for your statement to be true that prior to the changes ATO reported turnover was based on FVF charged on sale price only because the Motors final value fee has no correlation to the actual income figure.

AFAIK ebay does not differentiate between private vehicle sellers and commercial vehicle sellers. (if they did there would be one big loophole in the ATO reporting procedure previously ....and that ebay compliance officer must not have valued his sig on the stat dec)

Many sellers in the Motors section sell new grey import trikes and quads. If they sell 300 quads in a year @ 1000 each inc freight then their turnover is 300 000 and their FVF component is $18 000. How could the ATO (or ebay for that matter) extrapolate from the $18000 k FVF figure that the seller turned over 300k?

Throw a heap of 9.9% fvf for the spare parts sold on the same account and the yearly FVF figure has no correlation at all to the turnover......

Re: taxation

asporty — Sun, 08 Jun 2014 11:56:58 GMT

I checked with ebay and they have confirmed that all income will be reported to ATO now, sale+postage. Starting June they say.

Threshold is still $20,000 per year and ebay will report only sellers with incomes above this level. Seems like this is an ATO requirement and not set by ebay.

Re: taxation

davewil1964 — Sun, 08 Jun 2014 12:18:52 GMT

Go with it.

eBay has announced, however, that the reporting will be for $10k in any of the last 2 years.

Re: taxation

harley_babes_hoard — Sun, 08 Jun 2014 12:40:53 GMT

Actually the tax free threshold is 18,200 however ebay use to report sellers with sales over 20,000, which has now been reduced to 10,000. Yes ebay figures never used to include postage costs.

Re: taxation

asporty — Sun, 08 Jun 2014 22:13:15 GMT

Here is what I received from ebay a couple of days ago:

"the ATO reporting level has not dropped to $10,000.00. It is still at $20,000.00."

Can anyone refer to the date and wording of ebay announcement that mentioned drop to $10K.

Re: taxation

lane-ends — Sun, 08 Jun 2014 23:15:27 GMT

In principle ATO are interested in money turnover. That is money comming prior to any deductions (eg postage). The postage is now included in reporting mainly because the mechanism is now in place by Ebay to record it more easily. It was excluded before simply because it wasn't processed via the Ebay system.

Will this boost number of sellers having details given to ATO? Yes. But ATO will still only be auditing the same number of people. They just have a bigger sample to pick from. This may mean they will be able to pick up more obviously dodgy sellers rather than less dodgy ones. Keep in mind it will not just be Ebay activity alone that will get sellers on the audit list, it will be only one component in the deciding factor. Unless of course you are selling thousands and declaring nothing.

I still reckon that threshold is just a "shot across the bow" to let us know they are watching.

I wonder if your paypal account will ever be reported to ATO? Can't see how, but never say never.

Re: taxation

go-tazz — Sun, 08 Jun 2014 23:26:23 GMT

Here is the full "story",

It has been $10,000 for the last two finacial years, : ATO Online selling data matching

Re: taxation

ejholden1963 — Mon, 09 Jun 2014 00:11:40 GMT

G'day Colic,

It's all about ebay & protecting their "Only A Venue" defense, particularly in the US.

It's a worldwide issue and it's about the factual data that ebay compile as part of their normal operating structure. As a 3rd party to a transaction, anything they don't generate a fee on is not legally classed as fact and is open to dispute by the 1st Party, the seller.

The Statutory authorities who want their tax cut cannot enforce onerous reporting requirements on non-liable corporate entities, particularly foreign owned ones. Ebay is Swiss registered. Thus, the IRS, HMRC & ATO cannot force ebay to compile & report on data outside ebay's core stream.

So, while "It would appear that the shipping component should always have been included in the income total whether ebay charged a FVF on that component or not" the statutories couldn't force ebay to record & report on it.

You also have to look outside Au & it's piddly 5,000,000 registered users & look at the US & UK with their 50,000,000+ active registered sellers & the $Billions being moved around the globe every year.

Ebay has developed & instituted roll out of it's shipping FVF policy in the US, the UK, & now Au.

For ebay, the results are worth the development cost & dramas.

They have fixed the fee manipulation issue.

They ignore the seller "noise" & weather any buyer reaction because Amazon proved the sky will not fall.

They enjoy reporting higher turnover figures & eventually higher profits to Wall St.

But ..... of utmost importance to ebay, they show the Statutories that they are working with them & being a good Global Corporate Citizen, thereby getting Congress, 46 US States, HMRC and that piddly little mob downunder, the ATO who want that tax cut, off their back & putting the onus back on the Statutory & the relevant seller.

Ebay remain in the clear & protect that critical "only a venue" defense for without it, all their carefully crafted legal protection in the US dissipates and they become totally vulnerable to the noise ....

Re: taxation

ejholden1963 — Mon, 09 Jun 2014 00:32:31 GMT

Onya go-tazz ....

I've been trying to find that page ....

the data owner tracks the activity of registered sellers
or the administrative or financial cost of collecting the data exceeds the benefit the data may provide, the data owner may be excluded from the program.

One of the reasons why quicksales became a fee free site ..... It cost more to comply than the fees were worth .....

lane-ends,

I thought I gave a good enough hint in my original post .....

I was also advised of a little reminder ....