Yes Hamsy what you say is correct according to my tax accountant.
If you are under $75K in total sales then you dont need to worry about GST at all. That's where we are.
Our accountatnt makes sure we remain under the income tax free thresholds (posted above) so we don't end up having to pay income tax either. So no worries there either.
But none of this takes away the requirement to declare ALL your income. There is a very fine line between hobby and a business venture. ATO would judge that based on your activities not you. And they will likely lean towards business venture. Therefore hobby is very difficult for you to prove to them. If it even smells like you are hoping to make profit then it would be judged a business activity, regardless of if/not you have an ABN.
If you are working a 9-5 job then every dollar from ZERO income in your selling activities will be added onto this and will be subject to tax.
If selling is your only income activity then as long as your taxable income remains under the thresholds (posted above) then you will have to pay ZERO income tax.
It's pretty easy for a smart tax accountant to legally keep you under the thresholds if you are already under the GST threshold. So IMHO you are better off to declare all your sales income and still pay ZERO tax than to hide it from them and be possibly caught out later on. If you don't declare it and they find out then they will likely impose penalties as well as ask for any back taxes due and you will then be on their radar for the future as well. You don't want that as they will never let go.
Our accountant told us its very unlikely they will come after us in any way (as in desktop audit) as we are only small fry and not subject to tax anyway. But the fact remains that they can still do it. And we are still legally obliged to declare all sales income.
So if ebay report you to the ATO for being over the $10K threshold then they will know about you. If they can't match this up with a tax return from you then you are likely to get a please explain letter, especially if you already have a 9-5 job on file as well. Our tax accountant advised us that it is always the wise approach to declare ALL income and then he will make sure (by legal means) that no tax is payable. That's why we pay him. Then everything is open and above board and you give them no reason to be on your case.
So I would urge anyone who sells on here to speak to a good tax accountant about all this, especially if you have received one of these emails recently and have not declared any sales income to the ATO. I don't want to hear about any of my selling colleagues getting into hot water with the ATO.
