Do I need to pay GST and if so, can I avoid it?

[marjak15]

Hi, I've got a business on ebay where I can turnover over more than $75,000 (gst threshold), but my income from $75000 turnover is probably only around $20,000. The bulk of my turnover is in what I originally paid for the items I resell, and postage. 

I would like to make around $40,000 a year from my business, but paying gst might make my business not worthwhile. I would have to turnover $150,000 to make $40,000 a year and from what I've heard, the GST on that would be around $15,000 making it not worthwhile. 

Can I take postage off plus what I originally paid for the items when calculating my turnover? If I can't, are there any ways around paying GST ie. setting up multiple businesses etc? Are there possibly exceptions for my situation where I don't earn much compared to the turnover I make?

Thanks for any help

[chameleon54]

The OP mainly sells used Play Station type games and accessories, , vinyl records and a few other non related items. Most prices range from $10-$20.  The most likely source of this stock is garage sales or markets. It would be near immpossible to import these items to resell, due to postage costs and PAL regional issues.

It is highly unlikely the OP will be able to buy the stock from GST registered sellers, so will not be able to claim input tax credits on stock. Basically they will be taking a big hit in a competative market by registering for GST. Current sales are quite good, indicating the OP may be realistic in thier quest to reach the $75,000 GST threshold of sales.

I still believe the two stores in different names approach is the most suitable option in this situation .

[bluebudgies]

They may not have anyone whose name they can put the second store under, and if they start a second ID it might take a loooong time before they can get the selling limits raised to where they can sell $75K.

[lyndal1838]

Having 2 IDs on ebay will not be of any benefit....ebay notifies the ATO of all accounts owned by any one person and the sales are added together.

[bluebudgies]

I was referring to chameleon's comment about having two stores in different names. I agree that two IDs under the same name would be a waste of time.

[chameleon54]

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@bluebudgies wrote:

They may not have anyone whose name they can put the second store under, and if they start a second ID it might take a loooong time before they can get the selling limits raised to where they can sell $75K.

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We started our second store around 3 years ago. We contacted ebay CS and linked the new store to our existing store which is unlimited. ( yes they where in different names but same ip address. ) The new store was issued with an $80,000 per month sales limit right from the start, before we listed the first item. It only took around 30 feedbacks and a couple of months to start selling without buyer resistance and within 6 months it surpassed the established stores monthly sales for the first time. 

Admittedly I was putting most effort into the new store, with fresh listings etc. but still an interesting exercise in how quickly a new store can gain market traction without selling limits.

[bluebudgies]

It might depend which rep you speak to when you ask for higher limits. I know someone who started a new ID about the same time as your second store and I don't think they were quite as stringent with limits on new IDs as they are now. I think they were allowed to sell 100 straight off, whereas now it's only 10 or so. I'm sure it's possible for a really successful seller like the OP to do it though - if they've got someone whose name they can do it in. If they've got an 'other half' they might already have their own income. I doubt two of them would be living on the $20K they mentioned that they're left with out of $75K sales.

[clarry100]

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@lyndal1838 wrote:

Having 2 IDs on ebay will not be of any benefit....ebay notifies the ATO of all accounts owned by any one person and the sales are added together.

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Lyndal,

What Chameleon (and I) were talking about above was not simply opening a new userID in the same name. In that case it would likely work as you described.

In our case the 2nd ID is in my wifes name. Yes we are both at the same physical street address and operate from the same IP address.

But we each have our own ABN, TFN and business entity and also our own separate PayPal and bank accounts into which payments go. So far as the ATO are concerned these are two independent and legal entities for tax purposes, both Income Tax and GST.

So in effect we split our incomes (not equally of course) and each lodge our own separate tax returns.

And if ever (hopefully one day) either one of us approaches the $75K GST threshold then we will independently register for GST and collect/pay it.

[lyndal1838]

Yes Clarry, I was answering bluebudgie and I misread the post....I thought he was talking about 2 IDs with the same owner.

I am well aware that you and chameleon have accounts in your name and your partners.

[clarry100]

And my sincere apologies too. I did not read back far enough in the thread to fully comprehend the thrust of your post.

I see now what you meant.

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@lyndal1838 wrote:

Yes Clarry, I was answering bluebudgie and I misread the post....I thought he was talking about 2 IDs with the same owner.

I am well aware that you and chameleon have accounts in your name and your partners.

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[jdredz]

If any sales are overseas, as they are gst free, do they come off your total sales?  Could you possibly sell 50,000$ in Australia and 50,000$ overseas in a 12 month period and avoid paying any gst?