Reporting sellers to the ATO

[chinatrader*123]

Does anyone know if the ATO still requires Ebay to report sellers whose yearly sales are in excess of $10,000? I seem to remember an announcement from ebay a year or two ago, but I haven't seen anything recently.

[dylan11235813]

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@davewil1964 wrote:

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@dazzledayz wrote:

In addition to what Clarry has to say I should add that anyone not registering for an ABN is most likely losing money as a result.

Once you've got that magic number (ABN) you can start to claim every dollar you throw at your business and often a lot more.

There is no need to register for gst until you start earning above $75,000 pa so most should avoid the dreaded BAS.

You would be absolutely amazed at the amount of money you can deduct for business inputs and devaluation of plant.

Car - devaluation, petrol, repairs, rego, insurance etc (using the logbook method is best)

Computers and peripherals - ditto

Broadband connections

Home office - % of your rent/rates, insurances, upkeep etc (even a % of your lawnmower blades lol)

Stock - costs and devaluation

Materials and packaging

eBay costs

PayPal costs

Bank costs

AP costs

I'll stop here but the list is a lot longer and a chat with an accountant will prove very profitable.

The thing is though, a lot of these costs are ones you are already incurring but they are just money down the drain.

Once you go legit, all this cash deducts from profit.

Most won't be up for anything additional in tax at the end of the fin year.

You'll even learn to run a profit and loss analysis and this will help you with your pricing.

Centrelink don't mind if you run a business on the side either - they just require a monthly profit & loss statement.

When you claim all your deductions you'll probably not even lose any benefits.

If you're making an ok profit they may even reduce your reporting requirements.

In this day and age the taxation system is weighted towards business rather than wage earners.

You've already made the decision to be an e-entrepreneur so go legit and go for it!

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And all of those expenses are tax deductible whether you have an ABN or not.

Maybe your accountant needs to do some study.

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Haha. I'm not entirely sure that I can claim my entire internet costs...peopel use facebook at work don't they? I didn't have the internet before starting! The ATO seems to have access to way more info now, with the new system. It won't be long before the paypal data is prefilled.

[clarry100]

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@lyndal1838 wrote:

And if you are claiming deductions for expenses connected with your home office you open yourself to all sorts of problems if you sell the property in the future.

You can certainly be "legit" without an ABN and it will save you a lot of time and money in compliance costs.

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That is known as Capital Gains Tax (CGT).

And yes you are right, this does apply in the future if you sell your home and if you have claimed a proportion of your mortgage interest as a business expense. 

Your other houseold running expenses like insurance, power, water, phones, internet and such like do not affect CGT tho. Only the mortgage interest component does.

My tax accountant advised us NOT to claim the interest for this very reason as the tax benefit now is minimal but the negative impact into the future can be much greater.

[thecatspjs]

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@lyndal1838 wrote:

And if you are claiming deductions for expenses connected with your home office you open yourself to all sorts of problems if you sell the property in the future.

You can certainly be "legit" without an ABN and it will save you a lot of time and money in compliance costs.

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An ABN is compulsory if you have a turnover of $75K and must register for GST.

But for those who are "legit" under that amount what "lot of time and money in compliance costs" are you referring to ?   There are no significant compliance costs associated with an ABN that I am aware of.

Without an ABN:

-  you will not be able to register a business name 

-  you may find it limits the number of other businesses that may want to do buiness with you

- some businesses you deal with may be compelled to withhold 46.5% of any payments they make to you if you are unable to quote an ABN (a real downer if you are particular markets)

- you cannot reap some signficant tax benefits including the current small business sweetner - being able to claim up to a $20K deduction for business asset purchases

[dazzledayz]

Cats is spot on with this and an abn costs nada!

I understand the implications of home office CGT and do not claim myself though others may wish to.

As for anyone renting; they'd be nuts not to do it.

Internet connection can be claimed in total as it is an essential tool to business and the ATO does not mind.

Similarly, landline and mobile phones; essential for business and the ATO has no provision for logbooks so usage cannot be apportioned as private/business.

Again, an ABN will assist in supporting any deduction claims.

You do not have to register a business name but, if you choose to do so later on (say when you develop a website) you will need an ABN in order to register one.

And let's not forget that if you wish to open accounts with suppliers they will most definitely wish to record your ABN.

I would be interested in hearing what anyone may consider a downside to having an ABN?

[imastawka]

You don't get the three free re-lists with a business account.

That's a downer