When does eBay report our earnings to the ATO?

[kitty-kat-kollection]

Meaning, I heard that once you earn over a certain amount, eBay automatically reports your income to the ATO.

That's fine, but I can't find anywhere that specifies what the amount is. I thought it was $10,000 but then I heard it was $20,000.

Also, do they report your gross earnings, before things like postage costs and fees are deducted? I assume they do and then you're responsible for declaring the postage, stock costs and fees as tax deductions?

Thank you! (I only opened my store in late July)

[k1ooo-slr-sales]

you will have to wait for someone like digital*ghost to come along to clarify specifics.

I should have put a disclaimer at the end of my post, like the one I’ve included on this post.

Disclaimer: I have no accounting or tax training and my post contains general information only.  It is the responsibility of members to obtain professional accounting/tax advice from a qualified professional if they are unsure of their tax obligations.  All advice on public discussion boards should be treated as general in nature.

[k1ooo-slr-sales]

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@kitty-kat-kollection wrote:
Yes, so we are supposed to declare our ebay calculated earnings (turnover, or gross income) to the ATO and then claim deductions back off our tax like cost of stock, ebay store fees, postage costs, final credit fees, paypal fees, and even stuff like the cost of storing our stock? (I bought 15 big tubs from Kmart to keep most of my items in, for instance).

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now you are getting into stuff that only an accountant or tax advisor can answer with certainty.  Members can let you know what they do, but “I read it on the eBay discussion boards” will not cut it with the ATO if you get audited.  Any payments for professional advice would be deductible.

Disclaimer: I have no accounting or tax training and my post contains general information only.  It is the responsibility of members to obtain professional accounting/tax advice from a qualified professional if they are unsure of their tax obligations.  All advice on public discussion boards should be treated as general in nature.

Spoiler

I would not not mind if any other posters copied and pasted my disclaimer into their posts on this and similar threads.

[k1ooo-slr-sales]

**post edit*

now you are getting into stuff that only an accountant or tax advisor can answer with certainty, OR the ATO.

If you get advice from the ATO over the phone request that the advice be emailed to you as well (just in case).

Disclaimer: I have no accounting or tax training and my post contains general information only.  It is the responsibility of members to obtain professional accounting/tax advice from a qualified professional if they are unsure of their tax obligations.  All advice on public discussion boards should be treated as general in nature.

[eol-products]

Your best to go to the tax website and do some reading. It does not hurt to also check the tax return forms for the year and you can see how they want you to fill each section out. 

[countessalmirena]

... or even something more non-committal than that, as some people may have certain qualifications, training or experience, but not be willing to post that information - for various reasons.

Disclaimer: I may or may not have accounting or tax training and my post is made without the claim of any such qualification, experience or training, as consumer-to-consumer information only.  It is the responsibility of members to obtain professional accounting/tax advice from their qualified tax accountant/registered tax agent or to contact the ATO personally if they are unsure of their tax obligations.  All advice on public discussion boards should be treated as general in nature.

[chameleon54]

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@kitty-kat-kollection wrote:
Yes, so we are supposed to declare our ebay calculated earnings (turnover, or gross income) to the ATO and then claim deductions back off our tax like cost of stock, ebay store fees, postage costs, final credit fees, paypal fees, and even stuff like the cost of storing our stock? (I bought 15 big tubs from Kmart to keep most of my items in, for instance).

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I use an accountant to lodge my tax, but claim EVERYTHING to do with running my ebay business. This includes......

Stock purchase cost, My mail box at the PO, My internet and phone costs including connection fees & call fees, My bank charges on accounts related to business, Pencils, paper, ink etc for office supplies, Storage including plastic tubs and shelving. PLEAE NOTE - Fittings such as shelving may need to be depreciated over several years, rather than claimed instantly, depending on value and depreciation laws at the time ( which change regularly as the Govt. sometimes uses accelerated depreciation to stimulate the economy ) .

I also claim any taxi fares and an allowance for my car. You can choose to claim a set number of KM. ( around 5000 from memory ) or run a log book to work out how many km. you use going to garage sales and the PO. I sometimes claim accomodation costs if I look for stock in my travels and in the past used to occasionally fly interstate to look at potential stock purchases. And yes I did buy pallets of stock from interstate from time to time so definately legit. I would also claim the freight costs on the pallets of stock.

You can claim a depreciation allowance for your office or garage used to store stock, BUT BEWARE as this can have implications for capital gains tax when selling your property, TREAD VERY CAREFULLY ON THIS ONE !!!!

I claim all ebay & paypal fees and you can claim for any educational courses associated with your business. If you sell crafty stuff and attend a TAFE couse on basket weaving.....Wallahh !!! ...... Tax deduction, ...............as is any business course or books related to running your business. I also claim for newspapers and you may be able to claim fashion magazine subscriptions if you sell clothes, but best to talk to an accountant about that one.

And last of all I claim my accountants fees. Money well spent and highly reccommended if running a business that may grow over time.

[digital*ghost]

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@chameleon54 wrote:

You can claim a depreciation allowance for your office or garage used to store stock, BUT BEWARE as this can have implications for capital gains tax when selling your property, TREAD VERY CAREFULLY ON THIS ONE !!!!

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I'm renting and have an entire room dedicated to storing stock etc, so I claim a percentage of my rent (i.e. the percentage of space as a percentage of the rent) as a business expense, but agreed, if you own your house, this can get a lot more complicated and it's often not a good idea. In reality about half my house is dedicated to my business, but there's only that one room that is 100% dedicated to it, so that's all I claim for). 

To the OP- You can claim anything you spend money on in order to run your business, but you do need to be careful about things that also have personal use. Like the rent above, if you use your computer, internet access, phone, car, electricity, and so on to run your business, you can claim those as expenses, but only the percentage that is used for business purposes. If you pay $50 per month for your internet access (which you need to operate your store), but half the time it's for personal use, then you can only claim $25 of that as a business expense. 

For things like internet usage and phone costs, which usually have a fixed monthly cost, it can be a good idea just to keep a log for a little while of how much time is spent using those things in a business and personal capacity, then you can work out the general percentage that can be claimed as a business expense.

A simple, running spreadsheet is also a good idea, to keep track of revenue, refunds, expenses etc. I keep a daily log, then tally them periodically to a simpler format, which I then use for tax purposes. eBay's figures represent gross revenue in it's most basic form, but won't always be accurate because I believe they just total all sales, regardless of whether they were cancelled or refunded for any reason. 

I also have an account that holds the majority of my business revenue, and I earn interest on that which also has to be declared as income (just thought I'd mention that as there a lots of these little things that people don't think about, whether it's an expense like a pen, or an income stream like the interest). 

[kitty-kat-kollection]

Excellent, thank you!

Yes, I already decided NOT to claim anything related to my actual house like electricity or my computer, as I own my apartment and really don't want to be paying capital gains tax whenever I sell.

I didn't know I could claim transport costs to get stock! Does that mean I can claim my Uber fares to the Salvo shops I can't get to by public transport? (I don't drive).

[davewil1964]

Utilities don't incur CGT, nor does the internet or computer depreciation,so you can legitimately claim those. Just not your mortgage payments.

I don't know how you'd go with Uber fares, as they would tend to eat up your profit, and possibly attract special attention from the ATO.

[kitty-kat-kollection]

Oh, and yes, I have a spreadsheet set up with monthly tabs for my sales - the cost to buy the item, how much it sold for, how much the postage cost, what the ebay fees were, what the paypal fees were, and then the profit.

What I have YET to do is add up all the receipts of my stock so I can then really get a proper idea of my full overall profit. No point earning $10,000 gross on ebay if I've bought $12,000 in stock (just an example by the way!)

Oh, and my interest-earning bank account, that's always declared to the ATO. I've had to declare bank interest since I was about 25 years old.