ATO & eBay selling bullion, paying tax
- Thread starter miniroo
- Start date
willrocks said:
I don't think I drew a distinction between the two but I meant to focus on the various laws that are reversing presumption of innocence in various matters of finance and taxation (and now anything that falls under the umbrella of "terrorism") in relation to the topic of this thread.
Some more info:
It probably goes something like this:
1. Match eBay data with ATO/ABN/Company records.
2. If eBay member does not have a business or company then:
2.1 If gross eBay earnings >= $10K and < $20K then send warning letter (hobbies vs business)
2.2 If gross eBay earnings >= $20K and < $40K then review previous tax returns, bank records. Request an explanation if required
2.3 If gross eBay earnings >= $40K then audit individual
...
1. Match eBay data with ATO/ABN/Company records.
2. If eBay member does not have a business or company then:
2.1 If gross eBay earnings >= $10K and < $20K then send warning letter (hobbies vs business)
2.2 If gross eBay earnings >= $20K and < $40K then review previous tax returns, bank records. Request an explanation if required
2.3 If gross eBay earnings >= $40K then audit individual
...
If you have a accountant and mentioned that you sell on Ebay he or she would have told you that the threshold is $10,000 AU. As once you hit the $10,000 mark you are no longer considered to be a hobby or clearing out some used items. You are now considered to be a online business. I've been selling for many years on Ebay a life time of odds and sods ( non bullion ) and it may take another lifetime to get rid of it, but I've been well aware of this ATO law for many years. I do this outside of my regular work. You need to be wary, if you look in your Ebay summary total sales are listed in US dollars and this can pose a problem for those who are unaware. I would say that being marginally over, you may incur a small slap on the wrist in a form of a warning. If you have a partner or are married set up another account in her name and sell from two different accounts. This means that there are 2 separate Paypal accounts, plus separate bank accounts, plus credit cards so both accounts are totally unique. That way you can stay under the threshold. I feel for you, as a fair percentage is lost in Ebay, Paypal fees plus postage costs. Gee if you sold a caravan or a car on Ebay that could easily put you over the $10,000 threshold in one foul swoop.
The $10,000 threshold is just a commonly used yardstick by accountants - it's not legislated anywhere.
From the ATO: https://www.ato.gov.au/Business/Starting-your-own-business/Business-or-hobby-/
Other tests I've seen applied are whether or not you market your services - e.g. I'm often contacted by people wanting to advertise on Silver Stackers as a "private" or "hobby" dealer, but they're not registered for AUSTRAC as "oh it's just a hobby". Nope. If you're paying for advertising it's not a hobby. The main ones that can affect people selling bullion "as a hobby" are whether you intend to make a profit, and engage in repeatable activities (e.g. steady stream of flipping on eBay). If you buy product with the sole intention of reselling it you're carrying on a business even if you don't want to be. The ATO will probably argue that if you're flipping your rolls of 1oz Goats as singles on eBay you're carrying on a business, as you bought silver with the sole intention to flip it for profit, repeatedly.
While on the subject, if you turned over more than $75,000 in a year and you're found to have been carrying on a business rather than a hobby, you've now also failed to register for GST- the $75k threshold for GST registration is revenue based, regardless of whether or not you're selling input taxed items at 0% GST (e.g. 999 silver bars). I've run into some smaller dealers before who didn't register for GST simply because they thought they didn't have to if they didn't collect any, or as long as they didn't make more than $75,000 of GST sales (alongside of say $500,000 of GST-free sales). Doesn't work that way.
From the ATO: https://www.ato.gov.au/Business/Starting-your-own-business/Business-or-hobby-/
Other tests I've seen applied are whether or not you market your services - e.g. I'm often contacted by people wanting to advertise on Silver Stackers as a "private" or "hobby" dealer, but they're not registered for AUSTRAC as "oh it's just a hobby". Nope. If you're paying for advertising it's not a hobby. The main ones that can affect people selling bullion "as a hobby" are whether you intend to make a profit, and engage in repeatable activities (e.g. steady stream of flipping on eBay). If you buy product with the sole intention of reselling it you're carrying on a business even if you don't want to be. The ATO will probably argue that if you're flipping your rolls of 1oz Goats as singles on eBay you're carrying on a business, as you bought silver with the sole intention to flip it for profit, repeatedly.
While on the subject, if you turned over more than $75,000 in a year and you're found to have been carrying on a business rather than a hobby, you've now also failed to register for GST- the $75k threshold for GST registration is revenue based, regardless of whether or not you're selling input taxed items at 0% GST (e.g. 999 silver bars). I've run into some smaller dealers before who didn't register for GST simply because they thought they didn't have to if they didn't collect any, or as long as they didn't make more than $75,000 of GST sales (alongside of say $500,000 of GST-free sales). Doesn't work that way.
I stoped using Ebay many years ago, but if you sell coins or bars many of you sale will be at loss.
It is easy to prove; just try to sell a 1 oz gold bar with profit after fees and postage. You suppose to pay tax on you profit, not on you turnover, so if they consider your activity as business I would try to claim for small losses on my eBay sales if I were you.
It is easy to prove; just try to sell a 1 oz gold bar with profit after fees and postage. You suppose to pay tax on you profit, not on you turnover, so if they consider your activity as business I would try to claim for small losses on my eBay sales if I were you.
goldpelican said:
Hi there, you are wrong about your opening statement- " The $10,000 threshold is just a commonly used yardstick by accountants - it's not legislated anywhere." Let's put things into context. Miniroo had breached the $10,000 threshold with Ebay online trading. What has happened, once Miniroo had breached the limit Ebay sent him a generated message requiring him to notify the ATO.
Here is the link from the ATO about " Online selling data matching program protocol "
https://www.ato.gov.au/General/Gen/Data-matching-program-protocol/
There is a lot to read, but in a nutshell all online selling activities can be data matched and online business have to hold data.
Here's a small except from the ATO data matching protacol which mentions the $10,000 threshold applied by ATO's own laws.
Data elements
The ATO endeavours to work collaboratively with data providers to ensure that requests for data are easily understood and reasonable in terms of costs of compliance.
The following data elements, where available, will be requested from the online selling site, in relation to all online sellers with sales of $10,000 or greater in the 2013-14 financial year:
Account name
Account identification
First name
Last name
Business name
Address
Telephone numbers
Date of birth
Email address
Registration date
Number of annual sales transactions
Value of annual sales transactions
Number of monthly sales transactions
Value of monthly sales transactions
Internet Protocol (IP) address
Seller status tier type
Business / Store status indicator yes/no
Even those members on this forum who trade in excess of $10,000 per per annum on Silverstackers just be wary, as this would also be considered as online trading. And the ATO could also data match accounts or data from in relation to transaction activities. Just play by the rules.
In essence, I agree mostly in part with the rest of what you said. Particularly about flipping your rolls of 1oz Goats regularly on Ebay. That in it's self sends up a red flag. As for those just getting rid of Odds and Sods you don't have much to worry about. Most of us have accumulated a lifetime of junk could spend a lifetime to off load it. That's what Ebay and Gumtree are good for. As for Miniroo, just be honest with the ATO about your activities.
Cheers......
I said legislated. A variable annual data matching threshold is not legislation. Last year it was $20,000 that they used as a data matching threshold. So anyone that felt that staying under $20,000 because that's what the ATO use on eBay sales last year would have been caught out this year.
SilverDJ
Well-Known Member
silversearcher said:
No. Ebay will automatically send the details to the ATO. The user does not have to contact the ATO.
Ebay have been ordered/asked by the ATO to provide all the details of anyone who earned more than $10k in a year, and they are complying with that request.
SilverDJ
Well-Known Member
goldpelican said:
Yep, spot on.
One could argue though that anyone who was deliberately trying to run a "business" on ebay and stay under that threshold, then they aren't even worth the effort to go after anyway, the tax is pitiful in the scheme of things. Almost by definition $10k-$20k in sales in a year would not be a serious attempt at a business.
Heck you could sell your car on ebay and be over that threshold and potentially be asked for a "please explain" from the ATO. What a pain in the arse and a waste of tax office resources.
I do hope they look for trading history because hassling people. e.g. selling the same new items over and over would be indicative of a business. Selling a bunch of 2nd hand items would not be.
goldpelican said:
Wrong again- Online selling data matching program protocol - 2013-14 financial year 2013 - 2014 is the last financial year and the ATO specifies $10,000 not $20,000. Do people actually carefully read posts. You have a habit of this.
Cheers.
I'm guessing they are working off the assumption that as a result of last year's $20k threshold, they're expecting to find a number of people operated multiple accounts that tried to stay under $20k to avoid detection. Hence lowering the threshold to $10k this year.
They're asking for IP addresses and dates of birth - there's some simple data matching points. Also note that they're seeking information on number of transactions - ok, so they can exclude the people who sold a car and an old TV, but breached $10k - but they can identify people who ran say 5 different accounts that they abandoned after $18k in sales each or their first negative feedback, and registered them as personal accounts, and had 100+ sales over the year.
They're asking for IP addresses and dates of birth - there's some simple data matching points. Also note that they're seeking information on number of transactions - ok, so they can exclude the people who sold a car and an old TV, but breached $10k - but they can identify people who ran say 5 different accounts that they abandoned after $18k in sales each or their first negative feedback, and registered them as personal accounts, and had 100+ sales over the year.
Speaking of reading carefully, re-read my post - it's in the context of determining in the eyes of the ATO if you're engaged in a hobby or business, period. A protocol is not legislation.
This has come up on the forum before - previously the ATO has done eBay / tax return data matching on a $20,000 threshold. I may have skipped a year.
This has come up on the forum before - previously the ATO has done eBay / tax return data matching on a $20,000 threshold. I may have skipped a year.
goldpelican said:
Regardless of the word protocol or legislation the ATO are up front with their threshold. From Miniroo's point of view I'd think he's more concerned about answering to the ATO...I hope all goes well for him.
Cheers
SilverDJ
Well-Known Member
goldpelican said:
Yes it was $20k.
Just google "ebay $20k threshold" plenty of references.
In fact it used to be $50k before that it seems.
http://www.busaustralia.com/forum/viewtopic.php?f=15&t=53101