I’ve reported over at APC about how eBay is being asked to help the Australian Taxation Office in identifying high-volume sellers who aren’t declaring their income. While most people are unlikely to fall into that category, the rules applying to tax and eBay can be a bit confusing. Here’s our quick guide to what you need to consider.
Should I be putting income from eBay on my tax return?
The short and sharp answer is yes: even if you’ve only sold a couple of things on eBay during the year, that income should go on your tax return. You might conclude that it isn’t worth the ATO’s while to track down an extra $200 (or whatever) of garage-sale-style-income for someone already paying regular tax via their salaried job — and many casual sellers certainly don’t declare these types of earnings — but in theory you should place it in the supplementary section of a standard tax return as additional income. People pursuing eBay as a career definitely wouldn’t want to take the risk of not declaring, since eBay has made it clear that it shares details of high-selling individuals with the ATO.
If I’m a professional seller, should I charge GST on my sales?
GST (Goods And Services Tax) is charged on virtually everything in Australia, but at eBay the rules are slightly different. Individual sales by non-professionals are considered to be GST-free for the seller, so if you’re just getting rid of the unwanted birthday present, it’s not a problem.
However, if your income from eBay is above the threshold for GST registration — currently $75,000 — then you do need to consider GST. This doesn’t mean that you can charge buyers an extra 10%: it means that you have to set aside 1/11th of the final sale price for auction items and consider that as GST owed to the Tax Office. eBay has an FAQ on GST which goes through all this in great detail. If you’re operating a business, you’re likely to be registered for GST in any case, since you can claim any GST charged on business expenses as offsets against GST you owe.
(As usual for financial stuff, the disclaimer: This is general advice. If you have concerns about your specific tax situation, consult a qualified professional.)
F Libbs
Monday, October 20, 2008 at 10:57 AMThis is very simplistic and makes no mention of capital gain/loss. Generally, if you sell an item for less than you purchased it for then you have incurred a capital loss not an income.
People need to consult the Tax Office about their individual circumstances.
Dave
Monday, October 20, 2008 at 11:46 AMI think it is unlikely a casual seller “of garage-sale-style” items would need to report anything as they are unlikely to be making a profit and generating ‘income’. If the ATO were to start down this path I would love to claim the loss I made on the un-depreciated portion of items I’ve sold.
Pat Conheady
Monday, October 20, 2008 at 2:41 PMThis article is misleading. Not all eBay income is assessable.
As the Tax Office will tell you, you only pay income tax on your sales if you are carrying on a business, or at least engaging in a commercial undertaking. Try this ATO.gov.au page for a start: http://www.ato.gov.au/youth/content.asp?doc=/Content/66884.htm .
The article above should link to the Tax Office’s guidance, and should also mention income tax deductions.
(This comment represents my view only, not my employer’s.)
Natalie
Tuesday, October 21, 2008 at 9:50 PMLucky me – I don’t ever have to worry about tax issues. I have the ultimate ally; my Dad is an auditor with the ATO.
Richard
Tuesday, March 22, 2011 at 10:44 AMHi Natalie, so your Dad will use his job working for the Australian people to commit fraud against his employers and get away with it…
Kate
Sunday, May 1, 2011 at 7:28 PMThat’s pretty cynical. I took it to mean that she always has someone to help her and give her accurate advice.