As online retail continues to outpace high street stores, the ATO is keeping a careful eye on everyone’s eBay income
When eBay launched in 1999 it was simply an auction site where people could sell household goods they no longer needed. This has changed dramatically over the past 20+ years, with many people now using eBay income as their sole income – and the ATO is well aware of this.
You can’t hide your eBay income from the ATO
To ensure eBay users and businesses declare their eBay income and don’t dodge tax laws, in 2011 the ATO asked eBay to provide the personal records of any seller with a turnover of more than $20,000. This amount reduced in 2015 to $10,000. When the request was first made, it came out of the blue to sellers who, at the time, hoped the email they received from eBay was a scam. Obviously, it wasn’t. These days accessing data from third parties is common for the ATO, who’s powers and resources to access our data seems to increase every year.
Income records from eBay help the ATO spot eBay sellers who are not disclosing their eBay income on their tax return.
The ATO do, however, understand that many users still use eBay to sell unwanted items once or twice a year. Also that its unlikely they’ll ever receive more than a few hundred dollars of eBay income a year from that. The significance of the income changes if, as an eBay seller, you actively seek out items to sell with the intention of making a profit. This is where your income from eBay becomes business income and should be declared on your tax return.
Is you eBay income a hobby?
eBay is also an outlet for artists and craftspeople. But here’s where it gets a bit tricky. There is a fine line between creating something for a hobby and creating something with the intention of making an actual profit.
For example: An artist, when selling a piece of work on eBay, can charge the cost of the materials, plus a little extra to cover additional costs for petrol, electricity, postage and tools etc. As they don’t make any profit, their work is considered a hobby. This means, it’s not necessary to declare their eBay income.
However, if the artist’s intention is to make a profit from the pieces they sell, it’s likely to be considered a business. In which case, they should declare their eBay income along with any other income at tax time
According to https://www.business.gov.au/ the difference between a hobby and a business is as follows:
- “A hobby is a pastime or leisure activity conducted in your spare time for recreation or pleasure.”
- “You’re in business if your activity, as a whole, is commercial with an aim to make a profit.”
With the Tax Office’s ‘data matching’ well established in the online realm, it is more important than ever to ensure you ALL your income on your tax return.
If you need help with establishing whether or not you need to declare your eBay income, no problem. Part of our service here at Etax.com.au, is to make sure you lodge a tax return that’s correct. This means our accountants are always standing by to help answer your questions. Plus, before we lodge your return to the ATO, we check it – twice! You know everything is correct AND the biggest legal tax refund heads to your bank account!
Visit our start page to begin your Etax online tax return today.