Talking Cents

Small Business Accountant in Sydney Explains How ATO Cracks Down Businesses on eBay

The rise and transformation of our modern economy in recent years has seen many new online based businesses booming, from Uber, to AirBNB and the various social media platforms that we all love to make use of. However, these transformations can affect small business accountant more than it may seem.

One avenue of the online world that has allowed the average mum and dad to make a few quick dollars is eBay. There would be very few adult Australians that haven’t sold a few household items on eBay to make a few quick dollars and de-clutter their homes at the same time, I know I’ve personally done this on several occasions. The more opportunistic eBayer’s are now actively looking for cheap items at garage sales or other used goods sale venues to resell the items on eBay and make a few extra dollars to help out with the family budget.

One organisation that has woken up to this is the ATO. Many individuals, estimated at 30,000 to 40,000 eBay sellers, are about to get a real shock when the ATO contacts them. Through Government regulated data matching, the ATO will be requesting the details of all eBay sellers in Australia that have sold more than $10,000.00 worth of items in the last financial year. Now most eBay sellers are not operating a business and just making a few quick dollars or doing it for fun, but those earning above $10,000.00 are clearly doing something substantial and the ATO will be investigating these people to seek out whether they are operating a business “for profit” or not. The ATO has published a fact sheet on the issue of hobby versus business and it would pay all eBay sellers to read up on this and come clean before the ATO contacts them. Voluntary declarations are always treated more favourably by the ATO than post-audit tax return amendments. If your eBay site is similar to a brick and mortar store in that it was set up with the intention of making a profit and is used or managed on a frequent basis then it is much more likely to be deemed a business rather than just a hobby.

This program may even catch out some genuine small businesses that closed down and then sold plant and equipment or excess stock on eBay after the business closed but innocently didn’t realise they needed to declare such income. The untapped potential for the ATO to generate extra tax revenue is, I am certain, going to lead to plenty of ATO resources being dedicated to this and other similar programs in the future. If you think you have sold more than $10,000 worth of items on eBay and you are a small business, do contact your small business accountant in Sydney to find out what you need to do before it is too late.

For more information on managing your small business accounting, contact mas accountants, the original accountants for small business based in Sydney and Melbourne.