Are you selling goods online?
Over the last few years, more and more people have been trading over the internet through online sales and auction sites.
If your online trading activities are more than just a hobby, you may have to pay tax on your sales.
Many people use online sales and auction sites to sell articles that they no longer need. If the sales are not part of a business activity, there is usually no tax to pay.
However, if you regularly sell online, you may be in business, and you should be declaring your sales for income tax purposes.
If your sales total over $60,000 a year, you must register for GST.
As a general guide, you are regarded as being in business if you acquired goods with the purpose of selling or to make a profit. You would also be considered to be in business if you are dealing in these goods.
A key factor that we would consider when deciding whether someone is in business is the frequency or regularity of their trading.
If you are in business, please remember to keep complete and accurate records, including banking information, proof of income and expenses (such as invoices and receipts), cashbooks and wage books.
These records must be kept for seven years.
You can find more information about record keeping on our website.
We run regular seminars and workshops across the country to help people who are starting their business.
Remember, people who run a business online have the same tax obligations as owners of shops in town.
Anyone who is not paying the right amount of tax has an unfair competitive advantage over those paying their fair share.
We receive regular data about online trading transactions, and we will take firm action with people who deliberately evade tax.
If you are frequently selling goods online, I recommend you to contact Inland Revenue or your tax advisor to discuss your situation.
Please visit www.ird.govt.nz for more details
If you are in business, you may like to attend one of our free tax seminars or workshops held in various parts of the country.
Abdul Rafik is Inland Revenue’s Community Relationships Advisor based in Auckland. He will answer your queries emailed to firstname.lastname@example.org