Trademe sellers - turn to Fair Go now!! Update 7/5/14

[Adrienne]

There is a new law change for those who sell regularly on trade me. It will need to be declared as from June. Fair Go is featuring this atm.

[Insect Direct]

so nothing knew really? other than consumers guarantees act will apply to all sales.

[Adrienne]

Its basically aimed at those who buy to resell, all the back yard traders. Emails are being sent out by TM over the next month. Not sure how it will affect breeders of fish but I guess if you breed in bulk to resell and have a lot of listings you will probably have to get a second account. It is to tax the income on those sales.

[Adrienne]

Not new for those who are upfront about their earnings and accept responsibility for issues, but for many others it is going to be a real change.

[Insect Direct]

suppose to pay tax on those things now I thought ... they will catch up with those who don't one day .. or year/decade lol.

the old hobby vs small business thing is stil the grey area by the looks.

[Adrienne]

Yes thats what they are getting at - tax on income that is not being declared and culpability for goods that are incorrectly described.

[alanmin4304]

If you declare the fish you sell on trademe you can also declare the costs and it s very likely that if you are very honest you will get a refund from IRS. It is not as easy to make a pile of money from breeding and selling fish as many people think.

[phoenix44]

People just need to be a little smarter with how they pay tax.

Set up a small business (It's free) - make your sales, do a little basic accounting (you'll learn something new); put in some expenses for a home office, purchase small assets like laptops under the business and depreciate them as they will be for business use. All these reduce your tax liability. You're legally allowed to minimise your tax liability, but not evade it. It's all about working a little smarter. Fact is there are a few expenses that can be run via the 'business' in the industry of selling / breeding fish / plants.

[camtang]

What about people who sell on online forums, buy sell swap, and other type places? Is it a strictly TM policy?

[camtang]

Set up a small business (It's free) -

:dno: I just forked out $150 to register a business? How does that work, did I get taken for a ride?

[Adrienne]

I don't know Camtang. I didn't note that - nor whether it was more to do with the fair trading act than the tax, but of course when one registers for one the other follows.

Now its been on Fair Go there is bound to be more information put out - or one would hope so.

[alanmin4304]

Not much has changed really. Income is income and is liable for income tax. Expenses are expenses and are tax deductable. It never has been the rich that support this country, they spend a lot of energy avoiding paying tax, it is the people working for wages and salaries that pay PAYE that run the country and repair the roads and don't question it. Do you know anyone who went to the boss and said. "I don't think I will pay tax this week". I met a farmer a few years back that told me that he only made 4k that year yet had two boys boarding at Christs College and drove a merc. I replied that I would word that differently. ("Your accountant managed to convince the IRD that you should pay tax on 4k"). Starting a business is free, you just claim a refund from IRD. Starting a company or partnership costs.

[#!CrunchBang]

What about people who sell on online forums, buy sell swap, and other type places? Is it a strictly TM policy?

It doesn't cover "second hand" stuff and small time sellers. It's only for people who buy to sell on to make a commercial gain.

[ryanjury]

People just need to be a little smarter with how they pay tax.

Set up a small business (It's free) - make your sales, do a little basic accounting (you'll learn something new); put in some expenses for a home office, purchase small assets like laptops under the business and depreciate them as they will be for business use. All these reduce your tax liability. You're legally allowed to minimise your tax liability, but not evade it. It's all about working a little smarter. Fact is there are a few expenses that can be run via the 'business' in the industry of selling / breeding fish / plants.

It will be very interesting to see how they apply this, you have always been supposed to pay tax on anything you buy and sell for profit.. But if the IRD started enforcing it in mass on trademe especially for hobbiest breeders they may be surprised by the numbers.. For example if you had a small fish room set up and sold a few fish to cover costs and it was determined a business then as Phoenix has suggested you would be able to claim business costs, and as stated above after taking into account internet connection, portion of rent/mortgage for office/fishroom, cost of fish/fish food, computer even gas/vehicle operating costs to go and collect fish drop fish off get gear etc you could find the "costs" being far higher than the actual "income".

[Phantom]

Unless I've been doing it wrong, you don't actually get a refund if you make a loss. I made a loss this financial year just been with my business but as far as I know it is just a tax credit on future years tax.

The only refunds I get are on GST. If you are registered for GST and spend more on items with GST receipts / invoices etc than you do selling things, then IRD will pay you the difference back.

Things like rent at home are GST exempt though, but you can claim it on power, phone, internet.

[Insect Direct]

I've never had a refund. I could possibly claim more expenses with some effort. Even complained about how much ACC charged me this year... they came back with I was on the wrong classification and charged me almost double (back dating it a few years). Winners.

Everyone is not avoiding tax ... ill never get a house if I have no income. Maybe I just need a new accountant. I'd rather do it 'legit' though, what ever that is.

[Phantom]

As long as the expenses are legitimate then it's all good.

I just have a business on the side of my day job. Made about $50k last year in revenue but with a bit of accounting, came out with a loss of about $100 I try to make sure all my purchases are under $500 + GST so I can expense them, even if they are assets. A lot of the expenses just boost up my equity in the business as they're reimbursements. Then I can legitimately spend the equity I have to reduce it down each month. Means no income tax

There are grey areas of expenses that are still legal. E.g. if you go on a trip away, go visit a customer or something then claim half of the travel expenses as a business expense. If you're GST registered, make sure you get GST receipts for that stuff.

If you work from home, you can claim a percentage of your floor area used for business purposes. So if you use 10% of your house, you can claim 10% of your rent / mortgage (GST exempt) and 10% of your phone, 10% of internet etc. If you are an internet based business, you could legitimately claim more of your internet costs ... say 50%.

[Caryl]

We run a business from home but the accountant works it all out so I can't say what we claim etc but do know we can claim for most stuff except food and clothing (if our business required specialised clothing it would be different). We claim a percentage of the house, power and vehicle expenses etc. I am sure there is probably more we could do but feel the effort is not worth it as it is swings and roundabouts, what you gain in one area you lose in another. The accountant does all she can to keep out outgoings low compared to income and I believe we manage to run at a loss.

Of course, when your husband works 70+ hour weeks it doesn't leave much time to then work on home business stuff!

[alanmin4304]

We get a small refund every year. It depends on wether you are trying to extract every dollar from what you are doing (income) or you are reinvesting and building your assets. The more you make in your day job, the more you are likely to get back from the losses you make in your part time business.

[smidey]

Not new for those who are upfront about their earnings and accept responsibility for issues, but for many others it is going to be a real change.

Yeah, it might be a great thing. If they want to tax the earnings they will also need to take into consideration the cost of producing it, looks like I'll be in for a tax refund because the cost is far higher than the income

[alanmin4304]

If it is only a few hours a week you don't need to pay ACC.

[livingart]

I thought ACC had a minimum of 500 to cover paper cuts while doing bookwork

[alanmin4304]

We don't pay ACC on the basis of it being part time and so many hours a week, but I can't remember how many it is. A phone call will sort that for you.

[Insect Direct]

We don't pay ACC on the basis of it being part time and so many hours a week, but I can't remember how many it is. A phone call will sort that for you.

I told them I am only part time and it is only a hobby to me - hence complaining about the large bill. That is when they tried to change my classification to a butterfly breeder :roll: . I didn't agree so now something else but still cost me more than what I was on prior (manufacturing not specified elsewhere).

Works out this small biz has paid almost 25% of turn over (yes turn over not even income) as tax this year. :facepalm:

Crickets making roads - I'm very proud :sml1:

[Insect Direct]

To add to the above. Think ACC told me it was income related not hours worked. So if your getting a refund each year maybe your not required to pay ACC ...

Next/this year will be better for me ... here's hoping anyway otherwise the business could be forsale prematurely.