ONLINE TRADING
If you sell goods through online auction or sales sites, for
example TradeMe or eBay, your tax obligations are exactly the same as for
buying and selling goods in a shop. Many people sell things they no longer want or need. Usually, there
are no tax consequences. However, people who sell things on a regular basis
may be regarded as being in business and should be declaring the sales for
income tax purposes.
As a general guide, you are regarded as being in business
and should be declaring sales from online (or any other) trading, if:
- you acquired the goods with the purpose of on-selling
- the purpose of the activity is to make a profit, or
- your business involves dealing in these goods.
A key factor that IRD would consider when deciding whether someone is
in business is the frequency or regularity of their trading.
As well as income tax, businesses with online sales of over $60,000 a
year are required to register for GST.
Like any other business, sufficient records must be kept for seven
years to substantiate your income and expenses.
IRD have access to website trading data and are currently, as part of
their tax audit processes, closely watching activities of regular
participants of the trading websites to ensure tax compliance.
WARNING ABOUT SCAM EMAILS
You are reminded about emails which ask for IRD Numbers and personal
information. Another version going around indicates that the recipient is
due a tax refund and asks for financial details- even McLean and Co. has
received one of these.
These emails are often known as phishing emails - for example, an
email may claim to come from IRD or a Tax Refund Agency and ask you to click
on a link that takes you to a fake website. Do not click on any links within
a suspicious email or reply to the email. It is recommended that you delete
the email from your inbox.
