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 we 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.
If you have been trading online for some time and think that you might have tax obligations that you have overlooked, contact us as soon as possible. If you’re still not sure if your online trading activity is a business, see our Online trading tax implications (IR1022) factsheet or contact us to discuss your situation
Date published: 22 Oct 2013