Selling online but not as a
Marika wishes to clear an excess of clothing from her
She lists them on the internet for individual sale. Some of the
items sell for more than her buying price, some for less.
She charges the buyers postage and receives a total of
Marika is not carrying on a business because she:
- did nothing to improve the value of the items
- does not sell any more items for a long time
- does not pay the online auction site for a 'shop' space
- generally receives less than the original purchase price of the
- has no intention to sell clothes online as a business.
Selling online as a business
Shari Belmont pays for a store online to sell antique items from
her grandmother's estate after her death. This costs her $2,000 for
As some of the items are quite valuable, the total value of the
sales is $42,000.
During this time, Shari discovers she enjoys the activity and
starts looking for other antiques to sell. She goes to garage
sales, antique shops and op shops. She pays cash for the antiques,
has them repaired if needed, and sells them on her online
Shari considers this is a hobby, as she only looks on the
weekends and has a full- time job as an office worker.
Although she doesn't pay to advertise, she has more than a
thousand visits per month to her website via a Facebook page she
has set up, where she posts photos and details about the items for
sale. Her Facebook page is shared by many people in the
Apart from the sale of her grandmother's estate, Shari has total
sales of $37,400 from 205 items sold during the financial year.
Shari is carrying on a business, even though her sales started
off as a hobby. She should declare her online income because
- has a specific online store for her antiques
- advertises her antiques (although at no cost) through
- repairs and resells them for a profit
- makes repeated sales over an extended period of time.
The sales from her grandmother's estate do not need to be
declared as income, but her other sales should be declared as
Selling online as a business
For two years, Bob Zaeta from Z's Carpentry has had a listing on
Gumtree (online selling) for selling his carpentry work.
Even as his business gets busier and he needs to employ someone,
Bob still uses the same Gumtree listing because he is now
established and has good ratings - he doesn't want to disadvantage
He continues to use this site to sell his work and services and
makes over 1,000 sales per year at a total value of $100,000.
Z's Carpentry also trades offline and reports an annual income
of $458,000. He has an Australian business number (ABN) and is
registered for GST.
Bob does not include the income from his online sales, but he
does claim the GST credits.
Bob is carrying on a business and is avoiding his tax
- not reporting all his income
- claiming the GST credits for the online portion of his
Bob should immediately amend the relevant income tax returns to
include his online sales.
A real-life case
A 2010 court case has highlighted the importance of being sure
that an activity that you might think is a hobby actually is a
hobby. A person who raised and sold over 1,200 turtles was found to
be in business, rather than simply enjoying a pastime as the person
The turtles were sold after they were purchased from an
interstate supplier and advertised on the internet; payments were
received in both cash and direct deposit to a bank account. Gross
sales were in excess of $100,000 over a three- year period, and
were not reported on the income tax returns.
The person was convicted and fined. So, if you fail to correctly
declare when you are in business, you may have additional costs and
penalties on top of the tax you would have paid.