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Edited version of your private ruling
Authorisation Number: 1012477652347
Ruling
Subject: whether or not you are carrying on a business
Question
Are you carrying on a business for tax purposes?
Answer:
No.
This ruling applies for the following period
Year ended 30 June 2012
The scheme commenced on
1 July 2011
Relevant facts
You are employed.
You have bought and sold various items on eBay.
You have not kept any records.
You buy items on eBay and elsewhere unseen and when you receive the item you then decide if they are worth keeping. If they are not worth keeping you resell them on eBay.
On some of the items you made a small profit (most around 10% above what you paid) and on others you made small losses.
Taking into account the account delivery costs, eBay fees and PayPal fees you suppose you broke even on the sale of items in terms of what you originally paid for them but may have made a small profit.
You do not have an eBay store an only buy and sell periodically when it takes your fancy.
You do not sell the items with a profit making intention.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 102-20
Income Tax Assessment Act 1997 Section 104-10
Income Tax Assessment Act 1997 Subsection 118-10(2)
Taxation Ruling TR 97/11 provides the Commissioner's view of the factors used to determine if you are in business for tax purposes.
In the Commissioner's view, the factors that are considered important in determining the question of business activity are:
· whether the activity has a significant commercial purpose or character
· whether the taxpayer has more than just an intention to engage in business
· whether the taxpayer has a purpose of profit as well as a prospect of profit from the activity
· whether there is regularity and repetition of the activity
· whether the activity is of the same kind and carried on in a similar manner to that of ordinary trade in the line of business
· whether the activity is planned, organised and carried on in a businesslike manner such that it is described as making a profit
· the size, scale and permanency of the activity, and
· whether the activity is better described as a hobby, a form of recreation or sporting activity.
No one indicator is decisive. The indicators must be considered in combination and as a whole. Whether a 'business' is carried on depends on the large or general impression gained.
We have determined that your activity is not carried on as a business for taxation purposes. To reach this conclusion we applied the following business indicators in TR 97/11:
· Your activity had limited commercial character or purpose.
· You do not sell the items to make a profit.
· Your activity is carried out on a small scale.
· Your eBay sales activity is not carried on in the same manner as an ordinary business activity.
· You do not keep records of your transactions.
· You do not have an eBay store.
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