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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of your private ruling

Authorisation Number: 1012541323724

Ruling

Subject: Am I in business?

Question

Are you carrying on a business of selling items?

Answer

No.

This ruling applies for the following periods:

Year ended 30 June 2013

The scheme commences on:

1 July 2012

Relevant facts and circumstances

You purchase second hand items.

You transport the items to your place of residence and, where required, repair the items to a standard where you can sell it online.

You undertake the activity as a pastime that assists you to keep your skills current.

The quantity of items bought and sold varies from year to year depending on the replacement program of the place where you purchase them, however, you buy and sell approximately x per year.

You earn an amount of profit per year depending on the supply and condition of the items.

You spend a few hours per week on this activity, mostly on weekends.

You do not have a business plan.

You do not keep proper financial records.

Relevant legislative provisions

Income Tax Assessment Act 1997 Subsection 6-5(1)

Reasons for decision

Subsection 6-5(1) of the Income Tax Assessment Act 1997 (ITAA 1997) states that your assessable income includes income according to ordinary concepts. This means 'ordinary income' includes amongst other things, income from salary and wages and business operations.

Taxation Ruling TR 97/11 provides criteria established by the courts that would need to be satisfied in order to be considered to be carrying on a business. It should be noted that TR 97/11 specifically deals with the carrying on of a business of primary production, but the criteria established can be applied to most activities.

The list of criteria includes, but is not limited to:

No one indicator is decisive. They should be considered in combination and as a whole. Generally, whether a business is carried on depends on the large or general impression given.

Application to your circumstances

In your case you have a personal interest in the items. The sale of items is considered to be a hobby or pastime undertaken by you that assists you to keep your skills current.

The activity of buying and selling items that you are undertaking has limited commercial character or purpose. You do not have a business plan or operate out of a business premises. You keep limited records of your transactions.

In addition the activity is undertaken mostly on weekends from your place of residence.

Based on the information you have provided we do not consider that the activity has the necessary characteristics of a business for taxation purposes. Therefore, any income you received in relation to this activity for the year ended 30 June 2013 will not be assessable under section 6-5 of the ITAA 1997 as ordinary income. In addition, any expenses that you have incurred in relation to this activity will not be deductible.

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