Edited version of private advice

Authorisation Number: 1052227195544

Date of advice: 5 March 2024

Ruling

Subject: Am I in business?

Question

Are you carrying on a business in relation to reselling goods?

Answer

No.

You do not meet the relevant indicators of carrying on a business contained in Taxation Ruling TR 97/11 Income tax: am I carrying on a business of primary production? Further information about carrying on a business can be found by searching 'QC 31733' on ato.gov.au

This ruling applies for the following period:

Year ending 30 June 2024

The scheme commenced on:

1 July 2024

Relevant facts and circumstances

You are retired.

You have an adequate and independent income from a defined benefit pension.

You are one of a number of beneficiaries of a will

You inherited a sizeable amount of household items. These items are predominately of low value as the high value items were distributed among the other beneficiaries in an extended process.

These items include:

•                    LPs, DVDs and CDs

•                    Out of fashion clothing and goods you inherited from your parents

•                    Miscellaneous household items, such as homewares and books.

The items fill 6 storage units.

You believe these items to be of limited interest to the general public and are of low value.

You and your spouse are members of a self-managed super fund. You plan to wind up the SMSF soon.

The fund owns a building located on the main street of a village.

The fund will transfer ownership of the building to you as an in-specie lump sum payment, at an arms-length valuation as determined by a valuer.

You will use the building:

•                    As a place where you will dispose of your inherited items, for a nominal amount,

•                    As a venue for free community activities facilitated by local community members or organisations, for example one on one adult literacy lessons, and

•                    As a place where local community members can consign goods for sale, where a set portion of receipts must be donated to a registered local not for profit organisation. You will not take a commission or generate any income from these sales.

You will not be undertaking your activity in a businesslike manner or with commercial purpose. The shop will only be open on an irregular and part time basis to fit in with your lifestyle.

You will not advertise.

The shop space is 70sqm with a 30sqm office at the back. Due to the size of the shop and the large number of items you believe it will take several years to dispose of all the inherited items.

You have no intention or prospect to make a profit. The operating costs of the building will outweigh any income received from the disposal of goods.

You do not intend to engage in trade as a second-hand dealer and plan to cease your activities after the goods have been disposed of.

You do not have a business plan and you have no intention to expand or grow your activities.

There is no inventory of the inherited goods, and you will not undertake a stocktake.

You have no computerised business systems and no plan to implement one.

This is a lifestyle choice to help you deal with your inherited goods, and to provide you with social interaction in a new community, provide you with an activity to do on an ad hoc basis and to provide benefits to the local community.

Relevant legislative provisions

Income Tax Assessment Act 1997 section 995-1