Do you have to declare your online earnings to the tax office?

Maria wants to know if she can sell items on eBay without declaring it to the ATO.

Do you have to declare eBay sales?

Selling items online is an effective way to make some extra money. Maria wants to sell on eBay and would like to know if she has to declare her earnings to the Australian Tax Office.

•••

Q. Maria

I have a lot of old books, clothes and stuff in the shed I want to sell online. It would be nice to go on a holiday with the proceeds. But I want to know if I have to tell the tax office if I make any money selling my things on eBay. Do I have to declare online sales?

A. If you are on an Age Pension, Centrelink has access to your bank account, so any money going in will naturally be tracked. However, as long as you are only selling the odd item, you should be fine. Still, you should check with Human Services about the specifics.

If you are not receiving an Age Pension, and you are selling as a hobby and not a business, then it may not be considered ‘income’ as such and, therefore, not necessarily be taxed.

But what’s the difference between selling as a hobby and a business?

Well, if you are clearing some space and want to see if you can flog a few books online, then that could be considered a hobby. However, if you sell those books then start going to op shops to buy more books with the intention of reselling them on eBay, then you are operating as a business.

According to the ATO, there are quite a few other ‘guidelines’ to note as well. Some of which are:

  • Is your main intention to make a profit?
  • Do you make repeated sales?
  • Do you advertise your online selling activity?
  • Do you have a business name or eBay store?

Suffice to say, there’s not a simple answer, so it’s probably best to check the ATO website for more information about whether your specific online selling activities constitute a hobby or business, or income you need to declare to the tax office.

All content on YourLifeChoice’ website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a Centrelink Financial Information Services officer, financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.

If you have a Centrelink question, please send it to newsletters@yourlifechoices.com.au and we’ll do our best to answer it for you.

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    COMMENTS

    To make a comment, please register or login
    fearlessfly
    19th Jan 2018
    10:45am
    I recall reading one of your articles a while ago that stated that Centrelink DOES NOT have access to look into one's bank account:

    https://www.yourlifechoices.com.au/government/centrelink/is-centrelink-checking-your-bank-account

    So, why do you make that conflicting statement in this article ?
    maelcolium
    19th Jan 2018
    12:52pm
    Yeah, I think it was just a poor choice of words. Centrelink can only ask for your balances and subsequently ask you to provide information on movements in your bank balances in order to establish if you are in receipt of monies from earned sources etc. Generally if you sell bits and pieces of your assets without carrying on a business then you are ok.
    Where it gets dicey is when you understate an asset's value and then cash it in for a substantially greater amount. Then they may kick up a fuss, but generally ,if you are honest and sensible, they are pretty good.
    jackie
    19th Jan 2018
    3:10pm
    Centrelink and the ATO are connected. Of course they will have access to your bank account. That’s how they catch so welfare cheats.
    invisible sock
    19th Jan 2018
    10:54am
    Once Ebay charges are taken into account, there is so little profit left that even the ATO & Centrelink wouldn't be interested.
    TREBOR
    19th Jan 2018
    11:19am
    'Conservative' government's wet dream - pensioner sells off assets to get by - pays Centrelink....

    What a joke.

    Tell 'em they're dreamin'.....

    19th Jan 2018
    11:27am
    So, what if you bought an item from a shop 1 year ago that cost you $1,000, and you now sell that item on Ebay for $900?

    Would Centrelink call the Ebay sale a $900 "profit" (minus Ebay fees) .... even though in reality it's a $100 "loss"?
    freedom27
    19th Jan 2018
    11:30am
    I recall reading one of your articles a while ago that stated that Centrelink DOES NOT have access to look into one's bank account:
    Yes I remember that too fearless


    https://www.yourlifechoices.com.au/government/centrelink/is-centrelink-checking-your-bank-account

    So, why do you make that conflicting statement in this article ?
    Polly Esther
    19th Jan 2018
    11:49am
    Just doing their job I guess which is to stir their readers up into a frenzy, they then justify their existence. Can't think of any other reason. I ask myself the question, "do I have access to anybody else's bank accounts"? Of course not. QED
    cheers :-)))
    freedom27
    19th Jan 2018
    11:33am
    Tried copying and pasting, think I stuffed up. Anyway I was agreeing with fearless comment regarding Centrelink DOES NOT have access to look into one's bank account:

    I agree, I remember reading someplace that Centrelink do not have access to look into ones account.

    So what's the story?

    Do they or don't they?
    maelcolium
    19th Jan 2018
    12:54pm
    They don't - relax.
    fearlessfly
    19th Jan 2018
    1:11pm
    Ctrl-C and Ctrl-V
    Copy ...... Paste
    freedom27
    19th Jan 2018
    1:55pm
    Thanks for answering my question maelcolium :)

    Thanks for showing me how to copy and paste fearlessfly..... but it still dosnt work, lol

    I am totally hopeless at anything techie

    Usually I just highlight the text and and then paste or something like that but for some reason its not working on this site. Will practise later on. If you see lots of nonsense posts just know that is me, unless theres a way of deleting my rubbish posts, lol

    Have a great day everyone :)
    Rosret
    19th Jan 2018
    4:52pm
    They do and they are using tax returns to determine income. That has been the cause of the flawed software errors.
    TREBOR
    20th Jan 2018
    5:29am
    "Usually I just highlight the text and and then paste or something like that but for some reason its not working on this site."

    Highlight - Control C - move to position you want to copy to - Control V - insert commas etc as required....

    If you wish to delete - Highlight and Control X.

    No need for capitals....

    19th Jan 2018
    12:55pm
    If anyone can work out how the ATO makes their assessments, they should be awarded a medal. I have a friend who used to have an interest in racehorses and one of his horses managed to do very well. The prizemoney ran into high thousands and the ATO told him that he had to declare it as income. He countered that the horse was owned by his wife and was a hobby whilst he was the unpaid trainer with a separate income. No, sorry, said the ATO, because of the amount involved it was income, end of discussion. After the horse (a stallion) retired it was put to stud duties with a live guarantee fee. The stabling costs were claimed as a tax deduction even though the stud fees were held by his solicitor and couldn't be released until a live foal was born. Yep, you guessed it, the ATO told my friend that the stabling costs couldn't be claimed as the horse was a hobby.
    TREBOR
    19th Jan 2018
    2:26pm
    Catch-a 22...... Milo Minderbinder at his best.....
    TREBOR
    19th Jan 2018
    2:24pm
    Let me put it in my smart-arsed way:-
    (reprise)
    TREBOR

    'Conservative' government's wet dream - pensioner sells off assets to get by and fund retirement - pays the government for the privilege ......

    Sounds like an end game to me....... bastards....

    19th Jan 2018
    3:01pm
    As eligibility for the age pension is subject to, inter alia, the asset test, converting an asset to cash shouldn't change the status quo. If an eligible pensioner has shares worth, say, $10,000 and a bank account with $2000 then selling the shares will mean share value is nil and the bank account is $12,000. I can't see a problem.
    TREBOR
    19th Jan 2018
    3:08pm
    100% correct.
    Alexii
    20th Jan 2018
    10:02am
    When one sells shares and the money goes into your bank account, you need to advise Centrelink of the change in the assets even though they remain the same total. I've learned that it's best to limit the sales and purchases to less than $10,000 because if they are $10K or more you can't do the changes on line - well you can but then it tells you the you need to either phone or go into Centrelink as the account is now blocked or some such. So this then entails wasting a lot of time either on the phone sitting and waiting or sitting and waiting at the Centrelink office. Incidentally I always find the staff at my local Centrelink are helpful and supportive.
    eggles01
    19th Jan 2018
    3:28pm
    All you need to do is to ring Centrelink or go to your local office and ask the QUESTION-"how much income can I earn before it effects my pension and 2nd QUESTION-how much ""ALLOWABLE income""can I earn before it affects my pension
    jeffr
    19th Jan 2018
    4:16pm
    You could always ask Malcolm how to set up an account in the Cayman Islands for your E bay Sales.......
    TREBOR
    19th Jan 2018
    9:03pm
    Not a good look when your majority party's chosen prime minister (not those words - he is NOT the PM voted for by the people) stashes his loot away in a tax haven and doesn't pay tax here while taking full advantage of taxpayer money to even hold a seat....

    Disgusting if you ask me.
    Rae
    20th Jan 2018
    10:03am
    Like America the Australian ATO does have an agreement for information sharing with the Cayman Is. I'm sure Turnbull pays appropriate taxes here. It's the over 60s that pay no tax if they stash their loot in SMSFs. That was a pretty silly idea Howard had.
    Jimbo
    19th Jan 2018
    10:24pm
    eggles01 have you ever tried to ring Centrelink ?
    Most people do not have enough time to wait for an answer
    wombat
    22nd Jan 2018
    2:33pm
    "Old Man" is right with Centrelink you are only changing the value of one asset for another and if used straight away for a holiday there is no asset. Selling like this will only affect the asset test and in most cases will not affect the income test. Under the tax laws most items will not be caught, as cleaning out the shed is private and domestic in nature. However, under the capital gains tax laws personal use assets and collectibles can be caught and classified as income. For Personal use items, eg motor vehicles and furniture, if you acquired for more than $10,000 and sell for greater than the purchase cost. Then the difference will be subject to capital gains tax. For Collectables, eg Jewellery, antiques, coins, paintings etc, if the acquisition cost was greater than $500 and you sell for more than the acquistion price, then the difference is also caught under capital gains tax. Any items caught under these rules would also be discounted by 50% if held for more than 12 months. It is this discounted amount that Centrelink could catch under the income test. If you are subject to any of these and the amount is significant enough to effect your income you may be able to offset capital losses in the same year. Speak to a tax accountant for your personal situation to be considered.