An insight to trading and selling on online auction sites in New Zealand – what you need to know about the personal income you earn over the internet. Should you be paying tax on your online income?
These days, the majority of us buy goods online traders and often sell stuff as well. With auction sites like Trade Me being the main online shopping choice for New Zealanders, it has become a large part of ‘Kiwiana’ culture to sell those unwanted pieces of furniture online, or that piece of clothing you no longer need.
Online trading is usually a weekend hobby or a way to fill in time between television shows. But as a seller on these websites, you could unknowingly be avoiding your tax requirements. If you are selling items online as a business opportunity, your tax obligations are the same as if you were selling out of a shop. There are two main factors that decide if you should be paying tax on your online income.
First is ‘intention to sell.’ If you are buying items with the purpose to resell, intending to make a profit, this most likely falls under untaxed income and you are required to pay tax on the profit of the sale. Importing goods for resale could be deemed a business. If you buy or import goods to sell online, you must declare the tax on your profits. You will be able to deduct certain expenses that went towards the resale, including advertising, postage (if not included in the cost) and any expenses incurred in the original purchase.
On the other hand, if you are selling your old couch, or anything else which you no longer need, you do not have to pay tax. If the object was for personal use and not purchased specifically to sell, you are not obligated to pay tax on the resale.
If you are an online trader, or just sometimes buy and sell online and would like to know more about your online tax obligations, speak to a New Zealand tax agent, or to the Inland Revenue Department.
