Taxman says 'cash jobs' and internet traders on hit-list

[vifferman]

So do I need to pay tax on all the drugs I sell, or just the ones I sell on TM?

Is it a hobby, or a business? If it's not enough to live off, then the IRD probably don't care, as they'd deem it to be a hobby.

[CookMySock]

Used to be that if you were GST registered you could could claim back a GST content on second hand goods purchased irrespective of whether the seller was GST registered and had added GST. Example to explain: GST registered person buys a trailer from Joe Bloggs (not GST registered) for $900. At present (12.5%) GST level buyer can claim $100 GST back

Uh, I don't think so. I think if you weren't charged GST then you can't claim it back, but I'm not an accountant. Lawyer, yes, accountant, no.

Essentially you get to trade $2,000 or "on 6 days" per year before legally having to have a Secondhand Dealers & Pawnbrokers Licence. The licence costs about $350 and requires police checks, etc. It's all about the authorities having checks in place to be able to track stolen goods.

Phooey. I buy and sell shit all the time. Boats, bikes, computers. EVERYONE spends more than $2000 a year on junk, so what, they can't sell it now? Perhaps we have to just chuck it in the bin or something?

Fuck the stupid government. They are full of shit. I will do as I choose.

Steve

[vifferman]

Used to be that if you were GST registered you could could claim back a GST content on second hand goods purchased irrespective of whether the seller was GST registered and had added GST.

Example to explain: GST registered person buys a trailer from Joe Bloggs (not GST registered) for $900. At present (12.5%) GST level buyer can claim $100 GST back

That's not actually correct.
You can claim back the GST content as evidenced by the GST receipts you've kept. If it's secondhand, there was no GST content and no GST receipt, so nothing to claim. GST is payable once. You can't add the GST paid on any service for the item, like say you bought a car, and have paid GST on repairs and maintenance. They are services you've paid for, not goods. It might be different if say you bought a secondhand truck, and bought a new HIAB hoist for it. You could claim on the GST on that.

If it's a new item, you can claim back the GST on that asset. However, if you end up selling the item for more than its depreciated value in your books, the money you made from the sale (over and above what your books say it's worth) is taxable as income.

[vifferman]

Phooey. I buy and sell shit all the time. Boats, bikes, computers. EVERYONE spends more than $2000 a year on junk, so what, they can't sell it now?

That's not the point. It's about whether what you're doing is obviously a regular, income-deriving activity. Most people buy and sell stuff, but overall, they make bugger all from it, so it's little more'n a hobby.

There's also an issue of costs: ensuring compliance isn't worth while, if trying to keep track of all the profit people make from "buying and selling shit" costs more than the IRD is likely to derive from doing so.

Another issue is intent: there are people who deliberately 'live below the radar', with the deliberate intent to avoid paying tax. Why the fuck should we support such people? Do you think when they need hospitalisation, or call the cops because their valuable shit has been stolen, they say, "Uh... I'm not a taxpayer, so I'll pay in cash for your services, or would you like this near-new 21" Philips K9?"

[FROSTY:Me]

Take the selling of vehicles. I have yet to get the same info when I ask how many cars/bikes I can sell a year before I am considered a trader.

I can answer that one clearly for you. You are legally allowed to sell up to 6 vehicles a year. However the law says you are not allowed to sell ANY vehicles and make a profit out of it unless you are a registered vehicle trader.
That is the law.
Enforcement is a a whole other kettle of fish.
They have to prove you are selling for a profit.

[ManDownUnder]

But surely the IRD need to then be able to get the details of the trader. And if we do not provide the real info when we sign up, then what?

Then you should consider the IRD has greater search and seizure powers than the police...

They WILL get their money

[p.dath]

I have no problems with that. Just wonder where the line is drawn. Take the selling of vehicles. I have yet to get the same info when I ask how many cars/bikes I can sell a year before I am considered a trader.

The test would be weather the IRD considers that you are selling sufficient to be making an "income" from it (and hence be taxable). I know for some other items selling 4 or more items in a 12 month period makes you a trader.
The IRD may also consider you other sources of income, and the ratio these sales make up.

For exmaple, if 50% of your income is from selling bikes, then you would definately be a trader.
I probably wouldn't risk making it more than 5% of your income.

[Naki Rat]

That's not actually correct.
You can claim back the GST content as evidenced by the GST receipts you've kept. If it's secondhand, there was no GST content and no GST receipt, so nothing to claim. GST is payable once. You can't add the GST paid on any service for the item, like say you bought a car, and have paid GST on repairs and maintenance. They are services you've paid for, not goods. It might be different if say you bought a secondhand truck, and bought a new HIAB hoist for it. You could claim on the GST on that.

If it's a new item, you can claim back the GST on that asset. However, if you end up selling the item for more than its depreciated value in your books, the money you made from the sale (over and above what your books say it's worth) is taxable as income.

If you as a GST registered person buy from Joe Bloggs there will be no GST invoice, or possibly paperwork at all. But if the goods are being purchased for your business they will need to have a GST content once they become part of the business's assets. Being able to claim GST from the purchase price despite not being charged by the seller is the method by which this is done.

Check with an accountant. Mine found this situation to be the case a few years back and I would assume it still stands.

[Naki Rat]

Phooey. I buy and sell shit all the time. Boats, bikes, computers. EVERYONE spends more than $2000 a year on junk, so what, they can't sell it now? Perhaps we have to just chuck it in the bin or something?

Fuck the stupid government. They are full of shit. I will do as I choose.

Steve

Check out the link in my post. The system has it stitched up far more than most people realise. Oh, and reselling secondhand goods sourced overseas (e.g. via Ebay) is exempt from this Act I understand.

[FROSTY:Me]

You guys are making things way complicated. I know the tax laws are pretty complicated but the guts of it is pretty simple.
If you sell anything for a profit you pay GST on the sale but claim back the GST on your purchase and any costs asssociated.
In essence you pay gst on the profit you make.
There really is nothing new here.

[RantyDave]

If you as a GST registered person buy from Joe Bloggs there will be no GST invoice, or possibly paperwork at all. But if the goods are being purchased for your business they will need to have a GST content once they become part of the business's assets.

Nnnnno. I think. Being not an accountant and all that but there's no way the GST content of something is an asset.

What does happen is that if a GST registered business buys a supply on which GST was charged then the business can claim that GST back from the government. Likewise when I (being a GST registered business) sell things I have to charge GST and my clients (also being GST registered businesses) claim *that* back. If I buy a supply from a non-gst registered supplier i.e. joe bloggs selling his car then I can't claim the GST back because I don't get a GST receipt off them. Stuffed, I would be.

Arguably an un-claimed GST receipt is an asset since it can be turned into money or, at least, a tax break.

I dunno. The long and short of it is that I get to buy computers, get the GST back, and count it as a business expense i.e. less corporation tax and the numbers work out as being about half price compared to buying them personally.

Dave

[Naki Rat]

Second-hand goods

If you purchase second hand goods from a non GST registered person/business you can still claim GST on the goods at the normal rate of 1/9 - You must keep a record of the following: name, address, date, description of item, quantity and price paid.

Not sure if this info is still current but any accountants out there should be up on it.

[steve_t]

On a slightly different note, they need to make sure the guys harrassing people at traffic lights and washing their windscreens pay tax!! I reckon these dudes can make more in hour than most of us! And it's tax free. Either that or pass a bylaw making it illegal... probably would have stopped that chick getting punched in the head here in Hamiltron!

[CookMySock]

It's all talk on the cereal box anyway. No sane person wants to go out of their way to pay every cent they can to the IRD.

It's just as much a sport avoiding the IRD as it is the Fuzz.

Steve

[RantyDave]

It's just as much a sport avoiding the IRD as it is the Fuzz.

With the obvious exception that when you evade tax you're actually stealing off the remainder of New Zealand and not merely getting away with the occasional 130k blat.

Dave