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

[Quasievil]

Good thing Im clean and pay my taxes in full on the due date....so who cares !

[CookMySock]

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.

Yes, but you will notice I used the word "avoid", not "evade."

Evading tax is a criminal offence. Avoiding tax is doing non-taxable activities. Evading tax is hiding taxable activities.

Steve

[Bullitt]

My contract wont let me provide comment on tax matters but I would warn anybody from relying on this thread. Theres more incorrect information in it than there is correct.

[The Stranger:Me]

My contract wont let me provide comment on tax matters but I would warn anybody from relying on this thread. Theres more incorrect information in it than there is correct.

Surely you jest. This is KB, everyone's an expert.

[Usarka]

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

Sell me some weed (akl) and I'll give you the GST on top. I'm hanging out and my contacts are left town..!

[steve_t]

Yes, but you will notice I used the word "avoid", not "evade."

Evading tax is a criminal offence. Avoiding tax is doing non-taxable activities. Evading tax is hiding taxable activities.

Steve

Tax avoidance is illegal also.... wasn't there already a thread on this recently?
Krusty the clown got done for tax avoision
You can use smart structuring for asset protection and any tax advantages that occur are merely incidental

[Max Preload]

I believe it was $35,000 or over, per year.

The threshold at which you must be GST registered recently increased from $40k to $60k. But you should always register immediately - it's to your benefit.

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.

That is correct, and is still the case. See here.

Secondhand goods aren't (usually) subject to GST - it's presumably already been paid when the item was new.

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.

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 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.

You're all WRONG! Secondhand goods bought from a non-GST registered person still carry a deemed GST content regardless. A receipt is all you need to be able to use it as a GST credit against your account.

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

Actually, it is an asset- it's a credit against the GST you've collected on behalf so you have a smaller balance of GST to pay (your liability) with your next return.

Tax avoidance is illegal also.... wasn't there already a thread on this recently?
Krusty the clown got done for tax avoision
You can use smart structuring for asset protection and any tax advantages that occur are merely incidental

Tax avoidance is not illegal. Tax avoidance is legally minimising your tax obligation with many legal methods like tax structure. Evasion is attempting to hide income that is taxable - that is illegal.

[RantyDave]

You're all WRONG! Secondhand goods bought from a non-GST registered person still carry a deemed GST content regardless. A receipt is all you need to be able to use it as a GST credit against your account.

Awesome - tax refund goodness, here we come! (thanks Max)

Dave

[Bullitt]

Im not going to say where this applies but have a look at section BG1 of the Income Tax Act

BG 1 Tax avoidance
Avoidance arrangement void
(1) A tax avoidance arrangement is void as against the Commissioner for income tax purposes.

Reconstruction
(2) Under Part G (Avoidance and non-market transactions), the Commissioner may counteract a tax advantage that a person has obtained from or under a tax avoidance arrangement.

[Patch]

But you should always register immediately - it's to your benefit.

bullshit


ironic how the gubbermint thieves expect us to be honest in our business practices and yet they are the worst at flouting the "rules" to suit them fookn black selves - pack of thieving cunts they is

[davereid]

But you should always register immediately - it's to your benefit.

If you are going to have to register for GST as you anticipate a turnover in excess of $60,000 then I agree with you.

Thats because you may as well get to claim all the stuff you buy, and all the fees you shell out getting started.

Often what happens is a small business starts off at home, and they pay for the extra phone line, and the fax, and the broadband and the new computer without being GST registered so don't get to claim for it. But a few months later, everything is going well, and they have to register anyway, so end up paying GST on all sales.

But if your business is small, and you don't have a legal obligation to register, then why would you ?.

GST takes time to administer, and you are in serious trouble if you make an error on a return. It also has to be done every 8 weeks, which is a serious hassle if you want a decent holiday, or some time out of the business, as it still has to be done unless you deregister.

If your business makes a profit, you will also be better off NOT being GST registered, from a purely profit point of view.

For example (using exaggerated margins to make the point):

I buy a cheap widget for $1.12 from my supplier. I sell the widget for $112.

My gross margin is $110.88, if I am not GST registered.

If I an GST registered, I pay $12 in GST, and claim 12c, meaning my gross margin is $99.

[KiwiKat]

It is usually beneficial for a small business trader to register for GST at startup as there is a definite cashflow advantage in claiming back 1/9th of most of your outgoings, particularly as you're not likely to make a profit for a while.

Businesses and backyard traders selling for cash or online have always been a taget for IRD as there is a temptation not to decalare your income. When business profits are generally down (like now) tax revenue is down and people try to quit their stuff through the likes of trademe. If they declare it sweet. I think IRD is warning traders that they still want their cut.

Backyard traders who are running a 'taxfree' business deserve to get caught and pay their share of tax (or maybe payback some benefits.)

[Beemer]

The Secondhand Dealers & Pawnbrokers Act is the legislation that IRD will hunt you down on.

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.

That sounds a bit unfair - we renovated our two bathrooms recently and also replaced our stove, then sold the old stuff on TM for about $700. Once I factor in all the other crap, whoops, unwanted treasures, I've sold on there, it could easily be more than $2000 in a year. I'm certainly not making a living out of doing it as it's all stuff I owned to start with and now don't need, but I'd certainly stop doing it if that was classed as 'income'.

[p.dath]

That sounds a bit unfair - we renovated our two bathrooms recently and also replaced our stove, then sold the old stuff on TM for about $700. Once I factor in all the other crap, whoops, unwanted treasures, I've sold on there, it could easily be more than $2000 in a year. I'm certainly not making a living out of doing it as it's all stuff I owned to start with and now don't need, but I'd certainly stop doing it if that was classed as 'income'.

You aren't trading are you. You're only selling. Trading is when you buy something with the intention of selling it for profit.

[p.dath]

...
If your business makes a profit, you will also be better off NOT being GST registered, from a purely profit point of view.

For example (using exaggerated margins to make the point):

I buy a cheap widget for $1.12 from my supplier. I sell the widget for $112.

My gross margin is $110.88, if I am not GST registered.

If I an GST registered, I pay $12 in GST, and claim 12c, meaning my gross margin is $99.

Not quite. If you are not GST registered then you will pay GST in that 1.12 to your supplier that you can not claim back, and you sell price contains no GST.