Private ruling: Am I in business – selling records electronically
Date of advice: 28 November 2017
Published: April 2018
Ruling period: Year ended 30 June 2017.
Date scheme commenced: 1 July 2016.

Ruling: Q1: Are you carrying on a business of selling records online? | A1: No.

Relevant facts and circumstances: You are employed full time. You purchased thousands of records (the records) over 30 years from various decades. You are selling your records online from your home. You have not bought any other records to resell or to replenish the records sold. Some of the records have appreciated in value considerably over the time you have had them. You have included in previous tax returns the moneys received from the sale of records and associated expenses. You included these amounts in your tax returns as you believed the online website would give your details to the ATO and you would get in trouble. You do keep general accounting records in relation to the selling of your records on the online site. You sell your records on an ad hoc basis. You do not have a business plan or a business name, nor do you employ staff, operate out of business premises or advertise your items for sale outside this site.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 6-5 | Income Tax Assessment Act 1997 Section 8 - 1 | Income Tax Assessment Act 1997 Section 995-1

Reasons for decision: Summary: Based on the information you have provided we do not consider the activity has the necessary characteristics of a business for taxation purposes. Therefore, any income you received in relation to this activity will not be assessable as ordinary income. In addition, any expenses that you incurred in relation to this activity will not be deductible. The records purchased are regarded as personal use assets and as such any gain made on the sale of a personal use asset purchased for under $10,000 is disregarded for Capital Gains Tax (CGT) purposes. | Detailed Reasoning - Additional information: Future years You should note that conducting an activity that has been described as a hobby is a 'status'. You can change from conducting an activity as a hobby to that of being in business and vice-versa over time as your level of activity changes. Therefore you should evaluate your level of activity on a regular basis to see whether you are conducting a hobby or carrying on a business.