Tax liability from ebay profits

C

Conshine

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I am no professional ebayer, but do dabble - Currently 70 or so transactions. I sell a lot more than I buy.

Have moved house a few times over the years and have accumulated an unbelievable amount of crap and taken it all with me. (One mans crap is anothers treasure!)
I am slowly getting through it all and doing quite well selling it on ebay.
I am accumulating quite a few euro in my Paypal account now - nearly E2000 in the last 8 months.

With Xmas coming up, I will certainly try to shop on ebay to spend my hard earned cash, but it earns no interest in Paypal and have no intention of spending it all on presents.

I have recently opened up the First Active ESaver account.
Discussed at length elsewhere on this forum I believe :)
And feel that the money would be better in this account - or any other account really that earns >0% interest.

My question is, does / will the tax man ever ask where the money comes from? E2000 does not come out of thin air.
Should I keep ebay invoices etc?
I am only a "personal seller" - I am not running a business, I am just, as mentioned before, clearing out crap, and have a lot of it and doing quite well at it.

My parents, not comfortable on computers, are giving me a load of their crap, having heard of my success from the wife who has to put up with my constant search for "crap to sell" - So my balance will increase even more over time.

Should I be keeping details of what they give me and what it sells for?
Should I buy the items from my parents and they write me a receipt?
Even if its a nominal amount?

I estimate another E1000 from my parents stuff, but I will pay that money to them when the things sell.

How long should I keep this for?

I know that the chances are low for the Tax man to investigate me for this amount of money - but its not 100% unlikely.

Thanks in advance for the advice!
 
I doubt the Revenue are going to be too concerned about the source of €2k or so.

However, it is always a good idea to keep some records of your sources of income.

As you are only selling your own accumulated "crap", you aren't subject to tax on it.
 
Even if you sell a personal household item or car for more than you originally paid for it, there is no tax payable, as these goods are not considered assets.
 
extopia said:
Even if you sell a personal household item or car for more than you originally paid for it, there is no tax payable, as these goods are not considered assets.
Click to expand...

Considered assets?? I love to see people dishing out there invaluable tax advice!! I car is not an asset? Really now?? I must recommend some of my clients to start buying classic cars are they are not "consider assets"!!!

Ok enough of ridiculing other "advisors". Firstly for what I understand from your initial comment this is non-trading income. (i.e you have realised a capital gain). However you are not liable to pay tax on a gain out €2,000. You are entitled to Capital Gains of €12,700 annually before having to pay tax.

That'll be €360 ex VAT!!!!
 
shane7321 said:
Considered assets?? I love to see people dishing out there invaluable tax advice!! I car is not an asset? Really now?? I must recommend some of my clients to start buying classic cars are they are not "consider assets"!!!

Ok enough of ridiculing other "advisors". Firstly for what I understand from your initial comment this is non-trading income. (i.e you have realised a capital gain). However you are not liable to pay tax on a gain out €2,000. You are entitled to Capital Gains of €12,700 annually before having to pay tax.

That'll be €360 ex VAT!!!!
Click to expand...

Ehhh No. He hasn't realised a capital gain of 2000. If he is subject to CGT, then it's 2,000 minus the price he originally paid for the goods - probably results in a zero or negative figure!

Also, I don't think the CGT allowance is as much as €12,700.
 
shane7321 said:
Considered assets?? I love to see people dishing out there invaluable tax advice!! I car is not an asset? Really now?? I must recommend some of my clients to start buying classic cars are they are not "consider assets"!!!
Click to expand...

I'm not sure what the relationship with these clients is. Hopefully they are not paying for financial advice.

shane7321 said:
Ok enough of ridiculing other "advisors". Firstly for what I understand from your initial comment this is non-trading income. (i.e you have realised a capital gain). However you are not liable to pay tax on a gain out €2,000. You are entitled to Capital Gains of €12,700 annually before having to pay tax.

That'll be €360 ex VAT!!!!
Click to expand...


OK, enough of the hysteria and personal affrontery.

The revenue commissioners do not consider ordinary personal household items or cars to be assets - the technical term is "wasting chattel". Such items tend to depreciate in value, rather than appreciate.

If you buy a saucepan for a tenner and, by some stroke of good fortune, manage to sell it later for 11 euro (or even a thousand euro), the revenue will not come after you for your profits. Same goes for your cars. (classic or not).


Here's what the [broken link removed] have to say about this (2004 figures, might have been updated since):

_______________________________________

Various exemptions and reliefs from capital gains tax are provided, the most important are:


1. The first €1,270 of net gains by an individual in a year of assessment are exempt. In the case of a married couple this exemption is available to each spouse but is not transferable.

2. Gains realised on the following are not chargeable gains:


i Irish government securities, including land bonds, prize bonds, savings certificates and bonuses payable under the National Instalment Savings Scheme;

ii securities of local authorities, certain Statesponsored bodies and the European Union;

iii futures contracts based on government and other securities that are not 14 chargeable assets for the purposes of capital gains tax;

iv life assurance policies and contracts for deferred annuities, unless purchased from another person etc.;

v chattels sold for €2,540 or less;

vi wasting chattels, such as private motor cars, animals;

vii winnings from betting, lotteries and sweepstakes;

viii gains accruing to superannuation funds, charities and bodies such as local authorities and trade unions;

ix works of art (valued at not less than €31,740) which have been loaned to an approved gallery for public display for a period of not less than six years;

x A gain on a dwelling house(including grounds of up to one acre) where the house has been used as an individual’s only or main residence (or, under certain conditions, as the sole residence of a dependent relative) during the individual’s period of ownership. In certain circumstances there may be a restriction on the relief or partial relief may be due.

xi A gain on the disposal of a business or farm by an individual aged 55 years or older for a consideration not exceeding €500,000 is exempt from capital gains tax.​
 
Extopia I agree with you in the main part. A wasting chattel is consider a once off, i.e one saucepan. If, however, I bought 10 saucepan and sold them each for €1,000 then in the eyes of Revenue they would not be considered a wasting chattel. In relation to the orginial query I do believe that the persons ebay profits would appear to be wasting chattel (i.e. not taxable).

Classic cars can sometimes come into the tax bracket. You have to treat each case individually.
 
I think if anyone managed to turn a €10 saucepan into a hot €1,000 ebay phenomenon the Revenue would still ignore the profit - as long as we're talking about selling on personal items and not buying and selling items in a business situation. The guidelines are clear enough.

The OP was talking about selling household items for maybe an average sale of €40 a pop, based on the info provided. Of course s/he has nothing to worry about.

Where is the revenue info sheet on classic cars? You may be right, but I'd be surprised if "classic" cars are treated any differently to your average Corolla, as long as we're talking about selling personally held items (as opposed to dealing in classic cars). The revenue guidelines clearly define cars as wasting chattels (correctly, in my view, classic or not) :)

Of course if you can point to specific Revenue publications dealing with classic cars, I stand corrected!
 
Well this is speaking from experience, I've only dealt with this type of case 3 or 4 times. I can't quitr quote the section of TCA 97 but I'll look it up for you!

Basically a client had a tax audit, where he had an unusual number of "wasting chattels" in one tax year. He was a collector of classic cars and then decided to sell all his cars in one year, making quite a big profit nearly in excess of €1,000,000. Of course we returned this at wasting chattels but Revenue hit us with an audit and decided that our client more than likely bought these cars with a view to selling them on.Naturally of course he didn't but he still got done in an audit. Luckily with some clever tax planning we managed to bring the amount down to a nomial value.

Unfortunately it depends on the Revenue officer you get!!
 
Well if what you say is true the Revenue decided he was running a de-facto car dealership and the cars were not therefore considered to be personal items, surely? So the rules for individuals would not apply. Not the same type of case as the OP mentions.
 
Yes true but my comment was in relation to classic cars!
 
Well if there are any revenue guidelines that suggest that gains on the sale of privately owned classic cars are liable for CGT I'd be interested in seeing them.
 
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