Trade Me is receiving around 80 requests a month from government agencies for information about its online traders.
The agencies range from Inland Revenue to Customs, Police and the national enforcement unit of the Ministry of Economic Development, according to Trade Me’s head of business Mike O’Donnell.
“A number of government agencies have powerful compliance regulations,” says O’Donnell. “You’d be a mug to think they weren’t able to take an interest.”
There is no trading threshhold triggering notification to government agencies, O’Donnell says. Rather, specific requests are made by the agencies.
An Inland Revenue spokesperson told Computerworld the department takes a “keen interest in using a variety of third-party information and obtains this from a range of sources.
“We do monitor online trading, particularly where there are high levels of activity and over certain levels of value. Generally, a level of activity above the GST registration threshhold ($40,000) would trigger our interest,” the spokesperson says.
“Our approach to dealing with third-party information from any source (including Trade Me and other online sites) that suggests that an income creation activity exists — and where the level of activity is more than that of a casual nature — is to confirm that any commercial activity is fully reported for tax purposes.”
O’Donnell says there are around 5,000 full-time businesses operating on Trade Me, ranging from at-home mums who source and on-sell goods, to large organisations such as Cash Converters, who chose to put their 40 stores on Trade Me rather than to build their own online facililty.
“There are also a number of full-time stores such as cellphone shops, stationery and tool shops,” O’Donnell says. “We also have around 1,000 car dealers, 3,500 real estate agents and 200 recruitment companies.”
Trade Me has created a tax advice section, created by accounting firm Deloitte, to help people decide whether they are liable to pay tax on their online trading activities.
In Australia, the Australian Tax Office (ATO) is probing eBay for details of sellers with an annual turnover of more than $50,000 to determine if they are avoiding GST, The Australian newspaper reported last week.
The ATO has requested data going back three years. Up to 1,000 customers may be affected. eBay has more than five million members in Australia and hosts thousands of merchants who use the service to sell their wares online.
The enquiry has also led to questions being asked about eBay’s status in Australia and whether it should be treated as a local business and required to register and charge GST itself. Phil Leahy, who heads the Professional eBay sellers Association, told The Australian he was confident the site would have to follow the lead of the eBay’s British site which was forced by the UK Inland Revenue to register for Value Added Tax.
• Trade Me is owned by Fairfax, which publishes Computerworld