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  • Hobby vs Business approach?

    Hi Gents,

    Would love some feedback on pro's and con's setting up a business vs scrapping as a hobby?

    Just looking at GST, there appears little benefit to scrappers as you can't claim GST credits on 'stock' that is provided free. It basically leaves the accounting hassle and potentially means you are absorbing a 10% hit on profits if the buyer is unwilling / unable to add GST on top?

    I could also imagine that bookkeeping generally is not a fun part compared to hobby scrapping & stacking.

    On the other hand, are you somehow disadvantaged as hobbyist when dealing with eWaste buyers & junkyards? Do they pay cash (even if you drop off larger quantities)?

    Could also imagine that some corporations don't want to deal with individuals, liability issues, insurance cover, etc?

    What other points am I overlooking here?


    Cheers
    Frank

  • #2
    On GST, you don't have to register for GST until your turnover is over $75,000 per year, best to stick with that and if your looking like going over then then stop selling until the next financial year.
    it's pretty hard to scrap and earn over 75k unless your selling heaps of parts on ebay, even ebay it's best to stop before you hit 10k, otherwise it's taxable as it's above hobby level, I pull my stock at 9k.

    Most ewaste buyers are happy to deal with anyone with decent volumes, say $500 worth of boards minimum would be no problem.
    Many will also pay GST if they haven't looked your ABN up to see your not registered for GST, in which case you need to request a cash type of sale, otherwise you need to send that GT money to the tax office, basically being registered for GST means your a tax collector for the ATO, easy to avoid if you ensure no-one pays you GST.

    Scrap yards are the same, if your not registered for GST they won't pay it, but if your taking in over $300 of scrap at any one time you will need an ABN which is easy to get but hard to hold onto for over 2 years unless your actually making decent money and paying tax.

    It's handy to have an ABN to start with but depends on what level your going to, treating a small scrapping biz as just a hobby might be an option if your not going to be extensively advertising and needing a website, so long as it's a hobby and your not taking in squillions, you won't have to pay tax, it's a bit like my youtube stuff, because I consider it as a hobby the ATO accepts it being a hobby even though I make ok money from it, they say unless i'm making like $100,000 a year then so long as I consider it a hobby then that's what it is, strange but that's how it is.

    So before you go for serious business i'd suggest going hard but considering it hobby until your turning over a decent amount, an ABN is not needed unless your taking in over $300 to scrap yards or needing a website with .au
    Most scrappers will just take in under $300 per day
    Buying eWaste link here

    Comment


    • #3
      Hard to gauge what makes up $300 at a scrapyard? I'd probably have to offload steel regularly because I don't have lots of space.

      Say I want to drop off 100kg copper cable, 450kg pressing steel and 50kg brass bits and I don't have an ABN - then what?
      Is this ABN requirement only at your scrapyard, only VIC or everywhere?

      Comment


      • #4
        I have been to only a few in SA, but none of the have asked for an ABN for any amount even into the low thousands. I have to fill out a form stating the items are not stolen and provide a drivers license if it is over $82 at some yards but no mention of an ABN.

        Comment


        • #5
          If no ABN and the scrap is over $300 it will incur a 47% tax deduction, only way a scrap yard could go around that is to break up the payments on paper over many days, so you get paid today but they fix paperwork to show you sent scrap in multiple days.

          https://www.ato.gov.au/Business/GST/...liance/?page=7

          So if you have over $300 of scrap you need to bring it in on different days, it's not as if you'll have 50 kg's of brass every week or even copper and it takes 2 tonne of scrap steel to get $300
          it shouldn't be of real concern to you if your just starting out anyway, if you have lots then just get an ABN, only takes 5 minutes to apply online and your set, then tax is up to you.
          Buying eWaste link here

          Comment


          • #6
            That link is spot on...

            https://www.ato.gov.au/Business/GST/...ance_of_an_ABN

            "The no-ABN withholding rule is designed to ensure that businesses, especially those that are not required to be registered for GST, do not request cash payments in an attempt to avoid their tax obligations."

            That would be an impediment to hobby scrapping :-/

            Comment


            • #7
              Scrap metal pays peanuts but it looks like it a lot of hassle on top...

              https://www.claytonutz.com/knowledge...metal-controls

              Cash no longer accepted
              Section 12 of the Act makes it an offence for a scrap metal dealer to pay for any scrap metal in cash (including cash cheque) or in kind with goods and services.

              The Act requires scrap metal business to be registered with the Commissioner of Police and pay a fee every three years. The registration information must include the name of the business and address of each scrap metal yard used. It will be an offence not to register. It is likely that this register will be utilised by other bodies such as the Australian Taxation Office and Environmental Protection Authority who have an interest in making contact with scrap metal businesses to ensure the payment of taxes and levies, and the appropriate disposal of waste.

              Part 3 of the Act will empower police to enter a scrap metal business without a warrant to determine whether there has been a contravention of the Act and to conduct a search; take photographs, films, audio and video recordings; seize anything the police officer believes on reasonable grounds is connected with an offence against the Act or regulations; copy records; require any person to produce documents on the premises



              Far out, talk about hoops to jump

              Comment


              • #8
                That all relates to a scrap metal yard, not for scrappers selling it

                The cash thing is only in NSW because they had a lot of crooks stealing cars and scrap metal so they get paid in the bank, everywhere else is still cash in hand no matter how much.
                Buying eWaste link here

                Comment

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