Spotlight on pro-traders
Inland Revenue has confirmed new legislation forcing professional online traders to reveal themselves and stand behind secondhand goods they sell at auction could help it catch tax dodgers.
A Consumer Law Reform Bill currently awaiting its second reading in Parliament would extend the Consumer Guarantees Act to professional traders auctioning secondhand goods through Trade Me and other online marketplaces, meaning such traders would need to fix or offer refunds for shonky used goods.
A key amendment to the legislation proposed this week by a select committee would oblige online traders to declare whether they were ‘‘in trade’’ or face fines of up to $10,000 – so shoppers would know whether they were buying from someone bound by the act.
Inland Revenue at present provides only relatively vague advice to traders, saying that as a ‘‘general guide’’ people who sell things on a ‘‘regular basis’’ that they bought with the intention of reselling for a profit should be declaring that for income tax.
A spokesman said Inland Revenue did not intend to align tax and consumer protection legislation by adopting a professional trading definition drawn up by the Consumer Affairs Ministry.
He said one possible result of the new requirement for professional traders to identify themselves was that it ‘‘ may alert Inland Revenue to those who are not meeting their tax obligations’’.
When the Consumer Affairs Ministry drafts its new guidelines, one rule of thumb may be the definition in the Secondhand Dealers and Pawnbrokers Act.
It says people are professional traders if they either buy or sell goods on six or more days in a year or sell secondhand goods worth more than $2000.