Selling on Trade Me or Marketplace: Is It Taxable?

Selling your own used belongings on Trade Me or Facebook Marketplace is generally not taxable. It becomes taxable when it is a business, or when you bought the goods in order to resell them. Inland Revenue (IRD) says there is no minimum income level to be in business, so the test is how you sell, not how much you make.

Selling your own things

If you are clearing out a wardrobe, a garage or last year’s baby gear, you are not carrying on a business and the money is not income. The Income Tax Act reaches a sale of goods in two main ways:

• Income from a business is taxable (ITA s CB 1).
• Selling personal property is taxable if you acquired it to dispose of it, or if your business is dealing in property of that kind (ITA ss CB 4 and CB 5).

IRD also says occasional money from a hobby, with no intention of making a profit, is not income and is not taxable. The flip side is that you cannot claim hobby costs or losses. Property, shares and crypto have their own rules, so this article covers goods.

When it becomes a business

IRD’s online trading page lists the questions it uses. Answering yes to some or all means you will likely need to declare the income:

• Did you buy goods with the intention of reselling them?
• Did you intend to make a profit from the sale?
• Are you providing services in return for payment?
• Do you regularly sell goods or services online?
• Do you sell online as part of an already established business?

IRD’s wider list of business indicators adds: putting in a lot of time, money and effort, keeping records of the activity’s finances, running it like most businesses in the same trade, intending to continue long term, and relying on it to pay living expenses.

Buying cheaply at op shops, garage sales or wholesale and relisting for more is the classic way a “seller” becomes a business. The first time you buy something intending to resell it, the profit is already income.

If it is a business: income tax

Business income goes in your income tax return (IR3) as net income, which is sales less the costs of earning them. If you also have a salary, the profit is taxed on top of it at your marginal rate. Our side-hustle tax calculator estimates the extra tax, and the second job and side hustle guide explains the IR3 bill.

Once your residual income tax for the year is more than $5,000, provisional tax generally applies, which means paying the tax in instalments through the year instead of in one bill after. The provisional tax guide for the self-employed shows how, and there are special rules for the first year.

GST: the threshold is on sales, not profit

You do not have to register for GST just because you start selling. You must register when you carry out a taxable activity and your turnover is over $60,000 in the last 12 months, or you expect it to be over $60,000 in the next 12 months. Turnover is what you sell, not what you keep, and it leaves out the GST charged on the sales. IRD also requires registration if you carry out a taxable activity and add GST to your prices. IRD can decide you need not register if it is satisfied the next 12 months will stay at or under the threshold.

Worked example: profit is small, turnover is not

A reseller buys used camera gear and sells it online.

The profit is $14,000, and many people stop there. But the GST test uses turnover, which is $66,000 and over $60,000, so this seller must register. Registered, they charge GST on sales and claim it back on business purchases. The GST registration guide covers filing, and the GST calculator works out the 15% in or out.

Platform reporting: what IRD says

New Zealand has adopted the OECD model rules for digital platforms. From 1 January 2024, online marketplaces resident in New Zealand must collect and report information about sellers who provide relevant services. IRD’s overview lists these as the rental of immovable property, such as short-stay accommodation and carparks, and personal services such as ride-sharing, food and beverage delivery, and graphic and web design.

IRD’s page adds that the optional extended standard for the sale of goods and vehicle rentals has not been implemented but may be considered in the future. The page was last updated on 29 November 2024, so check IRD’s current wording if this matters to you. Whether or not a platform reports anything, the rules above decide what is taxable.

What to do now

1. Run the questions above for the last 12 months. If you bought items to resell, or sell regularly for profit, treat it as a business.
2. Start keeping records if you are in business. IRD says to keep 7 years of tax records: sales history from the platform, receipts for stock, postage and fees.
3. Add up turnover monthly against the $60,000 GST threshold, including what you expect to sell in the next 12 months.
4. Set tax aside from each sale. Use the calculator above for a monthly figure.
5. Declare the income in your return and register for GST if you pass the threshold. If you are unsure, ask a tax agent or contact IRD.

Common mistakes

• Judging it by profit. GST turns on turnover.
• Treating “I only sell on the side” as a reason it is not a business. IRD says there is no minimum level.
• Claiming a loss on a hobby. IRD may reassess and bill you.
• Mixing personal and business spending, which makes the costs hard to prove.

This is general information, not advice for your situation. Confirm borderline cases with a tax adviser or Inland Revenue.