ATO Has Your PayPal Deposit Details - Even Friends and Family Transfers!

nicolemcmilllon on 05/09/2019 - 10:24
Last edited 05/09/2019 - 21:34 by 1 other user

Just wanted to give everyone a heads up about PayPal deposits.

The ATO now has these details (they may have had them for a long time) but they are now made public on your prefilling report.

The ATO notes that these deposits may not constitute income. For example if you are selling some household stuff or if friends send you money etc.

Most of the time is not income, but the fact that this information is available will definitely lead to the ATO asking questions.

I did a tax return yesterday and the client had over $20,000 deposited into his paypal account. He said that these were mainly friends and family transfers and selling a motorbike etc.

The ATO is getting more and more info and data matching so just be mindful of including any paypal deposits that are income to your tax returns.

Have a great day guys :)

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Comments

  • vetopower on 05/09/2019 - 10:28
    +8

    The government wants to be able to track every aspect of your financial life.

    It's why the government is trying to make it illegal to pay for transactions greater than $10,000 in cash: https://www.abc.net.au/news/2019-08-20/transacting-$10,000-or-more-in-cash-could-make-you-a-criminal/11429230

    • spackbace on 05/09/2019 - 10:42
      -1

      It's why the government is trying to make it illegal to pay for transactions greater than $10,000 in cash: https://www.abc.net.au/news/2019-08-20/transacting-$10,000-or-more-in-cash-could-make-you-a-criminal/11429230

      For paying businesses, you've needed to fill out a declaration form for years if you wanted to pay over $10k in cash

    • arkie0 on 05/09/2019 - 13:36
      +2

      The real reason is actually to limit a cash society once/if interest rates go negative.

      The black/cash economy is currently tiny, if rates went negative everyone would move to cash.

      • Miami Mall Alien on 11/09/2019 - 15:58
        -1

        That, and so that banks and merchant services providers can take a cut of every single transaction.

  • Skramit on 05/09/2019 - 10:34
    +11

    Good. Hopefully it stops people avoiding their fair share of tax.

    • orangetrain on 05/09/2019 - 12:28

      I'm still not seeing my Singaporean bank showing on my prefilled data when I sell millions worth of goods. Only poor suckers follow tax rules.

    • whooah1979 on 05/09/2019 - 19:54
      -7

      fair share of tax.

      There is no such thing as fair share of tax. Everyone would be paying 19c per $1 if it were fair.

      • Skramit on 05/09/2019 - 20:03
        +3

        Ugh yes there is. “Fair share” is not the same as “equal share”. I’m not suggesting everyone pay the same tax.

        It’s fair that somebody earning 200k pays 60k in tax. Like wise it’s a fair share for somebody earning 19k to pay 0 tax.

        • Skramit on 06/09/2019 - 10:09
          +1

          haha people are happy to neg without rebutting… OzB at its best.

        • whooah1979 on 11/09/2019 - 14:23

          I’m sitting quietly wait for the party that is brave enough to introduce a flat rate system. Or remove it completely in favour of higher GST.

    • srhardy on 06/09/2019 - 09:32

      If you really wanted that then its relatively easy with these simple changes;

      make trustees fully transparent and if paid overseas trust have a withholding tax
      have GST on all exports (it can be reflected and reduced new tax rates) as it helps catch transfer pricing scam so they pay some tax
      also remove all GST loopholes and exemptions, period
      GST on CRYPTO ~ yep, its a good/service you need to pay GST when you BUY it!
      Financial transaction tax (inc crypto) of 0.00333% both foreign and domestic
      Intellectual property poroperty valued at a fixed 10% of a product for deduction, to catch apple/amazon on digital gougling!

      We also need to move to a crypto AU$ that bypasses VISA and MASTERCARD for transactions

      Oh, make all gambling on credit non-enforcable and refundable… And a GST at the window for payouts auto deducted (casinos and horseraces ect)

      Tax rates can be reduced and the tax-free threshold increased (tax-free should be 60k a year now at the current cost of living), with max tax rate 10% 60-90k, 15% 90-120k, 20% 120k-250k, 25% 250k-1mil, 33%>1mil

  • Numlock on 05/09/2019 - 10:45
    +4

    Down with the cash-free economy!

    Keep using cash!

    • battler on 05/09/2019 - 13:41

      wad is god.

  • Cave Fire on 05/09/2019 - 10:49
    +1

    This information has been around since the 70's AFAIK. Paypal is just a front end for the banks, as you need a bank to validate any credit in the system. Notes are also just a front end for the electronic transactions.

    • salmon123 on 05/09/2019 - 11:08

      It's interesting that the ATO only pre-fills the paypal data.

      I would've thought with NPP, that people are now receiving gumtree payments directly into their accounts, so this data should be available on a prefill report too.

      • hashtagbargain on 05/09/2019 - 11:24

        Just a matter of time then?

        • salmon123 on 05/09/2019 - 11:25

          Yeah - they probably already have the data from bank accounts, just not visible on a pre-fill report.

          I imagine they've been verifying employment income against bank deposits for 20+ years.

  • salmon123 on 05/09/2019 - 11:05
    -1

    @nicolemcmilllon how would you deal with someone that's just selling household items via ebay and received 20k? Would you just ignore the paypal amount in the pre-fill data or would you declare it as business income and offset it with the purchase price of the goods (possibly down to $0 profit)?

    Also, how would you deal with someone that's flipping items at a profit, eg buying on gumtree and selling on ebay? Looking at mygov the business income section asks for an ABN, etc. Do you need to retrospectively register for an ABN in this case?

    Another example might be someone that rents a property and then sublets it via airbnb. How would you deal with that?

    • HighAndDry on 05/09/2019 - 11:29
      -1

      Also, how would you deal with someone that's flipping items at a profit, eg buying on gumtree and selling on ebay? Looking at mygov the business income section asks for an ABN, etc. Do you need to retrospectively register for an ABN in this case?

      You really need to have applied for an ABN before you started flipping items at a profit.

      • salmon123 on 05/09/2019 - 11:32
        +1

        You really need to have applied for an ABN before you started flipping items at a profit.

        Thanks Sherlock, do you have a constructive comment on how to deal with it retrospectively?

        • HighAndDry on 05/09/2019 - 11:38
          -1

          Hey, I'm not the one conducting a business without an ABN. Talk to an accountant - it's not actually the ABN itself which is important, it's the (potential) tax liabilities and treatment differences that are.

          • Htu08 on 05/09/2019 - 11:44

            @HighAndDry: https://www.ato.gov.au/Business/Starting-your-own-business/I…

            I find the ATO has released alot of guides in recent times for mainly every scenario. air bnb etc etc (rental income)

            • salmon123 on 05/09/2019 - 14:10
              -1

              @Htu08: The "hobby or business tool" in the link you posted, doesn't really support the airbnb case.

          • salmon123 on 05/09/2019 - 12:00
            -2

            @HighAndDry:

            I'm not the one conducting a business without an ABN

            It's a hypothetical question.

            Talk to an accountant

            I believe the OP is an accountant.

            Thanks for the valuable advice, Sherlock.

            • Htu08 on 05/09/2019 - 14:24
              +2

              @salmon123: Hi there Salmon123,

              I didn't send the link for air bnb as i was trying to say that you need to search teh ato website as they have alot of material now to deal with each scenario.

              https://www.ato.gov.au/General/The-sharing-economy-and-tax/R…

              sharing economy may be beneficial for alot of readers.

              the previous link i sent relates to your scenario i believe, pretty much.

              as well as Non commercial losses i posted down below.

  • [Deactivated] on 05/09/2019 - 11:42

    Luckily all my brodens are for losses. I hope it autopopulates a deduction.

  • nubzy on 05/09/2019 - 12:14
    +1

    Are PayPal credits from surveys and things like that considered income??

    • brad1-8tsi on 05/09/2019 - 13:44
      +1

      No, nor is Return & Earn credits, credits from solar PV fed back into the grid, scrap metal recycling up to $6800pa, casual selling on ebay

      • pgcs on 06/09/2019 - 07:38

        Unless you have an ABN, then it's apparently pretty much all income.

  • tamckinnon on 05/09/2019 - 12:42
    +2
    1. Pre-Filling on Tax Returns is a good thing, more automation is a good thing. You do have to check that it is correct however!
    2. PayPal are licensed by APRA as a authorized deposit-taking institution (ADI) so PayPal are just complying with the AML/CTF Act.
    3. The AML/CTF act requires reporting to AUSTRAC, e.g. transactions of $10k or more (TTRs), suspicious matter reports (SMRs) & money transferred to and from overseas (IFTIs)

    *AUSTRAC is an Australian Government agency that uses financial intelligence and regulation to disrupt money laundering, terrorism financing and other serious crime.

    https://www.austrac.gov.au/sites/default/files/2019-06/eu_pa…
    https://www.austrac.gov.au/business/legislation/amlctf-act
    https://www.legislation.gov.au/Details/C2019C00011
    https://www.oaic.gov.au/privacy/other-legislation/anti-money…

  • chumlee on 05/09/2019 - 12:47
    +10

    My drug dealing is just a hobby so I'm not required to pay tax until it turns into a business

  • Bid Sniper on 05/09/2019 - 13:22

    Thanks for the heads up.

    I was wondering about paypal if ATO can legally look at your account. Accountant didn't ask for details since I said I use to sell unwanted crap I accumulated over the years.

    • salmon123 on 05/09/2019 - 14:12
      +1

      I was wondering about paypal if ATO can legally look at your account.

      Yup - they can even raid your house without a warrant. They have pretty board powers to search and seize.

  • ssquid on 05/09/2019 - 13:22

    What do they do if you receive non-AU$ payments (and the funds remain unconverted in your PayPal account)?

    • salmon123 on 05/09/2019 - 14:12

      Pretty sure they'll use an approximate conversion rate when they report it to the ATO.

  • thatonethere on 05/09/2019 - 13:29
    +1

    More info here https://www.ato.gov.au/Tax-professionals/Tax-Agent-Portal/In…

    The Pre-filling 2019 report includes the following changes:

    Business transactions through electronic payment systems - new section
    Where a client may have received business income through electronic systems such as BPAY, PayPal, or credit card facilities a new message and data will be displayed. This will be shown for information only.
    Information displayed will include: Provider, Net annual payments amounts and Transaction currency.

    I'm guessing at the moment it is a nudge to say "we're watching you".

    • salmon123 on 05/09/2019 - 14:13

      I'm guessing at the moment it is a nudge to say "we're watching you".

      I think they'll make examples of a few people this year to increase compliance for next year.

  • [Deactivated] on 05/09/2019 - 14:01

    Yes the ATO tracks everything, but 99.9% of people are tiny fish in a big pond

    • pgcs on 06/09/2019 - 07:40

      It's always the 'tiny fish' (easy targets) they go for. The sharks are rarely touched.

      • LFO on 06/09/2019 - 12:40

        The sharks are safely swimming in another pond. Cayman Is and many more.

  • uncompressed on 05/09/2019 - 16:39

    Death and Taxes. NO EXCEPTIONS.

    • Mikay89 on 05/09/2019 - 16:51
      +2

      Taxes first, then death, even taxes after death too… unless your a former MP, then you become the exception!

    • Gerry H on 05/09/2019 - 16:55
      -1

      problem is they dont spend the tax properly. such high tax and so much goes to waste.

    • LFO on 06/09/2019 - 12:38

      Nope.
      Taxes you can cheat. Death you don't.

  • Gerry H on 05/09/2019 - 16:51

    how would they know ur paypal account? i have accounts where i don't use my real name because of privacy.

    • [Deactivated] on 05/09/2019 - 17:18

      TFN and/or linked bank account.

      • thatonethere on 05/09/2019 - 17:54

        Or linked credit card or provided ID documentation.

    • salmon123 on 06/09/2019 - 10:39

      how would they know ur paypal account?

      ATO can match accounts using a variety of ways - names/addresses are one way, in addition to what other people mentioned about linked bank accounts and credit cards.

      i have accounts where i don't use my real name because of privacy.

      Have you actually received payments into those accounts and tried to withdraw it? Paypal typically asks for ID verification at some point, when you start to receive funds into the account. There's plenty of stories around, were people's accounts have been suspended pending verification.

      You should be careful with these accounts set up under an alias, because it would be almost impossible for you to prove they belong to you if they asked for ID verification.

  • endolphin on 05/09/2019 - 17:27

    How would the ATO view a PayPal deposit stemming from the sale of frequent flyer points? Ridiculous if income (ignores the forgoing of the benefits that the points provide).

    • salmon123 on 05/09/2019 - 17:42

      I wondered this too. I would say it's not income:

      • Unless you're a points broker, you're probably not running a business
      • Some points schemes (eg Amex) allow you to cash out points with statement credits. This isn't considered income
      • At the end of the day, you're buying the points by spending money on your credit card and selling them for a loss. This is how the credit card companies make money. Of course the costs you incur are indirect, because the merchant typically includes it in the price of the goods, but you get what I'm saying.
  • Neoika on 05/09/2019 - 23:14
    +2

    Next step: Get all points balance of your participating rewards programs.

    • ssquid on 05/09/2019 - 23:51

      Are those currency now?

  • [Deactivated] on 06/09/2019 - 08:27

    The ATO has access to most things, if you aren’t doing anything wrong then why worry? As is the case for 99% of the population, common sense really,

    Taxable income is about intent, if you are selling a few things or doing odd on the side as a hobby you don’t need an ABN. Almost all tax agents will advise you not to declare this, because it isn’t regular or predictable income.

  • zambuck on 06/09/2019 - 09:06

    This is the public list of data sources the ATO does data matching on. https://www.ato.gov.au/About-ATO/Commitments-and-reporting/I… . As the page says, these are not the only data sources used.

  • srhardy on 06/09/2019 - 09:43

    A HOBBY is TAX FREE and Ive seen 20K a year HOBBY income declared and its TAX FREE but
    you cant clai any expenses on getting the money, like fuel (he was collecting and reselling street-side recycling rubbish from a ute/trailer on weekends)
    storage or repair costs ect

    As long as its NOT your main source of income

    Oh; he gave away a large amount of this money to charities and this WAS a tax deduction off his personal income…
    he would do 'fly and builds' for schools ect with the money, this was neither a dedication nor an expense

    Another girl sold chocolates from her desk in an office and make 2-3k a year, again a hobby and the money she donated to charity was a tax deduction with keeping the receipts!

    • salmon123 on 06/09/2019 - 10:43
      +1

      Ive seen 20K a year HOBBY income declared

      How do you declare hobby income on a tax return?

      • pgcs on 09/09/2019 - 11:46

        Back when Amway was a big thing (early 1980's), if you were a seller at the 9% or less stage, it was considered a hobby by the ATO as the deductions would generally be higher than the income. Over that - which I think was 12% & up - you were fair game as a business.

      • [Deactivated] on 10/09/2019 - 09:10

        You don’t.

  • LFO on 06/09/2019 - 12:37

    As always: Keep all receipts AND keep your own notes detailing EXACTLY why is not income or etc.

    Write those explanations/justifications while they are fresh in your mind and then keep those written explanations for as long as necessary. It is only a .PDF scan or a piece of paper. No dramas.

    If it is convincing today it will be convincing 4 years down the road.

  • HeWhoKnows on 06/09/2019 - 17:40

    This is the problem with cashless payments.
    Digital money is fully trackable!

    Buy and sell in CASH as much as possible!

  • Techefy on 03/12/2020 - 01:43

    Hi, Can I ask how ATO finds my Paypal account?

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