Most people are confused about whether purchases made from Gumtree and private sellers with no ABN are tax-deductible. Gumtree is an online classified advertisement and community website which was launched in 2000. This online website is owned by eBay (a popular online shopping website). This is a place where people can advertise their goods and sell them. Here, ads are free or paid, depending upon the category of product and geographical location.
So, are purchases from this website tax-deductible?
Recently, we find an increase in people purchasing work-related or business-related products from websites like Gumtree. The ATO says that, for the expense to be tax deductible, the taxpayer must obtain written evidence from the seller. If the taxpayer does not have written evidence from the seller, for purchases of $300 or more, then it is not eligible for a tax deduction.
For your purchases on Gumtree or a private seller, to be tax deductible, make sure you obtain the following document from the seller:
- Name or business of the supplier
- Amount of expense
- Nature of products or services
- Day of the expense was incurred
- The date the document was created
However, it’s often not easy to obtain all of these documents from the seller. In such situations, you can also draw up a document and ask the seller to sign it.
To claim a tax deduction, you should not make payment in cash. Instead, make sure you pay via direct banking, debit card, credit card, or PayPal. Paying through these methods will provide evidence for the amount paid. Also, make sure you have a photo of items purchased and keep a copy of the Gumtree advertisement; it also works well for evidence.
In addition, you can also authenticate the purchases with additional documents. Having a bank statement, credit card statements, and photographs of the product or service that were offered works really well as evidence.
The ATO also allows two exceptions. Firstly, if the document does not show the expense incurred, then the taxpayer can also make use of a bank statement or any other evidence that clearly shows the amount and date paid. Secondly, if the document is not clearly specifying the nature of goods or services, then the taxpayer can also write in the missing details before lodging a tax return.
So, we can say that purchases that you make from classified advertisement websites like Gumtree, and private suppliers with no ABN, can be tax-deductible. The only important thing you have to consider here is to obtain all the important documents and evidence from the seller. Follow these guidelines, and you will be able to claim a tax deduction for these purchases.
If you’re interested in saving time when it comes to your accounting or bookkeeping tasks, we can help. Whether you are located in Capalaba, or anywhere in Australia, contact Accountants 2 Business today for a free introductory meeting.
