a young fella I know has been making a few bob buying & selling cars. He gets stuck in & tidies them up then flicks them off. I suggested to him that I thought there was a limit how many cars per year or over a period of time & he didn't know anything about that. I'm not sure either so thought I'd ask for the sage advice. cheers
cassina1,
Jan 14, 7:50am
I dont know what the number is but if you sell over a certain number a year you have to get a car dealers licence.
It doesn't matter how many he sells, he is selling for a profit he needs to register as a dealer and pay tax on any profit made.
apollo11,
Jan 14, 8:12am
"It is against the law to sell more than six vehicles in a 12-month period without being registered as a motor vehicle trader"
mini-mac,
Jan 14, 8:18am
thx for the replies. I've made him aware & am sure he will take note. Can only advise. cheers
curlcrown,
Jan 14, 8:31am
That's often quoted even on official web sites but it is such an oversiplification that it is wrong. In some cases selling one car would reqire registration and in others selling many more than six in a year would not. As metioned before by someone else it is the intetion to make profit that counts.
apollo11,
Jan 14, 8:34am
Very hard to prove intent though.
muppet_slayer,
Jan 14, 9:03am
Well you'd be an idiot to sell cars for no profit.
ronaldo8,
Jan 14, 10:52am
Businesses are required to pay tax on sales, private second-hand sales are not. It is the status as a business that is relevant not profits made, that only effects the amount of tax, not the requirement of registration and liability to pay it.
Everyone's intent is to make a profit obviously be they a business or not. Is it a business venture? then he needs to be registered. Is it up to 6 private sales, not a business venture, then he doesn't
It certainly sounds like a business venture, I'm sure the IRD would see it as one, the cars were bought not for private use but with the express intent to be sold, I.E. a business.
The matter of profits is a completely secondary one.
kazbanz,
Jan 14, 8:29pm
Please don't shoot the messenger-Im not passing judgement just telling you. The number 6 is really just a number drawn out of thin air. If you are buying and attempting to sell motor vehicles with the intention of making a profit then you ARE carrying out the business of a Motor Vehicle Trader. Even for 1 vehicle. As such you need to pay the fee and register as a Trader (Car dealer) You also need to "do" the GST dance and pay tax. keep in mind that effectively you only pay GST on your profit because gst applicable costs are claimable.
There are two separate issues 1) The whole taxation thing we have discussed
2) Legal requirements for traders vs private people. Traders are required by law to cover buyers under the CGA and SOGA so cannot sell "as is where is". Private people have the as is where is option. Traders are required to issue invoices (VOSA) and all vehicles MUST display a CIN (SIN) card. private people are not (although its always advised) Traders are also legally required to sell cars with WOF no more than 1 month/28 days old. Private can go as is and the wof can be nearly gone
kazbanz,
Jan 15, 12:57am
On this subject MVDT which is the 'teeth" of motor vehicle trader laws treat anyone buying and selling cars for profit as dealers. The twist to it is that they report non registered traders to the Com Com so you get whammed as a trader then get nailed by com com for illegal trading
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