You need an ABN to sell scrap metal!

I finally got around to cleaning up some of the junk around the house today. We've renovated a couple of rooms over the past few years and I've had a growing pile of scrap aluminium and copper fittings rescued from the skip.

Went to the local metal recycler and was informed you need an ABN to cash in old brass and copper these days, it's considered a commercial waste, no problem with aluminium extrusions apparently thats just household waste!

This all seems a bit of OTT bureaucracy to me, since when shouldn't anyone be allowed to sell scrap? Perhaps I should have just taken the tradey's advise, not bothered and just thrown it all in the skip for land fill!

In any case my small bucket of old taps and fittings was worth $75 as scrap.

Thats incredible.:no:

Yup,

Afraid it's correct and all due to the GST regs which came in back in 200? .

If you don't have an ABN I believe the scrappy is obliged to keep 50% and hand it on to the government. I will stand corrected if the 50% figure is wrong but is is just one more impost the govermint has put on all of us including the scrappies who become unpaid tax collectors.

Peter

I don't think that is the case in Vic. I last went in a year or so ago, ,and if you had an ABN you get a better rate,but you didn't necessarily need one.I wish you did though, as we had about $4000 of 50mm orange circ stolen over the weekend.

Tools

Not the case here in SA either. At our local, they note your rego number. (Bleedin' copper thieves!)

You don't need an ABN here in QLD at least not with my dealer. Although if the amount is over a certain limit he can withhold a certain amount for tax or something if you don't supply an ABN.

You can cash in up to $300 a day or $3000 a year if its for a hobby or household waste. Anything over this you need an ABN.

Most scrap merchants will make you fill out a form which is forwarded to the ATO.

I believe this is a federal thing. I know its the case in NSW, ACT and VIC.

I have had the same problem had a big pile of bright and shiney copper but got around it using a mates ABN and giving him a small cut (a couple of cases of beer go a long way)

The question of whether you need an ABN is are you in business or are you a hobbyist.

The purchaser does not know if you are a hobbyist or not.

If you are a hobbyist (or just a householder), a declaration can be produced when selling the goods (it is on the ATO website) which informs the purchaser that you are not required to have an ABN and therefore he is not required to withhold the 48% tax and remit it to the ATO.

It doesn't matter about the amount involved but obviously a huge amount might get the ATO's attention and then the ATO will backtrack the transaction to the seller (thats you), and then you would need to convince the ATO you are not in business and therefore required an ABN and/or required to be registered for GST.

GST is a Commonwealth Government tax so it is the same all over Australia.

You dont need an ABN for a non commercial sale, however as the scrap dealer is the buyer to some extent they can set the rules.

If they purchase scrap without an ABN and the ATO audit there books (as cash buyers/sellers they are an ATO target) they need to prove the purchase was "non commercial" so they may request you fill out a form.

The reason for a value limit on some scrap is to make it easier to prove it is a non-commercial transaction.

Also when calculating the BAS statement it is much easier to get total purchases and divide by 11 to get the GST portion rather than keep records of what had GST and what didn't.

Quote:

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Originally Posted by Tools

I don't think that is the case in Vic

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I stock pile off cuts of cable and what ever I pull out of houses from rewires and take it to a local scrap metal dealer and all I get for is my drivers license as ID.

Slightly off topic but down on the peninsular late last year we had Smorgans Steel arrive.They were going to visit areas where the locals had collected their scrap. They had planned for 6 months that has now blown out to 4 years.Country people sure do hoard stuff. Smorgans are paying have the amont to customer and supposedly half to CountryFireService

Tonto, Not entirely off topic. The local scrap merchant I used is now Smorgon/Metalcorp and now runs only computerised accounts which may partially explain the additional bureaucracy.

The previous time ( a couple of years ago) I used them I think they may have still been an independent and the accounts were all hand done, just checked drivers license for id.

No you don't need and ABN to sell scrap metal or anything else - unless you are engaged in an enterprise (ie: a business).

As has been said this is a Commonwealth Tax matter and all the info can be found on the ATO website at:

http://www.ato.gov.au/businesses/con...tent/38509.htm

which says inter alia:

As the payer, you may request a written statement from the supplier to justify not withholding if the supply:

relates to a private recreational pursuit or hobby. For example, a hobby artist receives a prize of $100 in a shopping centre art show, or is wholly of a private or domestic nature for the supplier. For example, a home owner sells some personal furniture to a second hand store. As a minimum, the statement should contain:

the supplier's name and address
why it was not necessary to withhold, and
the supplier's signature.

The Tax Office has developed a form, Statement by a supplier, which is can be used for this purpose.

If you do not withhold because an exception applies, you should keep sufficient records to:

identify the supply and the supplier, and
justify the reason for not withholding.
You may choose to obtain a signed statement from the supplier containing the required information or use our form. If we conduct a review and find that the statement was incorrect, you won’t be penalised if we believe it was reasonable for you to rely on the supplier’s signed statement.

As it says you do not need to use any special form - you just need to provide a signed statement with the relevant information. It also say that the supplier 'may' request the info - they are not compelled to, but most would want one to make life simple and CYA if they have any ATO queries later.

But . . . the ATO has a suitable form that you can use to ensure that the scrap metal merchant does not withhold any tax - here:

http://www.ato.gov.au/content/downloads/nat3346.pdf

Some businesses use the ABN to weed out small "nuisance" customers. eg "We are a wholesaler and only deal with other businesses with ABN's".

Cheers

Graeme