Extra income

[Willie0100]

As part of hobby being in the transport industry I will buy a car of say R 6000. Knowing a lot regarding the mechanical and electrical issues on a car I will do some repairs and road worthy it. I will then sell it for between R12 000 and R 15 000. The profit made in any sale is not cleared with SARS, the question is should it be?

[Phil Cooper]

Depends if your conscience says you must declare it to SARS so you can pay tax on it!

[Willie0100]

Mmmmmmm!!!!!!!

[Blurock]

Do you charge for labour, or is that free? Purchase price + Parts + Labour - selling price = taxable profit?

[AndyD]

should it be?

There's often a large difference between what profits someone should be declaring from their hobbies and what they do declare.

[Nickolai Naydenov]

From what I've seen SARS doesn't see cars as appreciating value items, a car actually loses value every day so I don't think they will hunt you lol... Besides you are talking of a very small amount

[Willie0100]

I thought as much, just want to do the right thing

[Dave A]

I've asked something similar of my accountants - if you've got a hobby making income, at what point can it be regarded as a "business".

They've never really given me a definitive answer other than to say for the issue I pointed them to that the income is so negligible no-one's interested. But if it involves the buying and selling of assets, I suggest the number of transactions a year might be relevant.

[Willie0100]

About 10 a year at the most because I only do this on week-ends. So if I understand this correctly, if you earn a salary and pay tax on it then using whats left to buy something to trade with you got to pay tax again? (Depending the total amounts).

[Dave A]

At ten a year, yep - I'd suggest treat it as a business.

Of course you'll be able to claim expenses - cost of parts, space used, hand cleaner, telephone, all manner of the little sundries one needs for this sort of thing.
So make sure you keep your slips.

[Nickolai Naydenov]

Remember it's only crime if you get caught hahahaha...

[Willie0100]

Thanks for the info.