Do you pay tax on selling scrap metal in Australia?

No dollar figure makes scrap sales taxable

There is no single dollar figure at which scrap sales become taxable. What matters is the nature of what you are doing. Clearing out something you own, once, is very different in tax terms from regularly sourcing, sorting and selling scrap to make a profit.

This is general information for sellers in Australia. It is not personal tax advice, and it does not apply to other countries.

The actual question: clear-out or business?

A genuinely one-off sale of something you own, such as an old battery, an appliance or metal from a clean-up of your own property, is generally not assessable income, however much it fetches. You are disposing of your own belongings, not carrying on a business.

The picture changes when the activity starts to look like a business. In that case, the money you receive is generally treated as business income, you may need to register for an ABN and possibly GST, and you may be able to claim related costs. The ATO looks at the whole pattern, not any single test.

What the ATO looks at

No single row decides the outcome. The ATO considers the combined picture. Someone who collects scrap from building sites every weekend, sorts it, and sells it for profit is plainly running something closer to a business, even if each sale is small. Someone who sells the contents of their own garage once is not.

The one real number: 75,000 dollars

If you are carrying on a business, the figure that matters is the GST turnover threshold. The ATO requires a business with a GST turnover of 75,000 dollars or more to have an ABN and be registered for GST. Businesses below that level can still apply for an ABN, and some choose to.

It is important to read that number correctly. It is a registration threshold for businesses. It is not a tax-free allowance on scrap sales, and it does not mean that you can sell up to 75,000 dollars of scrap as a hobby without any tax consequence. If you are operating a business, your income is generally assessable from the first dollar, and the 75,000 dollars is the point at which GST registration becomes compulsory.

Why an ABN matters when you sell

Even if you are not required to register, quoting an ABN affects how you are paid. The ATO rules for payments to suppliers who do not quote an ABN require the buyer to withhold part of the payment, currently set at 47 percent, and send it to the ATO. The rule exists to discourage cash payments that avoid tax, and it is why many buyers will ask for an ABN from anyone selling on a regular or commercial basis.

There are exceptions, for example where a supplier completes a statement that gives a specific reason the rule does not apply and the buyer makes reasonable enquiries to check it. A genuine one-off private sale is the usual case. If you are trading regularly, the practical answer is simple: get an ABN, quote it, and keep your records in order.

The scrap metal code of compliance

The ATO has published a framework specific to the scrap metal industry, covering GST for scrap dealers and the buyers who deal with them. It exists because the industry has historically had a higher rate of cash-economy activity than many others, and it aims to make it easier for businesses in the trade to meet their GST obligations consistently. It is aimed at businesses in the trade, not at someone clearing out a shed once. If you buy or sell scrap as a business, read the ATO's own guidance for the industry, which covers claiming GST credits on purchases and reporting requirements.

Both buyers and sellers are generally required to report all sales and other sources of income, so keep records of what you sold, to whom and for how much.

Records worth keeping

• The date, the buyer's name and the weight and grade you sold.
• The weighbridge ticket, invoice or receipt.
• How you were paid, ideally by bank transfer rather than cash.
• If you are in business, the costs of getting the material: fuel, equipment, labour, storage and disposal.
• Where the material came from, including the site and the job. This also protects you if a buyer asks about provenance.

Traceable payments and records are good practice even for casual sellers, because they show where the money came from if anyone asks. On ScrapTrade, every order has its own chat thread and payment record, which gives you a written trail for each sale. See how ScrapTrade works for the full process.

A word of caution

Frequently asked questions