It's Tax Time - Amway Distributors, is your "business" really a business?

Well it's that time of year again.....the preparation and lodgment of the 07/08 Financial Year Tax Return. One of the "benefits" of joining the "business" that sometimes gets touted to potential distributors is the "tax benefits" that can be gained, which by the way, is in violation of Amway's rules.

Let's be clear here, the ATO (Australian Taxation Office) has laid down in no uncertain terms as to when an Amway "business" is actually considered a business. It also clearly spells out when expenses can be claimed and what percentages apply. No matter what any sponsor or upline tells you regarding the "business" expenses and so forth, it means jack squat (not to mention it's misleading) if it does not accurately reflect the ATO's position. So do your homework and seek independant taxation and/or financial advice.

We highly recommend any potential and in fact, any new distributors that have joined this last financial year to read the ATO's position on the Amway "business". It is a lengthy read, but probably one of the most important documents that should be read before anyone decides to join or who has recently joined Amway. It is found on the ATO website:

http://www.ato.gov.au/corporate/content.asp?doc=/content/1770.htm&page=1&H1

From reading through the document, it's evident that the vast majority of the Amway "businesses" here in Australia would not be classed as businesses at all, as the ATO specifically states:

"You are not carrying on a business if you:

*purchase goods predominantly for your own self consumption
*are not actively sponsoring downline IBOs or otherwise building your Amway activities, or
*have minimal retail sales and insignificant sales to downline IBOs"

If you believe or have been told that you "don't have to sell" but simply just purchase and self consume products from your own "business", get others to do the same and you'll make significant money (we were told $50k within 12-18 months) then your deluding yourself that your running a "business". You may be able to kid yourself, but the ATO ain't gonna be buying it.

Now, if you are making a profit, and we should say, NET profit after all expenses (and this includes tools), then great, no really, we congratulate you. But if your not making a NET profit after a reasonable period of time and effort, then we think you should seriously evaluate your "business". Worse still, if your not keeping a regular track of your expenses and income to begin with, then in the real world, you are not and will never be considered a real business owner. Simply having the moniker of "independant business owner" certainly does not make you one, especially if you can't or don't run your Amway "business" like real businesses do.

If you believe or have been told that you "don't have to sell" but simply just purchase and self consume products from your own "business" and get others to do the same then as you can see, this does not constitute carrying on a business. Don't kid yourself by thinking otherwise and certainly don't let your sponsor/upline kid you either, especially if they tell you that you will make significant money by doing so (we were told $50k pa within 12-18 months). It's absolute baloney if they do not provide the data/evidence to back up thier claims.

If you have joined or are thinking about joining the Amway "business" to make money, and heck ain't this the primary reason people go into business for? then for god's sake, treat it and run it like a business, like real business people do. Real business owners understand the taxation laws that pertains to their business, and as an Amway "business owner" or a potential one, so should you!