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!

Amway Australia - A Call for Transparency

Another extremely interesting blog post has been made by Orrin Woodward (ex-Quixtar Diamond) on his blog, see here:

http://orrinwoodward.blogharbor.com/blog/_archives/2008/6/19/3752893.html

Some very enlightening comments have been made, particularly those from current Australian IBO's. And in particluar this comment, which we've reposted below:

"Re: Amway Australia Leadership Challenge

by Anonymous on Fri 20 Jun 2008 09:27 PM EDT Permanent Link

Hi Orrin.

I am the person who wrote the original article "outing" Amway Australia. I am very curious to see what has been said by others in response.

I would like to comment on IBO Fightback's comment.

In my original post I requested that people contact Amway Australia Management. You can ring them on 02 9843 2000. Ask for Amway Legal or the acting CEO, Mr Coldwell. (The previous CEO, Peter Williams resigned in April 2008 - did someone see the writing on the wall - under his guidance Amway Australia is sliding backwards, fast)

Why believe the data on Amway Wiki? How does IBO Fightback verify the comments on Amway Wiki???

I am not interested in the comments by a website - that website is no more valid than me saying 78% of Amway Diamonds in Australia re-qualify every year & make an average income of $375,000.

Just as a side issue, Amway Australia will not pay you a Diamond bonus if you have international legs. The SIP (Sales Incentive Performance) bonuses are paid on Australian legs. How many people are Diamonds in the Australian market - IE: they have 6 qualified - in country legs?

So again I repeat my original post: "Get the transparent facts". (I have one additional question to ad to the list) Before you go on building the Amway Australia business find out the following:

1. How many Diamonds qualified between 1985-2007 have re-qualified more than once. How many Emeralds, How many Saphires, How many Rubies? - this goes to the heart of the issue - is the business model sustainable?

2. What is the turnover rate on average for a Diamond group?

3. What is the average income made by a Qualified Diamond in Australia? How many years did the average Diamond take to achieve this income.

4. What is the Amway Australia sales volume for each year 1985 - 2007? In real $.

Lets stop the internet chat in its tracks. I am not asking anyone to believe or verify my questions with "further fake data" - I want all current, former & intending IBO's with Amway Australia to become aware or the THE TRANSPARENT FACTS.

Email, ring or arrange a meeting with Amway Australia management. Go and get these very simple & worthwhile questions answered. Then post the answers on Amway Wiki - then post them here.

Post the names of all those who are currently qualified & all of the names for each year: 1985-2007 who qualified. Amway want IBO's to be transparent - well now we want them to be just as transparent. Their own website says "money, time & lifestyle" let them prove it.

I challenge someone else to do this investigative work & report back. That way someone cannot claim that I am faking the results , just to prove my version of reality.

I am so confident that the results of this investigation - that I will let an outsider investigate my claims & report back.

The claims will be catastrophic - as I said originally - once you have the THE TRANSPARENT FACTS FROM AMWAY AUSTRALIA - YOU WOULD HAVE TO BE AN IDIOT TO KEEP BUILDING IT.

If any commentator is confident that my questions will be answered with data that reflects Amway Australia as a positive, profitable & successful business experience - then I will issue a retraction.

My article is written out of deep concern for Amway IBO's & those intending to sign up in Amway. I am an insider - I know what has gone on behind the scenes, I know who is not re-qualified even at the Diamond, Emerald, Saphire & platinum levels. I have been on many, many, many Australian Leadership Seminars with Amway Australia.

I have sat around & chatted with key leaders in Amway Australia. I have deep concern that people are filled with a "fake" promise of long term success, by those who still hold out hop that they can make significant money. This is the only reason many people buy Amway product - PV.

I am looking forward to seeing THE TRANSPARENT FACTS. I challenge all commentators to contact Amway Australia report back to this website."

We are pleased that the spotlight has somewhat now been turned on to Australian Amway business and that IBO's are having their say. Our reply to the abovementioned comment pretty much sums it up.

"Thank you Anon for speaking out and revealing your truth as how you see Amway Australia. The Australian public and in particular, the Australian IBO's (current and potential) have been kept in the dark for far too long as to the state of the Amway business here.

We, at our blog have also been calling for true transparency in regards to Yearly Sales Numbers, Numbers of IBO's, Average Earnings, Retention/Attrition rates etc. We agree too, that how can anyone perform their due diligence as to whether the Amway "business opportunity" is a viable (and profitable) venture to commit to without such vital information.

For any current or potential Australian IBO's out there reading this, we also implore you to find out the cold hard facts from Amway Australia. We also invite you to submit your comments, stories, results of your research and any other information to our blog as well.

Thank you Orrin for taking an interest and concern in the goings on of Amway Australia and bringing it to attention via your blog. Silence, secrecy, deception, unaccountability and lack of transparency and information has reigned supreme here, we hope that with further dialogue and input from the public continues, so that the Truth can finally see the light of day".

The Trouble with Buying through Amway - Part 2

In Part 1 we discussed what we consider the drawbacks of buying through Amway. Those were buying in bulk, inconvenience, non-perishable items only, product range and prices. In this blog post, we'll touch on inconvenience and non-perishable items together as they are both interconnected.

Shopping online is no doubt a very convenient method of purchasing products, millions upon millions of people do just that every single day. Amway being an online shopping site also, it's IBO's often sell Amway as being convenient and time saving. Why trudge down the supermarket aisles when you can order your products from the comfort of your home and have them home delivered right? Sure sounds good, but when you look at it closely, shopping with Amway can turn out not to be very convenient at all. Here's why we think this is so:

Firstly, if your expecting to buy ALL your groceries and household items through Amway (sold by IBO's as "redirecting your spending", you will find that this is simply impossible. Amway only sells products that are non-perishable. So unless, you don't eat any fresh meats, fresh fruit and vegetables, dairy products, baked breads and the like and also frozen foods, then you will still have to go to the supermarket or other fresh food outlets to buy these goods as you would normally do. Now, there are people who may indeed not eat any fresh foods whatsoever, but seriously, these would be in the absolute minutest percentile of the population. So for everyone else, instead of a doing a full grocery shop, your still having to do maybe a half shop and saving yourself what, 15-20 minutes? Big deal.

Secondly, when you purchase something online, most sites will dispatch your order the same or the next day. However with Amway, for regular deliveries, your order will be dispatched on the same day of each week, depending on where you live. So if your area's dispatch day is say Wednesday, then whatever you order from that day will not be dispatched until the next Wednesday, with your order arriving after 1-2 days. Who wants to wait for up to a week for their products? Oh, but you can get them delivered by Express, it costs extra of course. Regular delivery is $6.95 (plus $1 for each bulky item) and Express is $14.95. If you've placed your order by phone or fax then add $3 to the delivery charge also.

Nope, if we need a item, we can nick down to the supermarket, buy it and have it in our hands ready to use as soon as we get home and although the price of petrol is obscenely high, we doubt that we'd use anymore than 50 cents worth of petrol to do it.

Thirdly, deliveries of the products to your shipping address is made anywhere between 7am and 6pm. That's ok if your at home all day, and seriously who has ever had a delivery person knock on their door at 7am in the morning?? Anyway, so if your like the many millions of people that work, you will likely to be not home when your products arrive. Which will then result in the delivery driver leaving a card and you will then have to contact them, in the time frames they have outlined, to organise re-delivery. Unless of course you have organised for your products to be delivered to an alternate address. If it's at work and your boss is ok with you doing so then no drama, but if it is at a friend or relatives home, then you still have to take the time to go over there to pick up your products.

Now if you live more than 5kms out from the outer 60km zone in your nearest town, then you will have no choice but to nominate an alternate shipping address. So the people who live in rural areas and/or outside of larger towns and cities, who would appreciate and benefit the most from the home delivery of any products they buy, cannot get their Amway products delivered to their door!

So if you find buying all your fresh foods and perishable items as normal, buying your non-perishables through Amway (where a lot of it comes in bulk), where you can wait for a week for them to be delivered to your home, at a time when you will be home, or if your "out of town" not delivered to your home at all but some other alternate address, and paying the shipping fees on top of that then hey, you might say that it's convenient and time saving to shop through Amway.

We say, bugger that for a joke.

Amway's Reputation

Mention the word "Amway" to anyone who has walked the earth for more than a few decades and you'll find that in the majority of cases, the two words that will likely to be heard in reply are "scam" or "pyramid scheme". Whether those opinions are based on personal experience or through the experience or on the words of others, it's clear that the Amway name has the stigma of disrepute amongst the minds of the masses.

Being a word-of-mouth business where the continual recruitment of more people is required in order for one to succeed, one would think that no-one would join Amway with the reputation that it has. But people do join and lot's of them, though that number has declined over the last several years.

According to Amway's figures, there are approximately 80,000 registered IBO's in Australia and New Zealand combined today. Considering that the number of IBO's in Australia alone in the year 2000 (when Amway went online) was 100,000, this illustrates a significant decline overall, however, what is more significant is the number of IBO's that have joined and resigned within that period. Amway has a staggeringly high attrition rate, reported to be as high as 65% within the first year.

What is the reason for the such appalling retention rate of IBO's? Why do the majority of IBO's quit? One would think that if the majority of IBO's were successfully making money then there would be a continual annual growth of IBO numbers and lower attrition rates. As can be seen from the above statistics, this is not the case. So why aren't the vast majority of IBO's making money? Is it because they are not "working the business" properly? Perhaps. Is it due to lack of skills or effort? Perhaps. Are they themselves to blame for their failure in the business? Perhaps. Or is it the failure of the Amway business model itself that is largely to blame? Definitely. Whatever the reasons are, the labels of "it doesn't work" "scam" and "pyramid scheme" ensue and thanks to the growth and accessability of the internet, these thoughts and opinions are now also expressed publicly for all the world to see. The more people that join and subsequently fail in the Amway business and who share their experiences, the more that Amway's reputation generally takes a hiding.

Who suffers the most from the bad reputation? Yep, it is the IBO's who are trying to recruit new IBO's. So much so that the word "Amway" is rarely mentioned up-front to prospects. Instead the "curiousity approach" is taken where the terms "business opportunity", "e-commerce business" or the name of their associated AMO system is used in order for the IBO to have a chance in generating any interest. However, inevitably the "Is this Amway?" question often comes up. It is the single biggest objection an IBO faces when pitching the business. An objection that the majority of IBO's attempt to overcome by skirting around or downplaying the true importance, role or connection of Amway in their business. More often than not even this tactic does not work as the mere mention of the word Amway is enough to scare the majority of prospects away. Such is the power of a bad reputation. Easy to get and difficult to shake off.

So this is just our opinion on Amway's reputation. Do you agree or disagree? What are your perceptions and opinions about Amway?..... We'd like to know! Feel free to leave your comment here and/or visit our website at www.ozamwayvictims.com where you can share your experiences, thoughts and opinions and read what others fellow Australians have to say.