Report Business Taxation 1
To: Ali CC: From: Paulo Barbosa Date: 31/10/2014 Re: Infor mation abo ut Bad ges of Tr ade and V AT Ove rview
I ha ve co mposed t his m emo. As I do no t ha ve eno ugh infor mation to ad vise or gi ve recom mendations on th ese conc erns,
I h ave prov ided rele vant informati on w hich sho uld guid e you in det ermining if y ou sh ould reg ister a s self-em ployed f or in come ta x pur poses.
I hav e al so inc luded info rmation regar ding va t reg istr ation, accou nting and admi ni stration f or yo ur con sid eration.
No t al l busin ess a re conside red trad ing. T o be con sidered tradi ng or n ot, the aut ho rities c an fi nd six ba dges of tra de co ncept t hat hel ps t o dis tinguish i f t he pe rson is a t rad ing or n on-trad ing.
Badges of Trade
Mot ive- I f the re is pro fit mo tive in mi nd wh en a taxp ayer is buy ing asset s th at ca n be identi fied as a tra ding acti vi ty. An as set acqu ired th an by pu rchase, f or inher itance on the de ath o f a rel ative, i s unl ikel y to indic ate a trad ing acti vity.
S ale wit h a rea son - Th e eco nomic situ ation giv ing rea son t o the sa le o f the as set ar e al so impo rtant f actors to dec ide i f tra ding h as hap pen. I f som eone so ld an ass et bec ause of pers onal financ ial pro blems, it i s impr obable to b e a trad ing.
Subj ect mat ter of th e trans action-
I ha ve co mposed t his m emo. As I do no t ha ve eno ugh infor mation to ad vise or gi ve recom mendations on th ese conc erns,
I h ave prov ided rele vant informati on w hich sho uld guid e you in det ermining if y ou sh ould reg ister a s self-em ployed f or in come ta x pur poses.
I hav e al so inc luded info rmation regar ding va t reg istr ation, accou nting and admi ni stration f or yo ur con sid eration.
No t al l busin ess a re conside red trad ing. T o be con sidered tradi ng or n ot, the aut ho rities c an fi nd six ba dges of tra de co ncept t hat hel ps t o dis tinguish i f t he pe rson is a t rad ing or n on-trad ing.
Badges of Trade
Mot ive- I f the re is pro fit mo tive in mi nd wh en a taxp ayer is buy ing asset s th at ca n be identi fied as a tra ding acti vi ty. An as set acqu ired th an by pu rchase, f or inher itance on the de ath o f a rel ative, i s unl ikel y to indic ate a trad ing acti vity.
S ale wit h a rea son - Th e eco nomic situ ation giv ing rea son t o the sa le o f the as set ar e al so impo rtant f actors to dec ide i f tra ding h as hap pen. I f som eone so ld an ass et bec ause of pers onal financ ial pro blems, it i s impr obable to b e a trad ing.
Subj ect mat ter of th e trans action-