NSW No Second-hand Dealer's Licence Required to Buy from Public Authorities?

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Mr King

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30 October 2017
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To whom it may concern,

I have been attempting to find out if a business can legally sell items bought from a "government agency or public authority", without requiring a Second-hand Dealer's license. The items would be bought from local council run recycling/tip shops. I have contacted Fair Trading NSW four times and have only got one very generic response from them. I am trying to get a response before either starting the business or forgetting about the idea.

From my reading of the legislation I think it would be legal, as long as a business only buys items from public authorities. According to the "Pawnbrokers and Second-hand Dealers Act 1996" section 4(2)(c) the act may be restricted "to the extent provided by the regulations, in relation to such persons and circumstances as the regulations may prescribe."

Now the "Pawnbrokers and Second-hand Dealers Regulation 2015" clause 6(2)(a) states that the Act does not apply to a person who "buys second-hand goods only from a government agency or public authority". What are your thoughts on this? (The council's exemption is just above in clause 6(1).)

My main concern in obtaining a Second Hand Dealers licence relates to "Form 1" as specified in "Pawnbrokers and Second-hand Dealers Regulation 2015". I briefly showed this form to the manager of a council run recycling store and he didn't want to have anything to do with it. Because of this I do not think I would be able to buy any items from recycling/tip shops and thus having a Second-hand Dealers licence would be useless. I think it was the amount of time it would take to fill out this form and the personal information that would need to be disclosed that he did not like.

As mentioned I have not been able to get any decent response from Fair Trading NSW. I first sent one e-mail followed by two letters to the Business Licensing Department of Fair Trading NSW. I received no response to these.

I then sent a letter to my Office of Fair Trading NSW and got a response. It however was very generic and made no mention of the specific clauses of the legislation I mentioned in the letter. It did not say whether what I outlined was legal or illegal. It mentioned looking at the Second-hand Dealers page on the Fair Trading NSW website, but I had already done this months earlier. Is there any way to get a response from Fair Trading NSW, or another government organisation, in relation to this matter?

Thank you
 

Clancy

Well-Known Member
6 April 2016
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Well first of all, what type of business are you to begin with?
If i was in your position i would probably just go ahead and do it, (as long as i am not obviously breaching any specific law) then if someone came along and said i have to have a second hand dealers license then i would either get one or stop trading the items.
 
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Mr King

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30 October 2017
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Thanks for the response Clancy. I actually don't have a business at the moment. I intend to start one once I can confirm that what I outlined doesn't breach any laws. It would just be a home-based business with a sole trader structure. What I intend to do is similar to the second example ("Example – Selling online as a business") outlined on the ATO web page: "Online selling - hobby or business?". The main difference being that I would only be buying from public authorities. Another difference is that I wouldn't be buying just antiques, but other items too: clothing, video game consoles, tools, toys, books, etc.

I think what I'm considering doing is covered by the legislation, but I wanted to have Fair Trading NSW verify it too before starting. Does anyone want to speculate about why I didn't get a response from the Business Licencing Department of Fair Trading NSW? Is there some other department I can make enquiries to? Also, I thought that if it was in breach of the law they would be under an obligation to inform me.

Thank you.
 

Clancy

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6 April 2016
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Well, running a small business is going to require any average person to expand their knowledge base quite a bit,,, may i humbly recommend doing some kind of small business course? TAFE have quite a few. Then you can ask them all the questions you like and learn a few things you never knew you needed to know!
 

Rob Legat - SBPL

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My understanding on reading the legislation is:

1. You would need a second hand dealers licence to sell the items. The regulations only exempt the buying of the goods from a government agency/public authority, not the selling. Contrast the use of the word "buys" with the use of the word "deals" in subsection (b). This implies that (a) does not apply to the selling of the goods by someone who is not a government agency or public authority.

2. You do not need a Form 1 when only buying from a government agency or public authority, as regulation 6(2)(a) says the Act does not apply to buying the goods, and the Form 1 is used in that transaction. If you bought goods from anyone else, it would apply.

3. You would also need to determine whether the place you are buying from is the public authority itself, or someone who is independently contracted by the authority.
 
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Mr King

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30 October 2017
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Thanks Clancy, I might look into one of these courses. Currently I've been sourcing most of my information from government websites, like business.gov.au | Simple. Fast. Easy. and Home page.

I appreciate your succinct response Rob Legat. I did notice how "buys" was used in subsection (a) rather than "deals", but I did not know how to interpret this. So you think that Form 1 is not required when buying from a government agency or public authority. What about sections 13 and 16 of the regulation? Does the exemption mean that records do not have to be kept about the buying of items from a government agency or public authority, but that records are still required when the items are sold? For example, no vendor details would need to be recorded (13(2)(a)), but the purchaser details would (13(2)(e)).

As for point 3, I've personally bought things from some of the council run recycle/tip shops before, and so have some receipts with ABNs. I checked their ABNs through ABN Lookup and found that each was classed as a "Local Government Entity".

Lastly, someone suggested that a person in business might not need a second-hand dealer's licence at all if items are sold no more than six days a year (section 38(1) of the Act). However, section 38(3) says that there may be "other means of proving" that someone is carrying on a business of buying or selling second-hand goods. From this it seems that even if the business sold items for six days or less, and second-hand dealing was a significant part of the business, a licence would likely still be required. What do you think about this?
 

Rob Legat - SBPL

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If you only buy from a government body, the Act doesn't apply to the purchase of the goods - that would include the record keeping. If you buy from government bodies and other sellers, then it would. In that case, if the government body didn't want to comply with the Form 1 just keep the receipt they give you for payment and make sure it notes the details of what you're buying.

The selling of the goods still needs to comply with the legislation, as the exemption only applies to the buying portion of the transaction.

As for your last point, I wouldn't be relying on what that person has said. If you're operating as a business, you're operating as a business. The 6 day presumption merely flips the onus of proof - it doesn't make it a determining factor.
 

Clancy

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6 April 2016
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Obviously private citizens must be allowed to sell things from time to time - so they cannot just ban you from doing it. Instead they try to 'limit' what you can sell as a private citizen..... so you can certainly go ahead and legally buy and sell as a private citizen, but keep it small and don't quit your day job!

You will have noticed that years ago there was no restriction on the number of 'garage sales' you could hold per year - some people ended up running permanent garage sales and basically trading exactly as a second hand dealer! So these days you will find there is a limit to the number of garage sales you can hold per year.

Motor vehicles.... you will find there is specific rules relating to how many cars a private citizen can sell per year before needing a dealers license!

The point is, you can see how it is about limitation of what you can sell as a private citizen.
 

Rob Legat - SBPL

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This isn't about banning the sale of goods. The applicability is whether you need to be appropriately licensed for carrying on the activity as a business - as opposed to a 'one off' type transaction where you are not doing it as a business. There's a difference between having a garage sale to clear out the clutter from your house, and running a store from your garage every weekend.
 

Clancy

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6 April 2016
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This isn't about banning the sale of goods. The applicability is whether you need to be appropriately licensed for carrying on the activity as a business - as opposed to a 'one off' type transaction where you are not doing it as a business. There's a difference between having a garage sale to clear out the clutter from your house, and running a store from your garage every weekend.

And there is a difference between the one off garage sale to 'clear clutter' and the question of what is the maximum number of garage sales i am allowed to have?