By Susan Sandys  March 10 2010

Danny Bennett of Ashburton has a message for those making money selling on TradeMe - declare what you make to Inland Revenue Department.

The IRD has collected nearly $1.2 million in tax following a series of investigations into on-line traders.

Mr Bennett recently made his living from importing clothing and selling it through TradeMe.

He said he undertook the work part-time for a while, but then left his job, as selling on-line was paying him more money.

As he went to full-time he found he was making about $50,000 per year.

He later opened a retail outlet but eventually closed the business and is now general manager of an Ashburton retail store.

Mr Bennett said when he was trading on-line he had never considered not paying tax on what he sold.

"I didn't want to be in a situation where I had massive tax bills," he said.

"If it's just a one-off, then fine, but if they are doing it all the time they are actually making a profit and by law they should be paying tax on it," Mr Bennett said of other on-line traders.

One tax dodger told 3 News he had earned at least $20,000 from selling snowboards on TradeMe.

"Everyone does it. You can parallel import, do whatever you like, get it from the States ... and you can pretty much undercut all the retailers in New Zealand."

But TradeMe's Chris Budge warned traders that they were not operating anonymously online.

"Trade Me is probably a really stupid place to do something illegal."

IRD Spokesman Martin Scott said the majority of TradeMe users had nothing to worry about, and urged those who had sidestepped tax to come forward to avoid fines or prosecution.

"If you enter a one-off transaction on TradeMe and if it was for the intention of making money, so you've bought something and are reselling it to make money, then you're up for tax," Mr Scott said.

IRD is currently cracking down on those who trade online, and recently demanded data on well over three million sales from sites such as TradeMe.

It led to more than $1 million worth of tax being collected, and a new, second crackdown is now under way.