- There is no dollar threshold that turns a hobby into a business
- Register for GST within 21 days of turnover reaching $75,000
- Where a platform is liable for GST, that sale is outside your turnover test
- Warehouse stock in Australia and the sale becomes yours again
Selling on Etsy Australia tax questions almost always reduce to two: is your shop a business yet, and does Etsy’s GST collection cover you? Neither has the answer most sellers expect.
There is no dollar amount that turns a hobby into a business. And where a marketplace is liable for GST on a sale, you do not remit GST on it and you do not count it toward the $75,000 registration threshold, which can make a shop look closer to the line than it is, or further from it.
This guide works through the test, the threshold and the platform rules in that order. If you would rather hand it over, Sleek has accountants for Australian e-commerce sellers.
Is your Etsy shop a hobby or a business?
The ATO decides this on indicators, not on income. There is no dollar threshold, which is the single most common misconception among Australian marketplace sellers.
What the ATO looks at is whether you intend to be in business, whether there is a real prospect of profit, whether the scale is enough to produce one, and whether the activity is repeated and continuous. On top of that it asks whether you run the shop in a business-like way, which covers:
- Keeping business records and a separate bank account
- Advertising and selling to the public
- Operating from business premises
- Holding any licences the activity requires
- Having a formal business plan
- Using a business name or an ABN
A one-off sale can still count as business activity where it is intended to be repeated or is the first step in starting a business. So a seller who lists once, sells once and means to keep going is closer to the line than the single transaction suggests.
What changes the moment it becomes a business?
The income becomes assessable and has to go in your tax return, which is the part sellers most often miss while they are still thinking of the shop as a hobby. From that point the record-keeping stops being optional.
An ABN is not compulsory and it is free, but without one any business paying you must withhold 47% from the payment. For a marketplace seller that matters less than for a contractor, because your customers are consumers rather than businesses, but it still shapes every supplier and wholesale relationship you enter. The mechanics sit in our guide to registering for an ABN.
Nothing else changes automatically. GST has its own threshold, covered next, and PAYG instalments have theirs.
When do you have to register for GST as an Etsy seller?
Once your GST turnover reaches $75,000, and you then have 21 days to register. That clock runs from the point you become required to register, not from the end of the year.
Register late and you may have to pay GST on sales made since the date you were required to register, even though you never added GST to those prices, plus penalties and interest. That is the expensive version of this mistake and it is entirely avoidable by watching the number monthly.
GST turnover is your total business income less the GST already included in sales, sales to associates made without payment, sales unrelated to your enterprise, input-taxed sales, and sales outside Australia. The registration process itself is covered in registering for GST.
Does an Etsy sale count toward your $75,000?
Usually yes, and this is where the internet gets it wrong. The rules that let a marketplace take over your GST are narrower than most sellers assume, and they do not cover the ordinary case of an Australian maker posting Australian-held stock to an Australian customer.
Australian GST law treats some platforms as electronic distribution platforms. Where the EDP rules apply, the operator becomes liable for the GST instead of you, and you then do not return GST to the ATO on that sale and do not count it when working out whether you have to register.
But those rules only reach two kinds of sale: low value imported goods sold to a consumer, and imported services or digital products sold to an Australian consumer. If your stock is already in Australia when it sells, none of that applies to you.
| The sale | Who remits GST | Counts toward your registration turnover |
|---|---|---|
| Through Etsy to an Australian customer, stock already in Australia | You | Yes |
| Through Etsy to an Australian consumer, low value goods imported | The platform, as EDP operator | No |
| Through Etsy, your stock warehoused in Australia | You, because the goods are in Australia when sold | Yes |
| Imported digital product to an Australian consumer through the platform | The platform, as EDP operator | No |
| Through your own website | You | Yes |
| Via a platform that only advertises with a link to your site | You | Yes |
| To an overseas customer | Not an Australian GST sale | No, sales outside Australia are excluded |
Read the first row before the others. Most Australian Etsy sellers live there, and for them every sale counts.
When does Etsy’s GST collection not cover you?
Three situations, and the first one catches sellers precisely as they start to grow.
- You warehouse stock in Australia. The goods are located in Australia when they are sold, so it is a domestic supply and the platform’s collection does not reach it
- You sell through your own website. No platform is standing between you and the customer, so the sale is yours in full
- A platform only advertises your products. Where it simply links customers through to your own site, the ATO treats you as the seller
There is one more wrinkle worth knowing. A platform can voluntarily take on GST responsibility for an Australian-based merchant selling digital products or services electronically, but only under a written agreement made before the sale, and only where the operator is registered for GST. It is not something that happens by default.
This page deliberately does not state what Etsy itself does. Platform GST handling is a policy question that changes, so check Etsy’s current seller documentation rather than trusting any blog, including this one, on that specific point.
What should you ask any marketplace you sell through?
The ATO’s own advice is to go and ask, which is more useful than it sounds because the answers determine your own reporting. Put these five to any platform you sell on:
- What are their policies and terms of sale
- How do they treat your pricing, receipts and business systems
- How do they differentiate consumer sales from business sales
- What happens with returned goods and refunds
- How do they give GST information to transporters or customs brokers
Get the answers in writing where you can. If you ever have to reconstruct your GST position for a period, a saved policy page is worth more than a memory of what the help centre said.
What, not registering for GST?
It is a fair question, and the honest answer is that below $75,000 you generally should not. Registering voluntarily means charging GST on every sale, which either raises your prices against sellers who are not registered or cuts your own margin, and it commits you to lodging a BAS.
The case for registering early is narrow. It is worth considering when you have significant GST on business purchases to claim back, such as heavy equipment or materials, or when you are close enough to the threshold that you will cross it mid-year anyway.
For most Etsy sellers below the line, the right answer is to keep watching the number and do nothing. A page that tells every seller to register is selling something.
Does the ATO already see your Etsy income?
Yes. The ATO runs an online selling data-matching program, and its stated targets map closely onto what goes wrong for marketplace sellers.
It looks for incorrect reporting of income in tax returns and business activity statements, failure to meet registration, reporting, payment or lodgment obligations, and failure to comply with ABN and GST registration obligations. The move from hobby to business is named as a specific risk area.
What the program’s overview does not publish is which platforms are covered, what data is collected or over what periods. Treat any page claiming to know those details as unsourced, and note that the practical advice does not depend on them.
Why did the ATO put you on PAYG instalments?
Because one good year suggests another. PAYG instalments are prepayments toward next year’s tax, and entry is automatic rather than something you choose.
As an individual or sole trader you are entered when all three of these apply: instalment income from your latest tax return of $4,000 or more, tax payable on your latest notice of assessment of $1,000 or more, and estimated notional tax of $500 or more. All three, not any one.
For a shop that had a breakout year, this is the bill that lands in year two and was never in the plan. It is not a penalty and it is not a new tax, but it does change your cash flow.
Are Etsy fees deductible?
Yes, where your shop is a business rather than a hobby. Searches for etsy fees australia usually want a percentage, but the useful answer is which categories are deductible: listing fees, transaction fees, payment processing fees, advertising costs and currency conversion charges are all business expenses incurred in earning your income.
Two things sellers get wrong. Record fees as expenses rather than netting them off your sales, because your income is the gross amount the customer paid, not what landed in your account. And if the shop is still a hobby, there are no deductions to claim, because there is no assessable business income to claim them against.
This page does not publish current etsy fees australia rates, because platform pricing changes and a stale percentage is worse than none. Take them from your own Etsy statements, which are also what your accountant will want. The wider picture is in tax for online shops in Australia.
What records should you keep as a marketplace seller?
Enough to rebuild any period without relying on the platform still being there. At minimum:
- Sales through Etsy kept separate from sales through any other channel
- GST charged on each sale, and by whom
- Where each customer was, and whether they bought as a consumer or a business
- Refunds and returns, including which period the original sale fell in
- Fees, postage costs and materials
Separating channels matters more than it looks, because two channels can carry different GST treatments inside one shop. Reconstructing that split at year end is slow and error-prone; keeping it from the start costs nothing.
Here is the honest note this article owes you. Plenty of Australian Etsy sellers are genuinely below the GST threshold and genuinely still a hobby, and for them the answer is that nothing changes yet. If that is you, keep records, declare the income if the shop is a business, and come back when the numbers move.
How Sleek helps Etsy sellers
Sleek does not help you sell more on Etsy. What it does is the accounting side of selling on Etsy Australia: tracking turnover against the $75,000 line, keeping marketplace and direct sales separated, lodging BAS once you are registered, and preparing the tax return as a registered tax agent.
That work is worth paying for at the point where the admin costs you more time than it costs to hand over, which for most sellers arrives well before the GST threshold does. If you are earlier than that, side hustle tax in Australia and accounting for sole traders cover where you are now.
You can see what it costs on our fixed monthly pricing page, and if you are still building the shop itself rather than the books, selling crafts online in Australia is the better starting point. More material sits in our accounting and tax FAQs.
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FAQs on selling on etsy australia tax
Do I need an ABN to sell on Etsy?
Not as a matter of law, and it is free to get one. Without an ABN, businesses paying you must withhold 47% from payments, which matters more for wholesale and supplier relationships than for consumer sales. Our side hustle ABN guide in the sidebar covers the question properly.
Do I need a separate bank account for my Etsy shop?
Not legally, but it is one of the ATO’s own indicators of running an activity in a business-like manner, and it makes everything downstream easier. Mixing shop money with personal money makes GST turnover harder to track and deductions harder to substantiate. Open one before the shop gets busy rather than untangling it afterwards.
Do I need to lodge a BAS as an Etsy seller?
Only once you are registered for GST. The BAS is how you report and pay the GST you have collected and claim back GST on business purchases, and your lodgment cycle is set when you register. Below the threshold and unregistered, there is no BAS.
I sell on Etsy as a side hustle. Does that change anything?
No. The ATO applies the same business indicators whether the shop is your only income or your third, and having a full-time job elsewhere does not make an Etsy shop a hobby. What it does change is your marginal tax rate, because shop profit stacks on top of your salary.
When is it worth getting an accountant for an Etsy shop?
When the time you spend on records is worth more than the fee, or when you are approaching the GST threshold and want the turnover test done properly. Plenty of sellers below $75,000 with simple records do not need one yet. The trigger is usually crossing into GST, adding a second sales channel, or holding stock.
