If you’re earning income through Etsy in Australia, you may have tax obligations with the Australian Taxation Office (ATO). Whether you’re a hobbyist turned business owner or an established seller, understanding how to report Etsy earnings is essential for staying compliant.
1. Determine if You’re Running a Business or a Hobby
The ATO distinguishes between hobbies and businesses. If you’re making a profit and operating with intention to grow, you’re likely running a business—even if it’s small or part-time.
Learn more about the distinction on the ATO website here.
2. Register for an ABN
If you’re operating as a business, you must apply for an Australian Business Number (ABN). This helps the ATO track your business income and deductions.
3. Consider GST Registration
You only need to register for GST if your business income is expected to exceed $75,000 per year. If so, you’ll need to charge 10% GST on eligible sales and report this via your BAS (Business Activity Statement).
4. Track All Etsy Income and Expenses
Etsy income is considered assessable income and must be declared in your tax return. Make sure to track:
- Total sales income (converted to AUD)
- Fees deducted by Etsy
- Shipping costs
- Advertising and marketing expenses
- Costs of goods sold (materials, tools, packaging)
5. Keep Accurate Records
The ATO requires businesses to retain records for at least five years. Use spreadsheets or accounting software like Xero, QuickBooks, or even Etsy’s built-in reports to track everything.
6. Lodge Your Tax Return
If you’re a sole trader, declare your Etsy business income in your individual tax return using the “Business and Professional Items” section. Include all income and expenses to calculate your net profit or loss.
7. Consider Quarterly BAS if GST Registered
If you are registered for GST, you’ll need to lodge a BAS either quarterly or monthly, detailing your GST collected and paid on expenses.
8. Work with a Tax Agent
Tax laws can be tricky—especially with online platforms and international transactions. Working with a registered tax agent ensures you’re compliant and may help you reduce your tax bill through legal deductions.
Key ATO Reference
For official guidance, visit the ATO’s guide to business income and deductions.