Do You Pay Tax Selling on Amazon Australia? Income Tax, Sole Trader vs Company, Records and Deductions

Yes. If you sell on Amazon.com.au as a business, the profit is taxable income and you declare it in your annual tax return. Every business must hold a tax file number and lodge an annual return, and a return is due even in a year the business makes a loss. If your selling is a genuine hobby, business.gov.au says the amounts need not be declared. Income tax is separate from GST: registration and BAS are covered elsewhere. This is general information, not tax or legal advice; confirm with the ATO or a registered tax agent.

Is Amazon income taxable in Australia?

Income from a business is taxable. The test that matters is whether you are carrying on a business, which is covered in hobby or business when selling online. If you buy stock to resell repeatedly, advertise it and run a Professional plan, expect to be treated as a business.

The taxable amount is not your Amazon payout and not your revenue. Taxable income is worked out from your income minus allowable deductions. Amazon's payout is net of fees and refunds, so use your sales reports to build the full picture: gross sales, then each cost.

Which structure: sole trader or company?

The rates and thresholds in the third and fourth rows are from business.gov.au. Individual rates and the tax-free amount change, so check the ATO's current figures, because the business.gov.au page quotes the tax-free threshold for 2023–24 only.

Business.gov.au says a sole trader is legally responsible for all aspects of the business, including debts and losses. Registering a proprietary company costs A$636. Many sellers start as sole traders and move to a company as profits and risk grow, but structure is a decision for your accountant, because it affects tax, liability, insurance and how Amazon verifies your business.

What can I deduct?

Deductions are amounts you can claim for expenses involved in running your business. At a general level, an Amazon seller's costs usually include:

• the cost of stock you sell, and freight and import costs for it
• Amazon plan, referral, fulfilment and storage fees
• advertising spend
• packaging, labels and prep services
• software, subscriptions and accounting fees
• a work-use share of phone, internet and home-office costs

The ATO's sole trader guidance frames the same idea: the expense must be for the business and not private use, a mixed-use expense can only be claimed for the business portion, and you must have records to prove it. Stock bought but unsold at year end, depreciating assets and prepaid costs have special treatment, so ask your agent.

If you are registered for GST, the GST in your costs is generally a credit under the BAS, so your income tax deduction uses the GST-exclusive amount. See GST on Amazon seller fees and BAS for Amazon sellers.

What records do I need?

Business.gov.au says you must keep records of all transactions that relate to your tax, super and registrations, for most records 5 years from when you got them or completed the transaction, whichever is later. Required records include income and sales, expenses, stock and asset expenses, bank records and GST records; digital records are accepted and scanned copies can replace paper.

For an Amazon seller that means saving each month's sales and fee reports, supplier invoices, import documents, ad statements and bank statements, in a folder structure that follows the financial year.

Do I have to report Amazon income through a platform reporting regime?

The ATO runs a sharing economy reporting regime in which operators of some digital platforms report sellers' transactions to the ATO. The ATO does not say on a public page whether it covers sales of goods on Amazon, so check with your agent. Do not rely on a platform report to tell you what to declare. Declare your income from your own records, and if you receive a notice or a data-matching letter, ask your agent.

How do stock and cash timing affect profit?

A common surprise for new sellers is that cash and profit differ. If you buy A$20,000 of stock and sell half by year end, the cost of the sold half is generally what reduces your profit; the unsold half is stock on hand, which your agent will treat under the stock rules. Amazon also holds money for a settlement cycle and may hold reserves, so a healthy bank balance does not equal profit and a thin one does not mean a loss. Keep a stock list with quantities and costs at 30 June so your agent can work it out, and track each ad and fee line by month.

A seller who ships in bulk from overseas should also keep import documents, since the ABF says the importer or broker must keep relevant documents for five years after an import declaration.

When should I talk to a registered tax agent?

Earlier is cheaper than later. Three moments matter most: before you choose between sole trader and company, before your first financial year ends so stock and deductions are set up properly, and whenever your Amazon sales approach the GST threshold. A registered agent can also tell you whether your return is due on 31 October or later, because business.gov.au says that date applies unless the return is lodged through a registered tax agent. Bring your sales reports, invoices and bank statements, not just the Amazon payout totals.

What are the practical steps?

1. Decide whether you are in business (see the hobby test) and get an ABN if you are; see do you need an ABN.
2. Choose a structure with your agent, noting the plan choice in Amazon Australia Individual vs Professional.
3. Open a separate business bank account and a bookkeeping system from day one.
4. Register for GST if you must or choose to; see GST for Amazon sellers.
5. Reconcile Amazon data monthly, and keep records for the five-year period.
6. Lodge on time. Late lodgement or payment can attract penalties.

The Australia hub has the full list of tax and compliance guides, and the EOFY glossary entry covers year-end terms.

FAQ

Do I pay tax on Amazon sales if I am a sole trader? Yes if it is a business. You include the business income in your individual tax return using a business schedule. You do not lodge a separate return for a sole trader business.

Do I need to lodge a tax return if I make a loss? Yes. Business.gov.au says you must lodge for any year you run your business, even when you do not expect to owe tax. Losses can also be restricted, so ask your agent.

Is Amazon's payout my taxable income? No. The payout is after Amazon's fees, refunds and adjustments. Your taxable income starts from your gross sales and allows deductions for allowable costs. Use your sales and fee reports to reconcile the two.

Does Amazon withhold tax from my payments? No public Amazon page says it does for Australian sellers, and Amazon staff say sellers are responsible for their own taxes. Check your payments screens and ask an agent.

What is the company tax rate? Business.gov.au gives the full company rate as 30% and says different rates apply to base rate entities. Ask an agent which applies.

How long do I keep Amazon records? Most business records for 5 years from when you got them or completed the transaction, whichever is later.

Next step

Get a registered tax agent to confirm your structure, your GST position and your deductions before the end of the financial year. For the Amazon side, Blooprint's Amazon account management can help keep the account and reports tidy; tax advice is not part of what we do.