Understanding GST for E-commerce Businesses
E-commerce businesses in Australia and New Zealand face unique GST challenges compared to traditional retail. From marketplace selling to international orders, digital products to subscription services, online sellers must navigate complex tax rules across multiple jurisdictions.
This comprehensive guide covers everything you need to know about GST compliance for your online store, whether you're selling on Shopify, Amazon, eBay, or your own website.
Quick GST Thresholds for E-commerce
- Australia: Register for GST when annual turnover reaches $75,000
- New Zealand: Register for GST when annual turnover reaches $60,000
- Cross-border sales: Different rules apply for international customers
- Marketplace selling: Platforms like Amazon may collect GST on your behalf
1. When E-commerce Businesses Must Register for GST
Turnover Calculation for Online Stores
For e-commerce businesses, turnover includes all sales revenue from:
- Product sales (physical goods)
- Digital products and downloads (eBooks, software, courses)
- Subscription services (monthly/annual memberships)
- Shipping fees charged to customers (if GST-registered)
- Marketplace sales (eBay, Amazon, Etsy)
- International sales to customers in Australia/New Zealand
Important: Include ALL Revenue Streams
Many e-commerce businesses underestimate their turnover by forgetting to include:
- Multiple sales channels (website + Amazon + eBay = combined turnover)
- Subscription revenue (calculate annual value, not monthly)
- Shipping and handling fees
- Affiliate income from product recommendations
Voluntary Registration Benefits for Online Stores
Even if your turnover is below the threshold, registering for GST can benefit e-commerce businesses:
| Benefit | How It Helps E-commerce |
|---|---|
| Claim GST Credits | Reclaim GST on website hosting, payment processing fees, advertising (Google/Facebook Ads), inventory purchases, packaging materials |
| Professional Credibility | ABN/NZBN registration signals legitimacy to wholesale suppliers and B2B customers |
| Wholesale Opportunities | Many wholesalers require GST registration before selling to you |
| Marketplace Requirements | Some platforms (Amazon Business, wholesale marketplaces) require GST registration |
2. GST for Different E-commerce Platforms
Shopify GST Configuration
Shopify is the most popular e-commerce platform in Australia and New Zealand. Here's how to configure GST:
Step 1: Set Up Tax Settings in Shopify
- Go to Settings → Taxes and duties
- Select your country (Australia or New Zealand)
- Enable "Charge tax on this product" by default
- Enter your ABN (Australia) or NZBN (New Zealand)
Step 2: Configure GST Rates
- Australia: Shopify automatically applies 10% GST to all Australian orders
- New Zealand: Shopify automatically applies 15% GST to all NZ orders
- International orders: Set to 0% (exports are zero-rated)
Step 3: Display GST-Inclusive Prices
In Settings → Taxes and duties, enable "Include taxes in prices":
- Australian law requires consumer-facing prices to be GST-inclusive
- Shopify will show "$110.00 (incl. $10.00 GST)" at checkout
- Prevents customer confusion and ACCC compliance issues
Shopify GST Reporting
Shopify provides built-in GST reports: Go to Analytics → Reports → Taxes
- Total GST collected (Label 1A for BAS)
- Tax-exclusive sales (Label G1)
- Export to CSV for accountant
Amazon Marketplace GST
Amazon Australia has special GST rules for marketplace sellers:
Who Collects GST?
- If you're GST-registered: You collect and remit GST yourself via BAS
- If you're NOT GST-registered but sell imported goods: Amazon may collect GST on your behalf (for low-value imports under $1,000)
- For high-value goods (> $1,000): Customer pays GST at customs (not included in Amazon price)
Amazon Seller Central GST Setup
- Log in to Amazon Seller Central
- Navigate to Settings → Tax Settings
- Enter your ABN (Australia) or IRD number (New Zealand)
- Select "GST Inclusive Pricing"
- Amazon will display prices inclusive of GST to Australian customers
Amazon Low-Value Goods GST
Since July 1, 2018, Amazon collects GST on behalf of non-resident sellers for low-value imported goods (< $1,000 AUD):
- Amazon remits this GST to the ATO directly
- You don't include these sales in your BAS (Amazon provides separate reporting)
- Check your Seller Central reports under "Tax Document Library"
eBay GST Rules
eBay Australia requires GST-registered sellers to:
- Display prices GST-inclusive for consumer listings
- Add your ABN to your eBay seller profile
- Issue tax invoices for sales > $82.50 (if requested by buyer)
- Track eBay fees separately (you can claim GST credits on eBay seller fees)
eBay Fee GST Credits
eBay charges GST on seller fees (final value fees, listing fees). You can claim these as input tax credits:
Example: eBay Final Value Fee: $11.00 (incl. $1.00 GST) Claimable GST Credit: $1.00
Etsy and Other Marketplaces
Etsy does not automatically collect GST for Australian/NZ sellers. You must:
- Manually calculate and add GST to your product prices
- Keep records of all Etsy sales for BAS reporting
- Use third-party tools (e.g., QuickBooks, Xero) to import Etsy transaction data
- Issue tax invoices for sales > $82.50 (AUS) or $50 (NZ) if requested
3. GST on Digital Products and Services
What Are Digital Products?
Digital products include anything delivered electronically:
- eBooks, PDFs, digital downloads
- Software and mobile apps
- Online courses and video tutorials
- Music and audio files
- Stock photos and graphics
- Website themes and plugins
- Subscription access to online platforms
GST Treatment of Digital Products
| Scenario | GST Treatment |
|---|---|
| Digital product sold to Australian customer | Charge 10% GST (if you're GST-registered) |
| Digital product sold to NZ customer | Charge 15% GST (if you're GST-registered in NZ) |
| Digital product sold to international customer (outside AUS/NZ) | No GST (zero-rated export) |
| SaaS subscription to Australian business | Charge 10% GST |
| Online course to overseas student | No GST (export) |
Payment Platform GST (Stripe, PayPal)
Payment processors charge GST on their fees:
- Stripe: 1.75% + 30¢ transaction fee + GST on the fee
- PayPal: 2.6% + 30¢ transaction fee + GST on the fee
- Square: 1.6% + fees + GST on the fee
Claim GST on Payment Processing Fees
You can claim input tax credits on the GST component of payment processing fees:
Example (Stripe): Sale Amount: $100.00 Stripe Fee: $2.05 (incl. ~$0.19 GST) Net Received: $97.95 On your BAS: - GST on Sales (Label 1A): $9.09 ($100 ÷ 11) - GST on Purchases (Label 1B): $0.19 (Stripe fee GST) - Net GST Payable: $8.90
4. International E-commerce and GST
Exporting Products (Zero-Rated GST)
When you sell physical or digital products to customers outside Australia/New Zealand:
- Do NOT charge GST on the sale (zero-rated)
- You CAN still claim GST credits on expenses related to those sales
- Keep proof of export (shipping documents, international tracking)
- Report export sales separately in your accounting system
Documentation Required for Export Sales
To claim zero-rating on exports, maintain:
- Shipping labels showing international destination
- Customs declarations (for goods > $1,000)
- Courier tracking showing delivery overseas
- Customer invoices with overseas billing address
Importing Products for Resale
If you import products from overseas (e.g., from China for dropshipping or inventory):
Low-Value Imports (< $1,000 AUD)
- GST is charged at the border by Australian Border Force
- Courier (e.g., DHL, FedEx) will bill you for GST + clearance fee
- You can claim this GST as an input tax credit on your BAS
High-Value Imports (≥ $1,000 AUD)
- GST + customs duty applies
- You'll need a customs broker to clear the goods
- Calculation: (Customs Value + Freight + Insurance + Duty) × 10%
Example Import GST Calculation: Product Value (CIF): $5,000 AUD Freight: $500 AUD Customs Duty (5%): $275 AUD ($5,500 × 5%) GST Base: $5,775 GST Payable: $577.50 ($5,775 × 10%) Total Import Cost: $6,352.50 Claimable GST Credit (on BAS): $577.50
Dropshipping and GST
Dropshipping (selling products shipped directly from supplier to customer) has specific GST rules:
Scenario 1: Australian Dropshipper, Australian Supplier, Australian Customer
- You charge customer $110 (incl. $10 GST)
- You pay supplier $55 (incl. $5 GST)
- You collect $10 GST, claim $5 credit, remit $5 net to ATO
Scenario 2: Australian Dropshipper, Overseas Supplier, Australian Customer
- You charge customer $110 (incl. $10 GST)
- You pay overseas supplier $50 (no GST)
- Customer may be charged import GST by border force (if > $1,000)
- You remit $10 GST to ATO, no input credit on supplier purchase
Scenario 3: Australian Dropshipper, Overseas Customer
- Zero-rated export (no GST charged to customer)
- No GST on overseas supplier purchase
- Keep proof of international shipping
5. E-commerce Accounting and Record-Keeping
Essential Records for Online Stores
E-commerce businesses must maintain detailed records for 5 years (AUS) or 7 years (NZ):
| Record Type | What to Keep | Why It's Important |
|---|---|---|
| Sales Records | All invoices, receipts, marketplace reports (Shopify, Amazon, eBay) | Prove GST collected (Label 1A) |
| Purchase Records | Tax invoices for inventory, packaging, shipping supplies, software subscriptions | Claim GST credits (Label 1B) |
| Payment Gateway Reports | Stripe/PayPal monthly statements showing fees + GST | Claim GST on processing fees |
| Advertising Invoices | Google Ads, Facebook Ads, Instagram invoices | Claim GST on marketing expenses |
| Shipping Records | Courier invoices, international shipping proof | Prove export sales (zero-rated) |
| Returns/Refunds Log | Credit notes, refund records | Adjust GST on returned products |
Recommended E-commerce Accounting Software
1. Xero + Shopify Integration
- Cost: Xero $35/month + Shopify from $39/month
- Features: Automatic sales sync, GST calculation, BAS preparation
- Best For: Shopify stores with 50+ orders/month
- GST Automation: Automatic GST coding, one-click BAS reports
2. MYOB + WooCommerce
- Cost: MYOB from $30/month + WooCommerce free (hosting costs apply)
- Features: Inventory tracking with GST, WordPress integration
- Best For: WordPress-based stores
3. QuickBooks Online + Multi-Channel
- Cost: QuickBooks from $20/month
- Features: Multi-marketplace support (Amazon, eBay, Shopify), consolidated GST reporting
- Best For: Sellers using multiple platforms
4. A2X for Advanced E-commerce Accounting
- Cost: From $19/month (+ Xero/QuickBooks)
- Features: Marketplace fee breakdown, automatic GST reconciliation, Amazon/Shopify/eBay sync
- Best For: High-volume sellers (200+ orders/month)
6. Common E-commerce GST Mistakes (and How to Avoid Them)
The Problem: E-commerce sales can spike quickly (e.g., viral product, holiday season). Sellers often miss the $75k threshold.
The Fix:
- Set up a monthly turnover tracker (spreadsheet or accounting software)
- Register for GST within 21 days of reaching the threshold
- Use our GST Calculator to estimate your annual revenue
Penalty: Up to $11,000 fine + backdated GST liability
The Problem: Accidentally charging GST to overseas customers (exports should be zero-rated).
The Fix:
- Configure Shopify to apply 0% tax to international orders
- Set up geolocation-based tax rules
- Manually verify tax settings for each country
Result: Overcharging customers (hurts conversions) or underpaying ATO (audit risk)
The Problem: Not claiming GST credits on Shopify subscriptions, Stripe fees, Amazon seller fees, Google Ads, etc.
The Fix:
- Download monthly invoices from all platforms
- Use accounting software to auto-extract GST from fees
- Typical claimable expenses: Shopify ($3.55 GST on $39 plan), Stripe (~$0.20 GST per $100 sale), Google Ads (10% of ad spend)
Missed Savings: $500-2,000/year for typical online stores
The Problem: Not claiming GST paid on imported inventory at the border.
The Fix:
- Keep all customs clearance documents showing GST paid
- Claim import GST as input tax credit on your BAS (Label 1B)
- For deferred GST scheme users: claim GST in same period as payment
Example: Importing $10,000 of stock = $1,000 GST paid = $1,000 claimable credit
The Problem: Using the same PayPal account for eBay business and personal eBay purchases.
The Fix:
- Separate business and personal accounts (PayPal Business, separate Stripe account)
- Use business credit card exclusively for business expenses
- Never claim GST on personal purchases (cars for personal use, home items not used for business)
Audit Risk: High - ATO/IRD audits often flag mixed-use accounts
7. E-commerce GST Checklist
Monthly E-commerce GST Tasks
- ☐ Download sales reports from all platforms (Shopify, Amazon, eBay, Etsy)
- ☐ Download payment processor statements (Stripe, PayPal, Square)
- ☐ Collect tax invoices for all business expenses (inventory, software, ads)
- ☐ Reconcile marketplace fees and extract GST component
- ☐ Track international sales separately (zero-rated exports)
- ☐ Record any import GST paid on inventory
- ☐ Process refunds and issue credit notes
- ☐ Review turnover to check if approaching registration threshold
Quarterly BAS Tasks
- ☐ Calculate total GST-exclusive sales (Label G1)
- ☐ Calculate GST on sales (Label 1A = G1 ÷ 11 for Australia)
- ☐ Calculate GST on purchases (Label 1B from tax invoices)
- ☐ Lodge BAS by deadline (28th of month following quarter-end)
- ☐ Pay GST liability or claim refund
- ☐ Back up all records (cloud storage, external hard drive)
8. E-commerce Growth and GST Planning
Scaling Your Online Store
As your e-commerce business grows, consider these GST planning strategies:
When to Hire a Bookkeeper/Accountant
| Business Size | Monthly Orders | Recommendation |
|---|---|---|
| Startup | < 50 | DIY with accounting software (Xero/QuickBooks) |
| Growing | 50-200 | Monthly bookkeeper ($200-400/month) + annual accountant |
| Established | 200-1,000 | Dedicated bookkeeper + quarterly accountant review |
| Enterprise | 1,000+ | In-house accountant or full-service accounting firm |
Cash Flow Management with GST
E-commerce businesses must manage GST cash flow carefully:
- Set aside 10-15% of revenue in a separate "GST holding account"
- Never spend GST money - it's the ATO's money, not yours
- Plan for quarterly BAS payments (due 28th of month following quarter)
- Consider monthly BAS if eligible (turnover > $20M or voluntary) for better cash flow
International Expansion and GST
Expanding to international markets? Consider:
- EU VAT registration - Required if selling > €10,000/year to EU customers
- UK VAT registration - Required if selling > £85,000/year to UK customers
- US Sales Tax - Varies by state (economic nexus thresholds)
- Marketplace facilitator laws - Amazon/eBay may collect tax on your behalf