Most ecommerce business tax deductions come from the everyday costs of running your online store. They are claimable provided they relate to earning your business income, and you keep records to prove them. For an Australian ecommerce business, the main tax deductions are the cost of stock you sell, platform and payment fees, shipping and packaging, advertising, software, equipment, staff costs and a portion of home-based running expenses.
This guide sets out what you can claim, how the ATO’s rules apply to online sellers, and the mistakes that can lead to a missed deduction or an amended return.
Key points
- Income from online selling is generally assessable, whether you sell through your own store or a marketplace.
- An expense must be for your business, not private, and backed by records to be deductible.
- Stock is deducted as it is sold, with an adjustment for stock on hand at 30 June.
- Small businesses with aggregated turnover under $10 million can immediately write off eligible assets costing less than $20,000 each.
- You must register for GST within 21 days of reaching a GST turnover of $75,000.
Do you have to pay tax on ecommerce income?
In most cases, yes. The ATO treats an online seller as anyone who sells physical or digital goods or services online and receives income from it. How that income is taxed depends on which of three categories your activity falls into.
| Activity type | Is the income assessable? | Can you claim related expenses? |
|---|---|---|
| Business | Yes | Yes, if they meet the ATO’s deduction rules |
| Income-producing activity that is not a business | Generally, yes | Depends on the activity |
| Hobby, or casual sale of unwanted personal items | Generally, no | No |
The ATO describes a business as a set of continuous and repeated activities you do for the purpose of making a profit. Regular sourcing of stock, a dedicated store and a separate business bank account all point towards a business. The ATO also makes clear that not being in business does not automatically make the money you receive tax-free.
Two further points apply to online sellers in particular:
- Platform payouts are income in full. Sales made through third-party platforms are declared as income, including amounts paid to you after platform fees or commissions have been taken out. The fees are then claimed as a separate deduction.
- Overseas sales count. Foreign income is declared alongside your Australian sales.
When GST registration applies
You must register for GST once your GST turnover reaches $75,000, and you have 21 days to do so. GST turnover is measured both on the current month plus the previous 11 months and on the current month plus the next 11 months, so a strong sales period can put you over the threshold before the year ends. You need an ABN before you can register.
How your profit is taxed also depends on your structure. A sole trader pays tax on business profit at individual rates, while a company pays company tax. If your store is growing, it is worth reviewing your business structure before the next financial year rather than after it.
The three rules every ecommerce tax deduction must meet
The ATO applies three golden rules to business deductions:
- The expense must have been for your business, not for private use.
- If the expense is partly business and partly private, you can only claim the business portion.
- You must have records to prove it.
One more rule applies to GST-registered sellers. You cannot claim the GST component of an expense as an income tax deduction if you can already claim it as a GST credit on your business activity statement.
Ecommerce tax deductions you can claim
The list below covers the expenses most online stores incur. Not every business will have every item, and the business-use portion still applies throughout.
Stock you buy to sell
Trading stock is anything your business acquires, produces or manufactures to sell or exchange. Unlike most expenses, stock is not simply deducted when you pay for it. You must account for the value of trading stock at the end of each income year (closing stock) and at the start of the next (opening stock). In practice, this means the cost of stock you have sold reduces your taxable income, while stock still on the shelf at 30 June carries into the following year.
For eligible small businesses, the simplified trading stock rules mean you may not need a formal stocktake if the value of your stock has changed by $5,000 or less over the year. Inventory-heavy stores rarely fall within that margin, so a reliable end-of-year count matters.
Platform, marketplace and payment fees
Subscription fees for your store platform, marketplace selling fees and commissions, and payment gateway and merchant fees are all costs of making sales. Because many platforms deduct their fees before paying you, these amounts are easy to miss if you only record the net payout. Reconciling the full sale, the fee and the payout separately is what keeps both your income and your deductions accurate. Connecting your sales platform to your accounting software, and having a Xero accountant set up the reconciliation rules, removes most of this manual work.
Shipping, packaging and fulfilment
Postage and courier costs, boxes, satchels, tape, labels and third-party fulfilment or warehousing fees are deductible when they relate to sending goods to customers. Freight and import costs to bring stock in are generally part of the cost of that stock, so they follow the trading stock rules above rather than being claimed straight away.
Advertising and marketing
Paid search and social advertising, marketplace promoted listings, email marketing platforms, website content and design, and affiliate or influencer payments are deductible marketing costs. Keep the invoices and platform statements, since card statements alone do not always show what the expense was for.
Software and subscriptions
Accounting software, inventory and order management tools, design software, website hosting and domain fees, and apps that connect to your store are deductible to the extent they are used for the business.
Equipment and the instant asset write-off
Laptops, cameras for product photography, label printers, shelving and similar equipment are depreciating assets. Small businesses with aggregated turnover under $10 million can use the instant asset write-off to deduct the business portion of an eligible asset immediately, rather than over several years.
The limit is $20,000 per asset. On 12 May 2026 the Government announced the $20,000 limit would become permanent from 1 July 2026, and the ATO confirms this measure is now law. Two details matter:
- The whole cost of the asset must be under the limit, even if you only use part of it for business. An asset costing $20,000 or more cannot be written off in full simply because the business portion falls below the threshold.
- Assets costing $20,000 or more go into the small business pool, where they are deducted at 15% in the first year and 30% in each year after that.
Home-based business expenses
Many online stores run from home. If you are a sole trader or partnership, you can claim the additional running expenses of working from home, such as electricity, internet and phone, whether or not you have a dedicated business area. The ATO’s fixed rate method for the 2026 income year is 70 cents per hour, which covers those running expenses along with incidentals such as stationery and computer consumables. You will need a record of the hours you worked from home.
Occupancy expenses, such as a portion of rent, mortgage interest and council rates, are only claimable if part of your home has the character of a place of business, for example a room used exclusively for storing and packing stock. Claiming occupancy expenses has a trade-off: if part of your home is a place of business, you may have to pay capital gains tax on part of the gain when you sell it. This is worth discussing with your accountant before you claim.
Staff, contractors and professional fees
Wages, superannuation contributions for employees, and payments to contractors such as virtual assistants, developers and photographers are deductible. So are fees for accounting, bookkeeping, tax advice and legal services related to the business, along with business insurance premiums and bank fees on business accounts.
Expenses you can't claim
Some costs are excluded no matter how closely they relate to running your store. The ATO’s list of what you can’t claim includes the following.
| Expense | Deductible? | Why |
|---|---|---|
| Private spending through the business account | No | Not incurred for the business |
| Entertainment, such as client meals or event tickets | No | Specifically excluded |
| Traffic and parking fines | No | Specifically excluded |
| General interest charge or shortfall interest charge incurred on or after 1 July 2025 | No | No longer deductible from that date |
| GST you have claimed as a GST credit | No | Already recovered through your BAS |
| Expenses of a hobby | No | Related expenses are not deductible |
Record keeping for ecommerce businesses
Every deduction depends on the records behind it. Under the ATO’s record-keeping rules for business, you need to keep most records for five years. Records must be in English or easily converted to English, and digital records must be able to be exported into a standard format such as Excel or CSV.
For an online store, good records usually include:
- supplier invoices and import documents for stock
- platform and marketplace payout reports showing gross sales, fees and refunds
- payment gateway statements
- receipts for advertising, software and equipment
- your stocktake at 30 June
- a log of hours worked from home, if you use the fixed rate method.
Regular bookkeeping keeps these records current, so tax time involves reviewing your numbers rather than reconstructing them.
Frequently asked questions
Do I need an ABN to sell online?
If your online selling is a business, you need an ABN, and you must have one before you can register for GST. If you only sell occasional unwanted personal items, you are generally not in business and do not need one. The ATO’s online selling guidance sets out where the line falls.
Can I claim expenses if my online store is a hobby?
No. If your activity is a hobby, the related expenses are not deductible. If your store is run regularly with the aim of making a profit, it is more likely to be a business, and your expenses become claimable under the usual rules.
Can I claim a laptop I also use personally?
Yes, but only the business-use portion. If the laptop cost less than $20,000 and your business is eligible, you can write off that business portion immediately under the instant asset write-off.
Can I claim GST back on business purchases?
If you are registered for GST, you can generally claim GST credits for the GST included in the price of business purchases through your business activity statement. You then claim the remaining cost, excluding GST, as an income tax deduction.
When should I bring in an accountant?
Many online sellers seek advice when they approach the $75,000 GST threshold, start holding significant stock, sell across several platforms or take on staff. Each of these adds reporting obligations that are easier to set up correctly from the start.
Get your ecommerce tax deductions right
All Square Accountants is a team of registered tax agents and qualified accountants based in Southport, working with Gold Coast ecommerce businesses on everything from platform reconciliation and GST to business tax compliance and year-end tax planning. We are a Xero Gold Partner, and our team can connect your sales platform to Xero so fees, refunds and payouts are recorded correctly throughout the year.
Book a 30-minute consultation with our team and receive a fixed-fee proposal within 48 hours.
This article provides general information only and does not take your personal circumstances into account. Figures and thresholds are current as at October 2026. Speak with a registered tax agent before acting on it.
