Running a high-ticket e-commerce or dropshipping business comes with a distinct set of tax challenges — particularly around GST on imported goods, income reporting across platforms, and choosing the right business structure to protect profits and manage risk. Whether you are selling through Shopify, Amazon FBA, TikTok Shop, or your own website, here is what you need to understand.
Do You Need an ABN?
Yes — without exception. If you are operating an online store with the intention of making a profit, you are running a business in the eyes of the ATO, regardless of where your products are sourced or fulfilled.
GST on Imported Goods — The Part Most Sellers Miss
This is the area where many e-commerce operators — particularly those using overseas suppliers or FBA warehousing — make costly errors.
Two key GST rules to understand:
- Low Value Imported Goods (under $1,000): Since 2018, overseas sellers supplying goods to Australian consumers must collect GST on items under $1,000. If you are the Australian importer/re-seller, different rules apply and you may be able to claim GST credits on import costs.
- Goods over $1,000: GST (and customs duty) is payable at the Australian border — typically handled by your freight forwarder. You can claim GST credits on this if you are GST registered.
The Dropshipping GST Assumption
Many dropshippers assume they have no GST obligations because their supplier is overseas and ships direct to customers.
Depending on your business model, you may still have Australian GST obligations on your sales revenue — particularly once turnover exceeds $75,000.
Platform marketplace facilitator rules (Shopify, Amazon) mean GST is sometimes collected by the platform — but this does not eliminate your reporting obligations.
Registering for GST — When and Why
Mandatory once your annual turnover exceeds $75,000. For high-ticket sellers, this threshold is often reached quickly — a few sales per month on a $3,000+ product can push you over within weeks.
Once registered, you can claim GST credits on:
- Supplier invoices (where GST is included)
- Platform fees (Shopify, eBay, Amazon fees with GST)
- Advertising spend (Meta Ads, Google Ads)
- Software subscriptions with Australian GST
- Import costs (where applicable)
Income Tax — How Is Profit Taxed?
As a Sole Trader, your e-commerce profit is added to your other income and taxed at your marginal rate (up to 47% including Medicare Levy). If you operate through a company, the rate is a flat 25% for base rate entities — a significant difference once profits scale.
What Can You Deduct?
The key points are below:
- Cost of Goods Sold (COGS) — the direct cost of products sold
- Platform fees — Shopify subscriptions, Amazon seller fees, eBay listing fees
- Advertising spend — Meta, Google, TikTok, influencer campaigns
- Shipping and fulfilment costs
- Software — Klaviyo, ReConvert, order management tools
- Photography, videography and content creation for product listings
- Returns and refund-related costs
- Professional services — accountant, legal, copywriting
Should You Operate Through a Company?
For e-commerce businesses, a company structure is often worth considering earlier than other business types — for two reasons:
However, be aware: under PSI rules, if the income is essentially derived from your personal effort (e.g. you are building the entire business yourself), the company tax saving may be limited. This is less of an issue for product-based e-commerce than for pure service businesses — but worth discussing.
- Profit margins can be high and scale quickly. The difference between 25% company tax and 47% personal tax becomes significant fast.
- E-commerce businesses often involve product liability risk. A company provides a legal separation between business risk and personal assets.
Foreign Currency and Payment Platforms
Many high-ticket sellers receive payments in USD or other currencies via Stripe, PayPal, or Wise. All of this income must be converted to AUD and declared. Exchange rate gains and losses also have tax implications. A clear record of conversion rates at the time of each transaction is essential for accurate reporting.
General information only
This article provides general tax information only and does not constitute personal tax, legal, or financial advice. Tax rules can change and individual circumstances vary.
If you would like advice based on your situation, please get in touch with the practice.
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