The ATO is clear: if you're running a reselling business, you have tax obligations. Here's exactly what they are.
The ATO determines whether your reselling activity is a business by applying the "enterprise test." They examine: whether you intend to make a profit, whether you operate regularly and repetitively, whether you have a business plan or strategy, whether you maintain business records, and whether you advertise or market your products. Most regular resellers meet multiple criteria and are clearly running an enterprise.
The ATO has data matching agreements with eBay, PayPal, Stripe, and other payment platforms. They receive transaction data and cross-reference it against tax returns. If they find income that wasn't declared, you'll receive a notice — or in some cases, face a formal audit. The days of flying under the radar as an online seller are effectively over.
Penalties for undeclared income range from 25% of the tax shortfall (for careless mistakes) to 75% (for intentional avoidance), plus interest. In extreme cases, criminal prosecution is possible. The ATO generally treats voluntary disclosures more leniently than non-compliance they discover independently.
The ATO has published specific guidance on the sharing economy and online selling. Their position is clear: selling personal items at a loss is not taxable, but regular commercial selling activity is a business. If you're unsure about your status, the ATO's website has a decision tool, or speak with a tax professional. See our reseller tax guide and hobby vs business guide.
Franked is built specifically for Australian resellers. Join the waitlist to be first when we launch.