Etsy Seller Tax Guide — Australia

When Your Etsy Shop Becomes a Business

Etsy sellers often occupy a unique space — many create handmade goods or curate vintage items as a creative outlet that also generates income. But the ATO doesn't distinguish between "creative" and "commercial" businesses. If you're operating with the intention of making a profit, selling regularly, and running your Etsy shop in a businesslike way, it's a business regardless of whether it feels like one.

The ATO looks at factors like how much time you spend on it, whether you advertise, and whether you have a plan for growing sales. Most active Etsy sellers with regular listings and sales are clearly running businesses under these criteria.

Understanding Etsy's Fee Structure

Etsy charges multiple fees, and each one is a deductible expense for your business:

• Listing fee: A small fee per listing (currently around $0.20 USD, converted to AUD)
• Transaction fee: A percentage of each sale price including shipping
• Payment processing fee: A separate percentage plus flat fee for processing the payment
• Offsite ads fee: If Etsy drives a sale through its advertising program, it takes an additional percentage
• Etsy Plus subscription: If you use the premium subscription tier

These fees add up quickly and can represent 15-20% of your gross sale price. Tracking each fee category separately helps you understand your true margin and ensures you claim every deduction available.

GST for Etsy Sellers

The standard $75,000 GST threshold applies to Etsy sellers. If your annual turnover crosses this threshold, you must register for GST and charge it on sales to Australian buyers. Etsy can be configured to display GST-inclusive pricing for Australian customers.

Note that Etsy's fees are charged in USD, which creates a currency conversion complexity for GST purposes. Your accountant can help you determine the correct approach to claiming GST credits on fees paid in foreign currency.

Record Keeping for Etsy Sellers

Etsy provides downloadable CSV reports of your transactions, which is more helpful than some platforms. However, these reports still need to be reconciled against your bank account and supplemented with COGS records (what you paid for materials or items). The ATO requires you to keep all business records for at least five years. See our guide on reseller tax in Australia for the full record-keeping requirements.

For Etsy sellers who also sell on other platforms, consolidating income across eBay, Depop, and Etsy is a common challenge. Dedicated reseller accounting software can help automate this process.