Dropshipping and E-Commerce Tax Accountants in Australia

Yes. If you are carrying on a business (selling products regularly with the intention of profit), you need an Australian Business Number. An ABN is free to register through the Australian Business Register. Having an ABN allows you to register for GST when required, invoice business customers without having tax withheld at the top marginal rate, and open a business bank account. National Accounts handles ABN registration as part of our client onboarding process.

You must register for GST when your annual turnover (gross sales, not profit) reaches $75,000, or when you reasonably expect it will reach that threshold in the current 12-month period. Once registered, you charge 10% GST on taxable domestic sales and lodge quarterly BAS. You can also claim input tax credits on GST paid on business purchases. National Accounts manages the full GST registration and ongoing BAS compliance.

For goods valued at $1,000 or less, GST is generally collected by the overseas supplier or marketplace platform (Amazon, eBay) if they meet the $75,000 Australian turnover threshold. For goods over $1,000, customs duty and GST are assessed at the Australian border and must be paid before goods are released. As a dropshipper, you need to understand your supply chain to determine who is responsible for collecting and remitting GST at each point. National Accounts reviews your fulfilment model and configures the correct GST treatment in your accounting system.

Yes. All advertising expenditure directly related to generating business income is fully deductible in the financial year it is incurred. This includes Facebook Ads, Google Ads, TikTok Ads, influencer payments, email marketing software, and SEO services. Advertising is typically one of the largest deductions for dropshipping businesses. Keep records of all ad spend, including platform receipts and invoices.

Refunds reduce your assessable income. If a customer returns a product or you issue a refund, that amount is deducted from your gross revenue. Chargebacks from payment processors (Stripe, PayPal, Shopify Payments) are also deductible. However, you need to track these accurately in your accounting system rather than just looking at net bank deposits, because refunds and chargebacks affect both your revenue and your GST position. National Accounts reconciles all payment channels in Xero to capture refunds, chargebacks, and platform adjustments correctly.

If you sell through Amazon (US marketplace), eBay, or Etsy, these platforms typically collect and remit US state sales tax on your behalf under marketplace facilitator laws. You generally do not need to register for US sales tax separately if the platform handles it. However, if you sell directly through your own Shopify store to US customers and exceed economic nexus thresholds in certain states, you may have US sales tax obligations. This is a complex area and National Accounts advises e-commerce clients on their international tax obligations based on their specific sales channels and volumes.

Most small dropshipping businesses use cash basis accounting, which records income when received and expenses when paid. This is simpler and aligns with how most sole traders and small companies operate. Accrual accounting records income when earned and expenses when incurred, regardless of when cash changes hands. The ATO allows businesses with turnover under $10 million to use cash basis for GST purposes. National Accounts recommends cash basis for most dropshipping clients unless there is a specific reason to use accrual (such as large prepaid inventory orders or significant accounts receivable).

When you pay a supplier in a foreign currency (typically USD or CNY), the ATO requires you to convert the amount to AUD at the exchange rate on the date of the transaction. If the exchange rate moves between when you incur the expense and when you pay it, the difference is either a deductible foreign exchange loss or assessable foreign exchange gain. Xero handles multi-currency transactions and automatically calculates exchange gains and losses. National Accounts configures Xero’s multi-currency settings and ensures exchange differences are correctly reported in your tax return.

The ATO requires you to keep records of all business transactions for five years. For dropshippers, this includes sales reports from each platform (Shopify, Amazon, eBay), supplier invoices and payment confirmations, bank and credit card statements, advertising platform receipts, shipping and logistics invoices, refund and chargeback records, and any contracts or agreements with suppliers. Cloud accounting software like Xero stores most of this digitally. National Accounts helps clients set up automated data feeds from platforms to Xero so record-keeping happens in the background.

Accounting fees for dropshipping businesses depend on the complexity of your operations. As a general guide for National Accounts clients: a sole trader with a single-platform store pays $1,500 to $3,000 per year for annual tax compliance and BAS. A company or trust structure with multiple platforms and higher complexity runs $3,000 to $6,000 per year. Ongoing bookkeeping is quoted separately based on transaction volume. All fees are provided as fixed quotes after an initial assessment, so there are no surprises.