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Re: Tax and selling on etsy

Newbie

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Hi, I am thinking of starting up an etsy store as a hobby (not expecting profit) but I am a bit curious as to how income tax works.

Will etsy report my income to the ATO like income from a normal job, or will I have to keep track of any income I make and provide proof to my tax agent.

 

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ATO Community Support

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Hi @Ray33

 

You would need to determine whether your activity on Etsy classifies as a business or a hobby. The Business.gov website has a great explanation on the difference between a business and a hobby that I recommend reading. If you determine your activity classifies as a hobby, any derived income is non-assessable and won't need to be reported to us. If you classify as a business you may need to register for an ABN and would need to keep track of your business activity and report this to us.

 

The way income works in regards to this depends on the ABN you register for. Generally individual sellers on sites like these register for a Sole Trader ABN, however it's up to you what type you choose. You can view details on ABN structures on our website. In this case you would report your business income in your personal tax return. There's a section for business income that should be pretty straight-forward, but we can answer questions on this if you need help at the time. Your payable tax is then calculated based on your total taxable income (minus any deductions). You can view details on individual tax rates on your website. 

 

As far as I'm aware Etsy would not provide income information to us so this would be your responsibility to manage if required.

 

We have a helpful guide on starting your own business that would be worth looking into. We can't give you any financial advice in regards to your business, however your tax agent may be able to provide advice.

 

Hope this helps, let us know if you have any questions. 

1 REPLY 1

Most helpful response

ATO Community Support

Replies 0

Hi @Ray33

 

You would need to determine whether your activity on Etsy classifies as a business or a hobby. The Business.gov website has a great explanation on the difference between a business and a hobby that I recommend reading. If you determine your activity classifies as a hobby, any derived income is non-assessable and won't need to be reported to us. If you classify as a business you may need to register for an ABN and would need to keep track of your business activity and report this to us.

 

The way income works in regards to this depends on the ABN you register for. Generally individual sellers on sites like these register for a Sole Trader ABN, however it's up to you what type you choose. You can view details on ABN structures on our website. In this case you would report your business income in your personal tax return. There's a section for business income that should be pretty straight-forward, but we can answer questions on this if you need help at the time. Your payable tax is then calculated based on your total taxable income (minus any deductions). You can view details on individual tax rates on your website. 

 

As far as I'm aware Etsy would not provide income information to us so this would be your responsibility to manage if required.

 

We have a helpful guide on starting your own business that would be worth looking into. We can't give you any financial advice in regards to your business, however your tax agent may be able to provide advice.

 

Hope this helps, let us know if you have any questions.