Concepts
Online marketplace
An online marketplace is a website or app where independent sellers list goods or services, and GST responsibilities can fall on both the sellers and, in some cases, the marketplace operator.
An online marketplace is a digital platform that brings buyers and sellers together. Sellers list products or services, buyers pay through the platform and the operator earns commission, listing fees or subscription fees. Examples range from general retail sites to specialised trading platforms for handmade goods, vehicles or services. From a GST view, there are usually several separate transactions happening at once, and it helps to separate them.
First, there is the sale from the seller to the buyer. If the seller is registered for GST, or is required to be, and the goods or services are taxable, the price includes GST and the seller reports it. A seller whose GST turnover reaches $75,000 must register, and sales through marketplaces count towards that turnover along with every other sale. Sellers below the threshold are not required to charge GST, although they can register voluntarily.
Second, the marketplace charges the seller fees. Those fees are a supply from the operator to the seller. If the operator is registered and the supply is taxable, GST is included in the fee, and a registered seller can claim it as a credit with a valid tax invoice. Seller fees paid to an overseas operator may be dealt with under different rules, such as those for imported services, so the statement should be checked carefully when preparing a BAS.
Third, there are special rules for marketplaces dealing in low value imported goods and certain supplies by overseas sellers. In some situations the operator of an electronic distribution platform is treated as the supplier and must account for the GST rather than the underlying seller. The thresholds and conditions for those rules are set by legislation, so a marketplace operator should check ato.gov.au for the current requirements.
For sellers, the practical tasks are to identify the amount that counts as sales for each period, work out how much GST is included, and match marketplace payouts to sales. Payouts normally arrive after fees and refunds have been deducted, so the amount banked is not the same as the gross sales figure. Sellers should keep order reports, fee invoices, refund records and bank statements for five years.
Common mistakes include reporting only the net payout as sales, forgetting that refunds and chargebacks may require an adjustment, and thinking that the platform handles everything because it processes the payment. Another is assuming that casual selling is never a business. Regular, profit-seeking selling is likely to be an enterprise, and the turnover counts towards registration.
Rules for platforms are an area where legislation has changed, and the right treatment depends on the type of seller, goods and buyer location. This is general information only, so check your specific situation with the ATO or a registered tax professional.
Worked example
Jo sells homewares on an online marketplace and is registered for GST. In a quarter her gross sales are $22,000 including GST, the marketplace charges $2,200 in fees including GST, and she buys stock for $8,800 including GST. GST on sales is $22,000 divided by 11, which is $2,000. Credits are $200 on fees plus $800 on stock, which is $1,000. Her net GST payable on the BAS is $1,000.
Practical tips
- Report gross sales, not net payouts. Use the marketplace sales report to see the amounts before fees, refunds and shipping adjustments.
- Check that fee invoices from the platform show GST correctly, and keep them to support your credit claims.
- Add up sales across every platform and your own website when testing whether you have reached the registration threshold.