Hobby or business? Selling on Etsy, eBay or at markets
Selling your own unwanted stuff is generally not taxable. Making or buying things to sell for a profit usually is, and if you do it regularly and in a business-like way it's a business. Even when it isn't a business, the ATO can still treat the profit as income you must declare. What goes on your return is the profit, not the total sales.
The short version
- Mel declares $800 of profit, not $3,000 of sales, and should set aside about $256 for tax.
- A genuine hobby, like Scott selling spare trading cards in the ATO's example, generally isn't taxed. Buying things in order to sell them for more usually is, business or not.
- No. The ATO says there is no single factor. It looks at intention, profit, scale, repetition and how business-like it is.
It started with a few candles for friends. Now there's a market stall once a month, an Etsy shop and a spare room full of wax. Somewhere along the way you started wondering whether the ATO thinks this is a hobby or a business.
Plenty of people feel a bit sick about this, especially after hearing that platforms report to the ATO. Here's what the ATO actually says, with its own examples.
The questions the ATO asks
There's no single test and no dollar figure that switches it on. The ATO looks at the overall picture, including:
- Do you intend to be in business?
- Do you intend to make a profit, and is there a real prospect of one?
- Is the size or scale enough to make a profit?
- Are the activities repeated and continuous?
- Is it planned, organised and carried out in a business-like manner?
Business-like signs include keeping records and a separate bank account, advertising to the public rather than just friends and family, and having a business name or an ABN. The ATO also says starting small doesn't stop it being a business.
Clearing out the garage
In the ATO's online selling guide, Frankie sells unwanted clothes, toys and electronics on Gumtree over three months for $800, buys a TV and stops. He isn't in business, and the ATO says the $800 is not assessable income. Selling personal things you bought for private use is generally not taxable.
Not a business, but still taxable
This is the bit that surprises people. In another ATO example, Riley, a full-time teacher, regularly buys things at garage sales and op shops and resells them on eBay and Facebook Marketplace for about $4,000 profit a year. No business plan, no advertising, a few hours a month. The ATO says Riley isn't carrying on a business, but the earnings are still assessable income that must be declared, and Riley can claim deductions for eligible expenses.
When it's a business
The ATO's example Shae spent a year planning handmade journals, then bought a binding machine, built a website, advertised and kept records in accounting software. Once she moved past planning and started selling with a profit intention, she was carrying on a business.
If you're in business you declare your business income and claim your business costs. It's the profit that is added to your other income.
Worked example
Mel's candle stall
Example only. Mel is an example person in Hobart who buys wax and jars every month to sell candles at a monthly market and on Etsy. This year she made $3,000 in sales and spent $2,200 on wax, jars, wicks, stall fees and Etsy fees. Her taxable income from her job is $50,000 and she isn't registered for GST.
| Step | Sum | Result |
|---|---|---|
| Profit from the candles | $3,000 - $2,200 | $800 |
| Her next-dollar rate | 30% tax + 2% Medicare levy | 32% |
| Tax on the profit | $800 x 32% | $256 |
Mel declares $800 of profit, not $3,000 of sales, and should set aside about $256 for tax.
Assumes her total income stays in the 30% band and her expenses are all deductible business costs.
What platforms report to the ATO
This is the sharing economy reporting regime, or SERR. Here is what the ATO confirms:
- Digital platforms have to report information about the people who earn income through them.
- Reporting started on 1 July 2023 for ride-sourcing, taxis and short-term accommodation, and from 1 July 2024 it expanded to all other reportable transactions.
- Platforms report twice a year: by 31 January for July to December, and by 31 July for January to June.
- Covered activities include digital goods such as eBooks and videos, hiring out things like tools, equipment or clothing, and task-based services such as trades, delivery and beauty.
- For individual sellers, reports include name, date of birth, contact details, bank account identifiers and the amounts paid, plus GST, fees and commissions.
- The ATO's guidance for software developers lists the sale of goods (where ownership transfers) as exempt from reporting.
So a market stall or an eBay sale of physical goods may not show up in SERR at all, while a digital download or a hired-out trailer can. Either way, reporting and tax are separate questions. Being reported doesn't make something taxable, and not being reported doesn't make it tax-free.
Selling digital downloads or hiring things out
Printables, patterns, eBooks and other digital files work a little differently on the reporting side. The ATO lists digital goods such as eBooks and videos as covered by the SERR, so a platform selling them for you may report your sales. Hiring out tools, equipment or clothing is covered too.
The tax question is still the same one. Are you selling with a profit intention, regularly, in a business-like way? If so, it's business income. If you have sold things for a while and never declared them, a registered tax agent can help you sort out what to do next.
If you decide you're in business
- Get an ABN. Not everyone is entitled to one. You need to be carrying on, or starting, a business.
- Keep records of all sales and costs, generally for 5 years.
- Register for GST if your turnover reaches $75,000 or more in a 12-month period.
- Put tax aside from your profit, since nothing is withheld.
- If you get a Centrelink payment, tell Services Australia about your business income.
Still not sure?
The ATO guide 'Are you in the business of online selling?' walks through six examples. If you're still unsure, a registered tax agent can help, and the ATO also offers private rulings.
Key numbers
| What | Figure and source |
|---|---|
| 2026-27 resident tax rate, $45,001 to $135,000 | $4,020 plus 30c for each $1 over $45,000 ATO |
| Medicare levy | 2% ATO |
| Business indicators | Intention, profit, scale, repetition, business-like ATO |
| No single factor | No threshold ATO |
| Starting small | Can still be a business ATO |
| Frankie example | $800 not assessable ATO |
Free official help
- ATO: Are you in the business of online selling?
Six worked examples from garage clear-outs to full online shops. - ATO: Are you in business?
The business indicators the ATO uses. - ATO: What is the SERR?
The platform reporting rules, start dates and reporting periods. - ATO: Overview of record-keeping rules for business
What to keep and for how long. - ABR: Applying for an ABN
Who is entitled to an ABN and how to apply. - Services Australia: Sole trader or partnership income
For anyone on a Centrelink payment with business income.
Questions people ask
Is there a dollar amount where selling becomes a business?
No. The ATO says there is no single factor. It looks at intention, profit, scale, repetition and how business-like it is.
Does eBay or Etsy report my sales to the ATO?
Platforms report under the SERR for digital goods and many services. The ATO's developer guidance lists the sale of goods where ownership transfers as exempt. Reporting doesn't decide whether your income is taxable, so declare what you need to either way.
Do I pay tax on my sales or my profit?
On your profit, which is your sales less the costs of making them. Keep your receipts so you can show the costs.
Do I need an ABN to sell at markets?
If you're carrying on a business you can apply for one. Not everyone is entitled to an ABN, so check the ATO's business tests first.
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Sources
- Are you in business?. https://www.ato.gov.au/businesses-and-organisations/starting-registering-or-closing-a-business/starting-your-own-business/are-you-in-business, accessed 2026-10-16.
- Are you in the business of online selling?. https://www.ato.gov.au/businesses-and-organisations/starting-registering-or-closing-a-business/starting-your-own-business/are-you-in-business/are-you-in-the-business-of-online-selling, accessed 2026-10-16.
- What is the SERR?. https://www.ato.gov.au/businesses-and-organisations/preparing-lodging-and-paying/third-party-reporting/sharing-economy-reporting-regime/what-is-the-serr, accessed 2026-10-16.
- Who needs to report under the SERR. https://www.ato.gov.au/businesses-and-organisations/preparing-lodging-and-paying/third-party-reporting/sharing-economy-reporting-regime/who-needs-to-report-under-the-serr, accessed 2026-10-16.
- What you need to include in your SERR report. https://www.ato.gov.au/businesses-and-organisations/preparing-lodging-and-paying/third-party-reporting/sharing-economy-reporting-regime/how-and-when-to-report-under-the-serr/what-you-need-to-include-in-your-serr-report, accessed 2026-10-16.
- Sharing economy reporting regime (ATO software developers). https://softwaredevelopers.ato.gov.au/sharingeconomyreportingregime, accessed 2026-10-16.
- Overview of record-keeping rules for business. https://www.ato.gov.au/businesses-and-organisations/preparing-lodging-and-paying/record-keeping-for-business/overview-of-record-keeping-rules-for-business, accessed 2026-10-16.
- Applying for an ABN. https://www.abr.gov.au/business-super-funds-charities/applying-abn, accessed 2026-10-16.
- Sole trader or partnership income. https://www.servicesaustralia.gov.au/individuals/services/centrelink/parenting-payment/who-can-get-it/income-and-assets-tests/income/sole-trader-or-partnership-income, accessed 2026-10-16.