Amazon Sellers: How to Report Income and Claim Stock Costs in Australia

Selling on Amazon offers massive growth potential, but getting your taxes right is critical. Between marketplace fees, inventory in transit, returns, foreign transactions, and GST, the ATO expects detailed and accurate reporting.

This guide simplifies how Australian Amazon sellers should report income, claim inventory (COGS), and handle returns, fees, and shipping to stay compliant, and audit-ready.

Reporting Amazon Income: Gross vs Net

Amazon pays you after deducting their fees, but that’s not what you report to the ATO. The ATO requires you to declare gross income, not the net amount hitting your bank account.

Example:

• Product sells for $100

• Amazon deducts $15 in fees

• You receive $85

• You must report $100 as income and claim $15 as a business expense

Pro tip: Use a clearing account in Xero or QuickBooks to separate gross sales, fees, and net deposits. This simplifies GST and income reporting.

Claiming Stock Costs (COGS)

Your Cost of Goods Sold (COGS) is one of the most valuable deductions as an Amazon seller. It includes:

• Product purchase costs (wholesale)

• Import freight and duties

• Amazon FBA storage and fulfilment fees (linked to stock movement)

• Packaging and labelling

To claim COGS accurately:

✅ Use accrual accounting to match the cost of goods sold with revenue earned

✅ Don’t claim stock costs when purchased, only when the stock is sold

✅ Maintain records: invoices, customs entries, freight bills

✅ Reconcile stock levels regularly, especially with FBA and international sales

Small business note: Even if you’re under the $10M turnover threshold, using accrual accounting is recommended if inventory is material to your business.

Managing Returns & Inventory Write-Offs

Returns and damaged stock are part of selling on Amazon, but they must be reported correctly.

• For returns, adjust both income and COGS.

• If an item is restocked, it returns to inventory.

• If it’s unsellable, it should be written off with documentation (e.g. disposal log, stocktake report).

Damaged, lost or obsolete inventory can be written off at year-end, but only if you have evidence and it’s reflected in your EOFY stocktake.

Shipping Costs and Deductions

You can deduct the following shipping-related costs:

• Freight to Amazon warehouses (local and international)

• Amazon fulfilment and handling fees

• Postage for merchant-fulfilled orders

• Import duties and brokerage fees

Key Rule:

• Shipping charged to customers = Income

• Shipping you pay = Deductible Expense

If you pay GST on imports, this may be claimable as a credit on your BAS.

Deducting Amazon Selling Fees

Amazon charges several fees depending on your fulfilment method and category:

• Referral fees

• FBA fees

• Subscription fees

• Closing fees for books/media

All are deductible, as long as you retain Amazon Settlement Reports for documentation and reconciliation.

Tip: If you're using foreign Amazon marketplaces, account for foreign exchange gains/losses where material.

What to Track and Report

Area	What to Report	How to Claim
Income	Gross sales (before fees)	Tax return & BAS (GST-inclusive)
COGS	Only when items are sold	Use accruals + purchase records
Fees	Amazon & payment processor fees	Claim as business expenses
Shipping	Outbound & fulfilment costs	Deduct when incurred
Returns	Adjust income & COGS as needed	Keep supporting docs
Inventory	Year-end stocktake, damaged items	Adjust EOFY valuations accordingly

Don’t Forget GST

• Register for GST when turnover hits $75,000/year

• Most Amazon seller fees don’t include GST (Amazon is not Australian-based)

• You may need to apply GST on low-value imports or under the reverse charge rules

Let’s Simplify Your Amazon Tax Reporting

At Dolman Bateman, we help Australian Amazon sellers:

• Track gross sales and fees accurately

• Automate COGS calculations with Xero and A2X

• Reconcile inventory and settlement reports

• Stay compliant with GST and ATO expectations

📞 Book a free eCommerce tax review before your next BAS is due.

Click here to book a meeting with Arnold

Disclaimer:

The information provided in this article is general in nature and does not constitute personal financial, legal or tax advice. All content relates to the current financial year only. Future changes to tax laws, thresholds or administrative requirements may affect the accuracy or relevance of this information, so you should always confirm that the guidance remains current. While every effort has been made to ensure accuracy at the time of publication, Dolman Bateman accepts no responsibility or liability for any loss or damage arising from reliance on this information. You should seek professional advice tailored to your circumstances before making any financial or tax decision.