GST debt for online sellers: why it sneaks up, and how to clear it

Online sellers build GST debt because the GST on each sale arrives mixed in with the rest of the payout and gets spent on stock, ads and refunds well before BAS day. When the quarterly bill lands, the money’s gone. The fix is to clear the existing balance, through a payment plan or a loan sized on turnover, then wall off GST from every payout so it can’t build again.

If you run your own web store, sell through marketplaces or ship from a spare room that’s turned into a warehouse, this guide is for you. It explains why ecommerce is unusually prone to GST debt, what that debt costs now, and how lenders look at an online store that owes the ATO.

Why does GST debt build so fast in an online store?

Most small online businesses don’t fall behind because they’re careless. They fall behind because the ecommerce cash cycle works against them.

• Payouts blur the GST. Money lands in your account as one net payout from the platform or payment provider. The GST share of each sale isn’t separated, so it feels like spendable revenue.
• Ads are paid up front. Advertising spend for next month’s sales leaves the account well before those sales come in.
• Stock eats the cash. Reordering a bestseller can swallow weeks of takings, especially with overseas suppliers who want deposits.
• Refunds and chargebacks arrive late. A good sales month can be partly unwound weeks later.
• Growth makes it worse. The faster sales grow, the bigger each quarter’s GST bill is compared with the cash you had three months ago.

Then there’s the registration threshold. The ATO says you must register for GST once your GST turnover reaches $75,000, and you need to do it within 21 days. Plenty of stores cross that line during a single strong season and only notice after the fact, which can leave the first BAS heavier than expected.

What does carrying GST debt cost now?

More than it used to. The ATO’s general interest charge compounds daily on unpaid balances, and the rules changed in 2025: the ATO confirms that GIC and SIC incurred on or after 1 July 2025 are no longer tax deductible. Before that, a business could at least claim the interest against its income.

The other cost is risk. Unpaid business tax can lead to firmer ATO action, including garnishee notices that can redirect money from your bank account, and for companies, director penalty notices that make directors personally liable for some debts. For an online store, a garnishee on the account your payouts land in is a serious problem: it can choke stock purchasing overnight.

Payment plan, unsecured loan or property loan?

There are three common ways out. Each suits a different store.

Option	Suits	Watch out for
ATO payment plan	Smaller balances, steady margins	GIC keeps running and isn’t deductible; the plan sits on top of each new BAS
Unsecured business loan	Stores with consistent turnover and clean bank statements	Sized on turnover; repayments must fit the cash cycle
Property-secured loan	Larger balances, or owners consolidating several debts	Property is on the line; needs a clear repayment plan

Payment plans. The ATO says businesses owing $200,000 or less can usually set up a plan themselves through online services or the self-help line. A plan is quick and keeps the ATO onside, but you’ll be paying it alongside each new quarter’s GST.

Unsecured loans. For trading businesses, unsecured and cash-flow options typically run from $5k to $500k, sized on turnover and bank statements. That suits online stores, which usually have plenty of transaction data. See our page on unsecured business loans.

Property-secured loans. If the debt is large or you’d rather roll the ATO and a few other debts into one, property-secured business loans range from $20k to $5m. Our ATO tax debt loans page explains how those are assessed.

Some stores also look at revenue-based finance, where repayments move with sales. It can suit very seasonal stores, but compare the total cost carefully.

Not sure which fits? A 60-second enquiry is enough for a real person to tell you which route is worth exploring.

How do lenders look at an online store that owes GST?

Lenders who understand ecommerce look past the debt to the engine underneath. Expect them to ask about:

• Payout and sales reports from your store platform and marketplaces, showing gross sales, fees and refunds.
• Business bank statements, usually several months, to match those reports to actual deposits.
• Your ATO position: how much is owed, which quarters, whether lodgements are current and whether a plan is in place.
• Stock and suppliers: how fast stock turns, how much is on order, and whether suppliers want deposits.
• Ad spend and margins: whether the store is buying growth at a loss or growing profitably.

Our ecommerce business loan page goes deeper into how online stores are read. The one thing that reliably slows an application is a mismatch: payout reports that say one thing and bank statements that say another, often because sales go through several accounts. Tidy that up before you apply.

It also helps to know your numbers in plain words: average monthly sales over the last six months, your best and worst month, the share that comes through marketplaces versus your own site, and roughly how much stock you hold at cost. An owner who can say those four things on the first call usually gets a faster, clearer answer than one who sends a folder of exports and hopes the lender works it out.

How do you stop it happening again?

Clearing the debt is only half the job. The ATO’s own guidance on accounting for GST in your business suggests putting the GST you collect into a separate bank account. For an online store, that means:

1. Skim on every payout. When a payout arrives, move one-eleventh of the GST-inclusive sales it represents into a dedicated tax account. Your bookkeeper can help you set the exact figure.
2. Never fund stock from the tax account. If stock needs funding, use a facility built for it, such as inventory finance, not the ATO’s money.
3. Look at the accounting method. Businesses under $10 million aggregated turnover can generally choose the cash basis, so GST follows the money. Ask your accountant whether it suits you.
4. Forecast BAS from sales, not from the bank balance. A bank balance after a big ad push tells you nothing about the GST you owe.

What does this look like for a real store?

Illustrative example only. An online activewear store grows quickly after a few products take off. Over two quarters, the owner reorders stock three times and doubles ad spend. Sales look great, but when the BAS comes due, there’s about $60k of GST owing and roughly a third of that in the account.

The owner sets up an ATO payment plan to stop escalation, then looks at clearing it entirely so the plan isn’t competing with the next two seasonal stock orders. With nine months of payout reports and bank statements showing steady sales, an unsecured loan clears the balance. The owner opens a separate tax account the same week and starts skimming GST from every payout.

The loan has a fixed end date, and the store’s next BAS is paid on time from the tax account.

Store humming but the GST bill isn’t? Let’s see if you qualify

Online stores that owe GST are usually growing, not failing. The cash just went into the next order before the tax office got its share. That’s a problem with a practical fix.

Our enquiry takes about 60 seconds, and there’s no credit check when you first enquire. We don’t send your details to a pile of lenders, so your phone won’t ring off the hook. A real person reads what you’ve told us, including your monthly sales and the ATO balance, and calls you to talk through what makes sense. Please fill it in accurately so we can match the right option first time.

See if your store qualifies →