Shipping costs as tax deductible

[katiegames69]

Hi,I am about to start an eBay store and was wondering if it is best to charge the buyer postage costs or offer free postage,when it comes to doing my tax return will I be able to use postage costs as a deduction if I am charging the buyer?

[kopenhagen5]

For a start whether you have a store or not is irrelevant.

In both cases you are required to report income and can claim expenses in deriving that income.

So selling an item for total invoice 60, that is the income and expense is your postage cost charged to buyer of perhaps 10.

Also eBay and PayPal fees are deductible.

If you are considering a large turnover then talk to an accountant as you will need to register for GST if turnover is 75,000+.

A store becomes viable if listing a minimum of around 100-200 items with a good turnover.

Otherwise you are better to keep the non store account using the 40 freebies a month.

Selling an item for 50 plus 10 postage or 60 with free postage depends on your market.

If you think buyers would balk at 60 then perhaps 50+10 is better.

You will get a slightly better rank in best match with free postage but is irrelevant when buyers search cheapest first. 

[porcelain_dolls_by_me]

Strongly recommend you check the ATO web site for details as to how to  determine the $75.000 threshold turnover for GST registration purcposes.  It is not as straightforward as one may think.

[offroad7400]

Regardless of free postage, you claim the actual postage cost you pay as an expense and claim the net sale as income.

[dontmissthese]

The GST threshold is based on turnover and not profit.

As all postage fees and FVF's get lumped on the one invoice the whole lot

is claimable as an expense. I have claimed every invoice as Advertising for 10 years now.

[djavusydney]

On search your listing is better on free shipping however if your items are subject to a lot of change of mind returns ones with separate postages will be better off as you do not refund your original shipping cost. On free shipping you lost the original shipping cost.

[offroad7400]

I never thought about that, and would that be why so many Chinese sellers list postage separately ?

[tazzieterror]

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@offroad7400 wrote:
I never thought about that, and would that be why so many Chinese sellers list postage separately ?

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Doubt it - who's changing their mind on cheap Chinese junk and paying postage to ship it back to China? Hardly anyone, I'd guess.

More likely they list postage seperately so that when search results are ordered from lowest price, they rank better, or because there are several postage options to choose from.

[rocket2retro]

A lot of Chinese do both. Same item in different listings, one with a postage charge & one with free postage. The total remains the same. I guess they're covering all scenarios.

[offroad7400]

I am thinking of doing the same strategy with one store excluding postage and the other 'free' with identical products. Curious to see which one sells more.