Dropshipping in Australia, your ABN, GST and consumer law obligations

If you run a dropshipping store that sells to customers in Australia, the law treats you as the retailer, not as a middleman. You do not hold stock, but you still carry on a business, and from your first sale a set of registration and consumer protection obligations attaches to you and your ABN.

The obligations that matter most are: holding an ABN and registering for GST once your turnover passes the threshold, registering any business name you trade under, honouring the Australian Consumer Law, and handling customer data and marketing emails properly. This guide sets out who each obligation applies to, what you must actually do, and what happens if you do not.

Who must comply: are you carrying on an enterprise?

The starting point is whether your dropshipping activity counts as carrying on an enterprise in Australia. Under s 8 of the A New Tax System (Australian Business Number) Act 1999 (Cth) (the ABN Act), you are entitled to an ABN if you are carrying on an enterprise in Australia. An enterprise includes an activity, or series of activities, done in the form of a business, such as selling goods online with the intention of making a profit.

Most dropshipping stores meet this test easily. The indicators that you are in business are: repeat sales rather than one-off sales, a commercial website, advertising spend, arrangements with suppliers, and a genuine profit motive. If those features describe your store, you are entitled to hold an ABN, and the Australian Business Register expects you to have one.

Two points stop this from being an optional step. First, if your GST turnover reaches $75,000 or more in a 12-month period, you must register for GST, and an ABN is required to do that. Second, if a business pays you more than $75 (excluding GST) for goods or services and you have not quoted an ABN, that business must withhold tax at the top marginal rate plus the Medicare levy, currently 47%, and pay it to the ATO. In practice that makes trading without an ABN expensive and difficult to sustain.

Duty 1: Register your ABN before your first sale

An ABN is an 11-digit identifier that connects your business to the government, to payment platforms and to wholesalers. Applying is free and is done through the Australian Business Register, and in most cases you receive your ABN immediately. The register also warns that you may face prosecution or criminal charges if you apply for an ABN, register for GST and claim refunds when you are not entitled, so only apply once your enterprise is real or genuinely planned.

Apply before you start trading. Most Australian suppliers and wholesale platforms expect an ABN to open an account and issue tax invoices, and payment processors often ask for one as part of their identity checks. If you apply late, your first invoices go out without an ABN and the businesses paying you must withhold the top rate of tax from them.

Keep your ABN details current. The Australian Business Register can review your entitlement at any time and can cancel your registration under s 18 of the ABN Act if you are no longer entitled to an ABN, so update your business activity details as your store evolves.

Duty 2: Register for GST when your turnover hits the threshold

Under s 23-5 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth) (the GST Act), you must register for GST if you carry on an enterprise and your GST turnover meets the registration turnover threshold. That threshold is $75,000 for most businesses and $150,000 for non-profit bodies, set by reg 23-15.01 of the GST Regulations 2019. Your GST turnover is broadly your total business income, excluding GST itself.

Timing matters. Under s 25-1 of the GST Act you must apply for registration within 21 days of becoming required to register. If your sales are climbing quickly, register before the threshold rather than after it, because GST applies from the date you were required to be registered, not from the date you apply. Registration is voluntary below the threshold under s 23-10, and many dropshippers choose to register early so they can claim input tax credits on supplier and advertising costs, and because larger platforms may expect GST registration details.

Once registered, you charge 10% GST on sales to Australian customers, remit it through your activity statements and issue tax invoices that show your ABN. Where your overseas supplier ships goods directly to your customer, check who is the importer of record. The ATO explains that goods valued at or below $1,000 sent by international post are usually non-taxable importations, with the customer as the addressee, but your sale to the customer can still be a taxable supply connected with Australia. Because the GST treatment of direct-shipped goods depends on how each sale is arranged, map this with a tax adviser before you scale.

Duty 3: Register your business name if you trade under a brand

If you trade under a name that is not your own legal name, or not your company's registered name, you must register it as a business name with ASIC under the Business Names Registration Act 2011 (Cth). Under s 18 of that Act, carrying on a business under an unregistered business name is an offence carrying a penalty of 30 penalty units. The application process in s 23 requires you to provide your ABN, which is another reason the ABN comes first.

Registration is done through ASIC's business names register for a modest fee, in one-year or three-year terms. A business name registration does not give you ownership of the name itself; that requires a trade mark. If you plan to operate several brands, each brand needs its own business name registration, but they can all sit under one ABN and one legal entity.

Duty 4: Decide the structure your ABN will attach to

Your ABN belongs to your legal entity, so choose the structure before you apply. The three common options are:

Sole trader: You operate in your own name. Simple and free to set up, but there is no separation between you and the business, so you are personally liable for its debts and claims.
Partnership: Two or more people share the business. Straightforward to start, but partners are generally jointly and severally liable for the partnership's obligations, and a written partnership agreement is essential.
Company: A company is a separate legal entity with its own ACN, and it provides limited liability, which protects your personal assets from business claims. Setup and annual ASIC compliance cost more, and the company pays corporate tax, currently 25% for base rate entities.

Think ahead. If you start as a sole trader and incorporate later, you must transfer business assets such as domains, supplier contracts and your business name into the company, and update your customer-facing documents. Deciding on structure early is cheaper than changing it later.

Duty 5: Honour the Australian Consumer Law from the first order

Schedule 2 of the Competition and Consumer Act 2010 (Cth) (the Australian Consumer Law or ACL) protects your customers regardless of where your supplier sits. Because you are the seller, the consumer guarantees apply to you. The key obligations are:

Consumer guarantees: Goods you supply must be of acceptable quality under s 54 of the ACL, match their description and be fit for purpose. These guarantees cannot be contracted out of, and a "no refunds" policy that ignores them is unlawful.
Honest advertising: Section 18 of the ACL prohibits conduct that is misleading or deceptive, and s 29 prohibits false or misleading representations about goods, including claims about quality, origin, certification or delivery times.
Product compliance: Goods must comply with mandatory safety standards before they can be sold in Australia. Electrical items and children's products are common problem areas for dropshippers, because products sourced cheaply overseas often do not carry the required Australian certification.

If a product is faulty, your customer's rights run against you, not the overseas supplier. You can pass obligations down the chain through your supplier agreement, but you cannot pass them on to the customer. That is why supplier due diligence and accurate product descriptions matter so much in this model.

Duty 6: Handle customer data and marketing emails properly

Every dropshipping store collects customer names, addresses, emails and order history, and usually shares that information with suppliers and couriers. Two laws govern what you can do with it:

Privacy: The Privacy Act 1988 (Cth) and its Australian Privacy Principles (APPs) apply to businesses with annual turnover above $3 million, and to smaller businesses in certain situations. Under s 6D of the Privacy Act, a small business loses its exemption if it discloses personal information to anyone else for a benefit, service or advantage, unless the individual consents. Sharing customer details with a supplier to fulfil an order can fall into that category, so even a small dropshipper should have a clear privacy policy that explains what you collect, why, and who you share it with, and should obtain consent to that sharing at checkout. APP entities must have such a policy under APP 1.
Spam: The Spam Act 2003 (Cth) applies to commercial emails and SMS. Under ss 16 to 18, you must not send unsolicited commercial messages without consent, you must identify who authorised the message, and every message must include a functional unsubscribe facility that works for at least 30 days. The ACMA enforces these rules.

What happens if you get it wrong

Non-compliance in a dropshipping business tends to surface in one of three ways: a tax audit, a consumer complaint, or a regulator investigation. The consequences are real:

Consumer law: Pecuniary penalties under s 224 of the ACL for false or misleading representations under s 29 can reach, for a body corporate, the greater of $100 million, three times the benefit obtained, or 30% of adjusted turnover, and $2.5 million for individuals. The ACCC regularly pursues online retailers. In Australian Competition and Consumer Commission v Online Dealz Pty Ltd [2016] FCA 732, an online retailer that sold children's cots and strollers which did not meet mandatory safety standards, and advertised them as "AUS certified", was ordered to pay $100,000 in penalties, its director $20,000, and to fund product recalls. The model was close to dropshipping: goods ordered from overseas and sent on to customers.
Tax: Failing to register for GST when required, or misusing an ABN, exposes you to ATO administrative penalties, interest and audits. The Australian Business Register warns that applying for an ABN when you are not entitled can lead to prosecution.
Privacy and spam: The OAIC can investigate privacy breaches and seek civil penalties through the courts for interferences with privacy, and the ACMA can issue infringement notices and penalties for spam breaches.

Compliance checklist before you launch

Work through each item before your store goes live:

Apply for your ABN through the Australian Business Register before your first sale, and keep your details current.
Register your business name with ASIC if you trade under a brand, and register your company with ASIC if you incorporate.
Plan your GST position: know your projected turnover, register at or before the $75,000 threshold, and apply within 21 days if you become required to register.
Publish a privacy policy and collect consent to share order data with suppliers and couriers.
Set up compliant email marketing with consent, sender identification and a working unsubscribe facility.
Publish clear terms and a refunds and returns policy that reflect your actual fulfilment times and honour consumer guarantees.
Check product compliance for any goods subject to mandatory safety standards, such as electrical items and children's products.

Where a lawyer helps

A lawyer's value in a dropshipping business is concentrated in the documents and decisions that allocate risk. A commercial lawyer can advise on entity structure and the trade-offs between liability and compliance cost, draft or review your supplier agreement so quality standards, shipping times, returns and compliance responsibilities flow down the chain, prepare your website terms and refunds policy so they match your operations and the ACL, review your privacy policy against the APPs, and coordinate trade mark protection for your brand. The GST and importation treatment of direct-shipped goods is a question for a tax adviser, ideally before you scale.

The threshold that catches dropshippers by surprise

The obligation most often missed is not the ABN itself. It is the point that consumer law applies from the very first sale, while GST only kicks in at $75,000 of turnover. New dropshippers treat the GST threshold as permission to ignore compliance until the business is big, but a single faulty product or misleading advertisement attracts obligations and potential liability from day one. If you are preparing to launch, your first action this week is simple: apply for your ABN, register your business name if you need one, and put a privacy policy and a refunds policy on your site before the first order lands. The $75,000 threshold will arrive sooner than you expect, and the consumer law is already there.