Settlement Accounting: Gross vs Net Payouts

Customers paid $11,000, but only $8,030 reached your bank account. How much should appear as sales? What happened to the difference?

Settlement accounting answers those questions. The missing cash might include customer refunds, selling fees and money temporarily held by a payment provider. Those amounts need different treatment in your accounts.

A bank rule that codes every Amazon or Shopify deposit to sales can hide the details. Your bank reconciliation may balance while your revenue, expenses and margin reports remain wrong.

Online sales represented 12.7% of Australian retail turnover in June 2025, compared with 11.6% a year earlier, according to the ABS’s final Retail Trade release. These are historical figures, not a current 2026 market estimate. For growing retailers, reliable channel reporting matters as much as a matching bank balance.

This guide focuses on Australian retailers selling their own goods through Amazon or Shopify. It forms part of our e-commerce accounting services. All worked figures below are illustrative.

What is settlement accounting?

Shopify’s payout details and transaction exports distinguish charges, refunds, fees and other adjustments. Their transaction dates and payout dates can differ. Amazon also charges different categories of selling and fulfilment fees. Review the actual settlement and invoices rather than treating every deduction as the same expense.

Gross revenue does not mean ignoring customer refunds or GST. In this article, gross presentation means recognising the retailer’s revenue before platform selling fees. It does not mean recognising the full GST-inclusive checkout total as income.

When should settlement accounting show gross revenue?

For financial reporting, AASB 15 paragraphs B34–B36 explain the principal-versus-agent assessment. Paragraph B35B addresses gross presentation for a principal. Paragraph 47 excludes amounts collected for third parties from the transaction price.

Consider what your business promises to the customer and whether it controls the goods before transfer. Using a marketplace to collect payment or fulfil an order does not settle that assessment.

Keep the reporting frameworks separate. Financial-statement revenue recognition, income-tax derivation and GST attribution have their own rules. The use of AASB 15 here explains the accounting principle; it does not suggest every small retailer must prepare general purpose financial statements.

Gross vs net settlement accounting: a worked example

Assumptions: An Australian GST-registered retailer acts as principal. The goods have been supplied. All sales and fees in the example are fully taxable at 10%, and the fee GST is fully creditable with supporting documentation. Sales, refunds and fees fall in the same relevant reporting period. There is no opening clearing balance, foreign currency or other adjustment. These are assumed amounts, not quoted Amazon or Shopify fee rates.

Reconcile the payout

The $550 remains recoverable from the platform under the example’s assumptions. A temporary hold is not automatically an expense. Shopify’s reserve guidance describes holds used to manage potential disputes and refunds. Any actual loss or reduction in recoverability requires separate assessment.

Separate revenue, costs and GST

For this example, platform fees are selling expenses below gross profit. The $5,400 cost of goods sold is net of returns and recoverable GST. Different cost classifications change margin subtotals, so apply and explain your policy consistently.

GST on sales after the refund adjustment is $900. The eligible fee credit is $120. Net GST from these sales, refunds and fees is therefore $780. This is not the business’s complete BAS liability: inventory purchases, other expenses and other transactions are excluded.

Record the settlement through a clearing account

The clearing account retains a $550 debit balance, supported by the reserve report. You can show it separately as a platform reserve receivable. Its later release clears that receivable; it is not another sale.

These entries illustrate the accounting outcome. If an integration already records sales and refunds, reconcile those entries rather than posting them again.

Can net payouts cause GST and income tax errors?

When the net tax amount happens to agree

Remove the $550 reserve from the example. The payout becomes $8,580. Coding that amount entirely as GST-inclusive sales produces $7,800 revenue and $780 GST.

If no separate platform fee is recorded, the result after $5,400 cost of goods sold is still $2,400. However, revenue and expenses are each understated by $1,200. The apparent gross margin is 30.77%, compared with the correct 40.00% under the stated classification.

The $780 net GST also agrees by coincidence. That narrow result depends on the same GST rate, full credit entitlement and matching attribution periods. Sales and GST-credit components are still wrong.

When the result stops agreeing

Restore the $550 reserve. Coding the $8,030 bank deposit entirely as GST-inclusive sales produces $730 GST. Under the example’s assumptions, that understates the $780 net GST by $50.

Other mistakes work differently. Recording revenue net of fees and then deducting those fees again understates profit. Recording gross sales but omitting deductible fees can overstate profit. Missing an eligible fee GST credit can overstate GST payable. Mixed taxable and GST-free sales also prevent a single payout tax code from reliably representing the underlying transactions.

The legal starting points are ITAA 1997 ss 6-5 and 8-1 for ordinary income and general deductions. Sections 17-5 and 27-5 address GST in assessable income and deductible expenses. The GST Act ss 9-70, 9-75, 11-5 and 11-25 address GST calculations and credit entitlement; Division 19 deals with adjustment events such as relevant refunds.

Check the period and the fee invoice

Under GST Act s 29-5, non-cash GST attribution generally follows the earlier of receiving consideration or issuing an invoice. Cash-basis attribution follows consideration received. Section 29-10 separately governs credits, including tax-invoice requirements. Check the payment arrangement before assuming receipt occurs only when the final payout reaches your bank.

Shopify says Australian Shopify Payments processing fees include GST. Its subscription billing guidance has separate rules where Australian GST registration and an ABN are supplied. Check each invoice; one tax code should not cover every Shopify charge.

Our GST and BAS review can check these classifications. Where previous periods are affected, year-end tax compliance support can assess the necessary corrections.

A practical Shopify and Amazon reconciliation checklist

1. Identify the channel and processor. Separate Amazon, Shopify Payments and other gateways used by your store. Keep currencies distinct where relevant.
2. Collect the source records. Use sales and refund reports, settlement transactions, reserve balances, fee invoices and bank statements.
3. Record sales once. Check what your order or accounting integration already posts before adding another journal.
4. Map each component. Separate sales, refunds, taxes, fees and balance-sheet movements. Investigate unfamiliar adjustments.
5. Match the payout. Reconcile the platform transfer to the bank using its reference, amount and currency.
6. Explain the closing balance. Support pending funds and reserves with platform records. Do not write off a difference just to force the clearing account to zero.
7. Review the cut-off and costs. Check transaction dates, tax periods, inventory costs and fees billed separately from the payout.

A refund does not necessarily reverse the original payment-processing cost. Shopify states that the original credit card processing fee is not reimbursed when a Shopify Payments refund is issued. Reconcile the actual fee movements rather than assuming a full reversal.

For wider seller obligations, see our Australian Amazon FBA accounting guide. Our bookkeeping service can help maintain the settlement-to-bank reconciliation each month.

What should an accurate e-commerce profit report show?

Start with revenue by channel, then show returns, product costs and selling expenses clearly. A channel with strong sales can still generate weak contribution after fulfilment, payment fees and advertising.

Product costs matter as much as settlements. Our guide to the landed cost of imported inventory covers that part of the margin calculation. Clean inputs also support cash-flow forecasting and management reporting.

Keep three questions distinct: what did the business earn, what did it spend to earn it, and how much cash is available? A reserve can reduce available cash without reducing revenue. A payout can include collections from a different reporting period.

Key takeaways

• Record revenue before platform selling fees when your business acts as principal.
• Separate refunds, GST, fees and recoverable funds held by the platform.
• Reconcile the bank payout and substantiate the closing clearing balance.
• Check tax outcomes from the underlying transactions, even when the net result appears reasonable.

Choose one recent payout and follow it from the customer transactions to the bank. Confirm that every deduction has a clear explanation and that any remaining balance is supported. That review is a practical starting point for reliable sales, tax and margin reporting.

Frequently asked questions