GST: The Complete Guide for Australian Businesses
Registration thresholds, supply classifications, cash vs accruals accounting, input tax credits, tax invoice requirements, the margin scheme, Simpler BAS, and the common GST errors that trigger ATO attention.
GST is a 10% tax on most goods and services supplied in Australia, collected under the A New Tax System (Goods and Services Tax) Act 1999. Registration is mandatory once annual turnover reaches $75,000 ($150,000 for non-profits), and taxi and ride-sourcing operators must register from their first dollar regardless of turnover. Once registered, you charge 10% GST on taxable supplies, claim input tax credits on business purchases, and lodge Business Activity Statements quarterly or monthly. The voluntary registration decision hinges on whether your clients are GST-registered businesses (who can reclaim the GST you charge) or end consumers (who bear it as a cost increase).
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Guidance, not advice. We explain the rules, we don't assess your situation. Always seek financial or tax advice from your accountant, or contact ATO. Read our editorial scope →
GST registration: thresholds, timing, and voluntary registration
Registration is mandatory once your GST turnover (gross business income, excluding certain items) reaches $75,000 in any rolling 12-month period, measured either on a current basis (this month plus prior 11 months) or a projected basis (this month plus next 11 months). Non-profit organisations have a $150,000 threshold. Taxi, limousine, and ride-sourcing operators must register from their first dollar earned regardless of turnover.
Registration timeline
Once the threshold is reached, registration must be completed within 21 days. You need an ABN first. Registration can be done through Online services for business, by phone (13 28 66), or through a registered tax or BAS agent. Backdating of registration is possible but limited to four years.
Calculating GST turnover
GST turnover is your total business income minus GST included in sales, sales to associates that are not for payment and not taxable, sales not connected with your enterprise, input-taxed sales, and sales not connected with Australia. Exclude capital asset sales and sales made solely because you are ceasing business when calculating projected turnover.
Voluntary registration below threshold
You may register voluntarily below $75,000. This lets you claim input tax credits on business purchases (recovering 10% of GST-inclusive costs) and presents a more established appearance for B2B clients. The trade-off: you must charge 10% GST on all taxable supplies, lodge BAS quarterly or monthly, and remain registered for at least 12 months. For a B2C business under the threshold, voluntary registration usually makes the operation more expensive for customers without proportional benefit.
Supply classifications: taxable, GST-free, and input-taxed
The GST treatment of a supply determines both whether you charge GST and whether you can claim input tax credits on related purchases. Getting this classification wrong is one of the most common and costly GST errors.
Taxable supplies (10% GST)
Most goods and services supplied in Australia by a GST-registered business are taxable at 10%. The supplier charges GST and the registered buyer claims input tax credits.
GST-free supplies
No GST is charged, but you can still claim input tax credits on related business purchases. Includes most basic food (unprocessed meat, bread, milk, vegetables, fruit), medical and health services, educational courses and materials, exports, water and sewerage services, certain childcare, and international transport.
Input-taxed supplies
No GST is charged, and you cannot claim input tax credits on related purchases. Includes financial services (lending, credit, derivatives), residential rental property (ongoing tenancy), sale of existing residential premises (not new or substantially renovated), and residential accommodation in commercial premises exceeding 27 days.
Cash basis vs accruals basis
The accounting basis you choose determines when you account for GST on sales and purchases.
Input tax credits: what qualifies and what does not
To claim input tax credits you must be registered for GST, acquire goods or services for use in your business, have a valid tax invoice (for purchases over $82.50 including GST), and the supply must be a creditable acquisition.
Tax invoice requirements
For purchases under $1,000 (including GST), the invoice must show that it is intended to be a tax invoice, the seller's identity and ABN, the date, a description of items including quantity and price, and the GST amount or a statement that the total price includes GST. For purchases of $1,000 or more, the buyer's identity or ABN must also appear.
Purchases that do not qualify
Input-taxed acquisitions (residential rental property, financial services), the private portion of mixed-use assets, entertainment expenses (in most cases), purchases made before GST registration, and purchases without valid tax invoices. Missing or invalid tax invoices are the single most common reason for denied input tax credits on audit.
Adjustments for change in use
If an asset's use changes from business to private (or vice versa), you must adjust previously claimed input tax credits. This commonly applies to vehicles, home office equipment, and property. The adjustment mechanism ensures credits reflect the actual business use over time.
Special GST rules: margin scheme, going concern, and second-hand goods
Several industry-specific GST rules modify the standard 10% calculation for particular transaction types.
Margin scheme for property
Allows GST to be calculated on the margin (sale price minus purchase price) rather than the full sale price. Both parties must agree to apply the margin scheme, and the seller must have acquired the property without input tax credits being available. GST = 1/11 of the margin. For a developer buying land at $500,000 and selling the developed property at $1,200,000, the margin scheme GST is $63,636 compared to $109,091 under standard rules.
Going concern exemption
Sale of a business as a going concern is GST-free provided everything necessary for continued operation is supplied, the buyer is registered (or required to be registered) for GST, both parties agree in writing it is a going concern, and the business continues operating up to the date of sale.
Second-hand goods
Dealers purchasing second-hand goods from unregistered sellers (where no GST was charged) may claim a notional input tax credit equal to 1/11 of the purchase price. This prevents double taxation when the goods are resold.
BAS reporting periods and Simpler BAS
Most small businesses lodge quarterly BAS, with due dates 28 days after the end of each quarter. Businesses with turnover of $20 million or more lodge monthly (due 21st of the following month). Annual reporting is available for businesses under the $75,000 threshold that are voluntarily registered.
Simpler BAS
Default for businesses with GST turnover under $10 million. Only three labels are required: G1 (total sales), 1A (GST on sales), and 1B (GST on purchases). The detailed breakdown of exports, GST-free sales, input-taxed sales, and capital vs non-capital purchases is not required. Bookkeeping reduces to classifying each transaction as 'GST' or 'no GST'.
Penalties for late lodgement and payment
Failure to lodge a BAS on time attracts a Failure to Lodge (FTL) penalty of $330 per 28-day period (or part thereof) for small businesses, up to a maximum of $1,650. Larger businesses face higher multiples. General Interest Charge applies daily on unpaid amounts at the quarterly rate (11.17% annual rate for the quarter beginning 1 October 2025), compounding continuously. From 1 July 2025, GIC is not tax-deductible.
Five GST mistakes that trigger ATO attention
These errors appear repeatedly in ATO compliance programs and each carries direct financial consequences.
Statute references
- A New Tax System (Goods and Services Tax) Act 1999 (primary GST legislation)
- GST Act s 23-15 (turnover threshold)
- GST Act Divisions 40, 51, 75, 80 (special rules: property, going concern, margin scheme)
- GST Ruling GSTR 2001/4 and GSTR 2013/1 (tax invoices)
- Taxation Administration Act 1953, Schedule 1 (BAS administration, penalties, GIC)
- GSTR 2001/7 (GST turnover — meaning of "current" and "projected" turnover for the s 23-15 registration threshold)
- GSTR 2001/3 (GST and food — Schedule 1 of the GST Act categorisation)
- GSTR 2017/1 (cross-border supplies of digital services and intangibles to Australian consumers)
- GSTR 2002/5 (sale of a going concern — GST-free if Subdivision 38-J conditions met)
- GSTR 2006/8 (margin scheme for taxable supplies of real property — Division 75)
- PS LA 2011/19 (Administration of the penalty for failure to lodge on time — last updated 11 July 2024)
- PCG 2023/1 (as amended) — Commissioner's compliance approach to the fixed-rate method for home office expenses. Where the fixed-rate method is used for income tax (70c/hour from 1 July 2024; 67c/hour for FY 2022-23 and FY 2023-24), home-running-cost GST input tax credits cannot also be claimed for the same bills — the fixed rate is an income-tax shortcut only and does not flow through to GST credits, which must be apportioned under the GST Act.
Frequently asked questions
Should I register for GST voluntarily if I am under the $75,000 threshold?+
What is the difference between GST-free and input-taxed supplies?+
Do Uber and ride-share drivers need to register for GST?+
Can I claim GST credits on expenses incurred before I registered?+
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