GST is the Goods and Services Tax, a flat 10% added to most things sold in Australia. If you run a business, you do not really pay it. You collect it for the ATO on your sales, claim back the GST you paid on your purchases, and send the difference to the ATO on your activity statement. Here is how it works and when you have to sign up.
When do you have to register?
You must register for GST once your business turnover reaches $75,000 over a rolling 12 months, or once you reasonably expect it will. The figure is gross business income, not profit, so it adds up faster than people think. For non-profits the threshold is $150,000. You need an ABN first, and you then have 21 days to register from the point you cross the line.
Two cases ignore the threshold. If you drive a taxi, limousine or rideshare (Uber, DiDi and the like), you must register from your first dollar. And if your turnover is under $75,000, you can still register voluntarily, which lets you claim back GST on your business purchases.
Figure 1: GST in one cycle. You collect it on sales, claim it on purchases, and settle the difference on your BAS.
How GST actually works
Once registered, you add 10% to your taxable sales. That extra 10% is never your money, it is the ATO’s, so the smart habit is to set it aside as it comes in. On the other side, you can claim a GST credit for the 10% you paid on business expenses, as long as you hold a valid tax invoice for purchases of $82.50 or more.
At the end of each period you report both figures on your BAS. GST collected minus GST credits is what you pay. If your credits are larger, which is common in a quarter with big purchases, the ATO refunds you the difference.
Not everything carries GST
Three categories matter. Most sales are taxable and carry the 10%. Some are GST-free, meaning you charge no GST but can still claim credits on related costs: exports, most basic food, and many health and education services. A third group is input-taxed, where you charge no GST and cannot claim credits, mainly residential rent and financial supplies. Getting a sale into the wrong category is one of the most common BAS errors.
Lodging, paying and keeping records
Most small businesses report GST quarterly. You can lodge monthly (required once turnover hits $20 million, optional if you want faster refunds) or annually if you are voluntarily registered and under the threshold. Keep your tax invoices and GST records for 5 years. Good record keeping is what makes BAS time quick instead of painful.
The detail, for the record
Current as at the 2025-26 income year.
Registration
- Threshold. Register at $75,000 GST turnover over a rolling 12 months, current or projected ($150,000 for non-profits). The threshold has been $75,000 since GST began on 1 July 2000. An ABN is required first.
- Timing. You have 21 days to register once you meet or expect to meet the threshold. Registration is effective from the date you crossed it. Backdating is limited to 4 years.
- No-threshold cases. Taxi, limousine and rideshare drivers must register regardless of turnover. Voluntary registration is available below the threshold.
How it is charged
- Rate and categories. GST is 10% on taxable supplies. GST-free supplies (exports, most basic food, many health and education services) carry no GST but allow credits. Input-taxed supplies (residential rent, financial supplies) carry no GST and allow no credits.
- Credits and invoices. Registered businesses claim GST credits on purchases. A valid tax invoice is required to claim a credit on purchases of $82.50 (including GST) or more.
- Turnover test. GST turnover excludes input-taxed supplies, GST itself, sales of capital assets, wages, and income not connected with an enterprise.
Lodging and paying
- BAS cycle. Quarterly is standard; monthly is required at $20 million turnover and optional otherwise; annual reporting is available for some voluntary registrants. Quarterly BAS is generally due on the 28th of the month after the quarter (the October to December quarter is extended to 28 February).
- Records. Keep tax invoices and GST records for 5 years.
- Late lodgment. Failure to lodge a BAS on time can trigger a penalty of one penalty unit for each 28 days overdue, up to 5 units, plus general interest charge on unpaid amounts.
Legislative basis
- GST is imposed under A New Tax System (Goods and Services Tax) Act 1999, with the core rules in Division 33. BAS obligations sit under Division 388 of Schedule 1 to the Taxation Administration Act 1953.
GST is simple in theory and fiddly in practice, mostly around categorising sales and not spending the money you have collected. Homepedia Tax Assistant tracks GST as it goes and prepares the BAS so the numbers are already there at quarter end.
This article is general information, not personal tax advice. Talk to a registered tax or BAS agent about your situation.
