If you run a business, one of the first tax questions you will face is whether you need to register for GST, Australia’s goods and services tax. The answer comes down to your GST turnover. This guide explains what GST turnover means, the GST threshold that makes registration compulsory, when it makes sense to register for GST voluntarily, and the GST obligations that begin once you are registered.
What is GST turnover?
GST turnover is your gross business income from your normal business activities, meaning the gross income your customers pay before business expenses, but with some amounts excluded. It is not your profit; it is your total sales revenue.
When you work out your GST turnover, you exclude for GST purposes:
- GST you included in sales;
- sales that are not for payment and are not taxable;
- input-taxed sales (such as certain financial supplies and residential rent);
- sales not connected with running your business.
The Australian Taxation Office looks at two versions: your current GST turnover (this month plus the previous 11) and your projected GST turnover (this month plus the next 11). If either reaches the GST turnover threshold, the registration rules apply.
The GST registration threshold
You must register for GST if:
- your business has a GST turnover of $75,000 or more; or
- you run a non profit organisation with a turnover of $150,000 or more; or
- you provide taxi or limousine travel, including ride sharing services, in which case you must register for GST regardless of turnover, from the very first dollar you earn; or
- you want to claim fuel tax credits for your business.
The $75,000 GST threshold is the relevant threshold for most small businesses and sole traders, and $150,000 is the equivalent GST threshold for a non profit organisation.
How to calculate your GST turnover
Take your gross business income for the month, based on income from services sold and other ordinary business revenue before expenses, add the previous 11 months for your current turnover, and add your expected next 11 months for your projected GST turnover. Business expenses do not come into it; the test is revenue, not profit.
Example. Ana starts a consulting business in January and bills $5,000 a month by April. Her current GST turnover is under the GST threshold, but her projected turnover is $5,000 x 12 = $60,000. If she wins one more retainer and the run rate hits $6,300 a month, her projected turnover crosses $75,000 and she needs to register for GST within 21 days, even though her actual invoices to date are nowhere near it. This is the figure used for GST registration, not a cash flow or profit test.
When do you need to register for GST?
You need to register within 21 days of becoming aware that your GST turnover will reach the GST turnover threshold. In practice, that means keeping an eye on your projected turnover: if you can reasonably expect to hit $75,000 over the next 12 months, register for GST now, even if you have not reached it yet. gst turnover exceeding the threshold also triggers registration within 21 days. A new business should monitor projected turnover from the start so it can register on time.
A common trap is waiting until you have already passed $75,000 in actual sales. Because the test is forward-looking, you may be required to register for GST earlier than that, so it pays to monitor your numbers.
What happens if you don’t register when you should?
If the Australian Taxation Office finds you should have been registered, it can backdate your GST registration, and in more serious cases you may need specialist support such as ATO tax audit assistance and representation. You may then have to pay GST on all taxable sales since the date you should have registered, even though you never collected the goods and services tax from your customers, plus penalties and interest. Registering on time is far cheaper than fixing it later.
Should you register for GST voluntarily?
If your turnover is under the GST threshold, GST registration is optional, so voluntary registration can be a strategic choice for some businesses when you understand the broader GST rules and registration obligations in Australia:
- you want to claim GST credits on your business purchases and equipment;
- your customers are mostly other GST-registered businesses, who can claim the GST back themselves;
- you expect to cross the GST turnover threshold soon and want to avoid switching mid-year.
Staying unregistered can also help preserve cash flow in some cases, especially if you work with an accountant who provides broader accounting and business advisory services to model the impact of GST on your pricing and margins.
It is usually less attractive if you sell mainly to the public and your costs carry little GST, because registering means adding 10% goods and services tax to your prices or absorbing it, plus the extra admin of lodging activity statements. For some small operators, the businesses minus GST approach below the threshold is preferable because it can mean simpler pricing for customers and less admin.
How to register for GST
To register you first need an Australian business number (ABN), and choosing the right business structure and a separate business account can make GST setup and turnover tracking easier; many businesses get help from advisors who specialise in ABN applications and GST registration services. You can then register for GST:
- online through ato online services for business or the australian business register for ABN and GST setup;
- by phone with the Australian Taxation Office; or
- through your registered tax or BAS agent, who can handle the GST registration for you.
Many businesses also set up accounting software from the outset, and the accounting method chosen at registration affects reporting, while reliable bookkeeping and GST compliance services make ongoing record-keeping much easier. If you’re unsure how to register, professional advice can help with gst compliance.
Your GST obligations once registered
Once registered, your ongoing GST obligations are to:
- add 10% GST to your taxable sales so you can collect GST;
- issue a compliant tax invoice to your customers;
- claim GST credits on your business purchases;
- lodge a business activity statement (BAS) and pay GST, or claim the net GST credits, usually quarterly.
For GST included purchases, registered businesses may be able to claim credits. A tax invoice should show the GST amount or state that the total price includes GST, with the total price clearly shown. Small businesses may choose the cash basis for GST reporting, depending on their circumstances.
You pay GST to the ATO on the difference between the GST you collect and the GST credits you claim. Staying on top of your BAS is the main ongoing obligation. See our guide to BAS due dates so you never miss a lodgement.
Frequently asked questions
What is the GST registration threshold in Australia?
$75,000 in GST turnover for most businesses, and $150,000 for a non profit organisation. Many sole traders assume the threshold is the only rule, but taxi and rideshare drivers must register for GST from the first dollar earned.
What counts as GST turnover?
Your gross business income from normal activities before expenses, excluding GST, input-taxed sales, and sales not connected with your business. It is turnover, not profit.
Do I have to register for GST as a sole trader?
Only if your GST turnover reaches the $75,000 GST threshold, or you drive taxi/rideshare, or you choose to register voluntarily. Below the threshold it is optional.
When do I need to register for GST?
Within 21 days of becoming aware your turnover will reach the GST turnover threshold. The test is forward-looking, so monitor your projected GST turnover for the next 12 months, not just your past sales.
Can I register for GST before I hit $75,000?
Yes. Voluntary GST registration is allowed and can be worthwhile if you want to claim GST credits or mainly deal with other GST-registered businesses.
Do I pay GST on all my sales once registered?
You add the goods and services tax to taxable sales only. GST-free sales (like most basic food and exports) and input-taxed sales do not carry the 10%, though the distinction affects which GST credits you can claim. In cross-border situations, special rules can apply to imported services and goods and sales made to Australian consumers through an electronic distribution platform, so dedicated guides on import tax and GST on imported goods or the ATO website are worth checking in those cases.
Not sure if you need to register?
Getting the timing of your GST registration right helps with GST compliance under australian tax laws and avoids penalties and back-payments. KNS Accountants can check your GST turnover against the threshold, register you, and set up your BAS, and can advise on registration, BAS setup, and ongoing compliance for your small business, including services tax GST obligations. Their team provides both general tax accountant services in Sydney and more focused GST and small business tax services for ongoing compliance and planning. Contact KNS Accountants for help with GST and your small business.
This article is general information only and does not take into account your personal circumstances. It is not personal tax advice. Thresholds are current as at the time of writing; confirm current details with the ATO or a registered tax agent.
