Quick answer: GST is a 10% tax added to most goods and services sold in Australia. Your small business must register for GST once its GST turnover reaches $75,000 in a 12-month period — and you have just 21 days to register once it does. Once registered, you charge GST on your sales, claim back the GST you pay on business purchases, and report the difference to the ATO on a Business Activity Statement (BAS), usually quarterly. Our free GST calculator can split any GST-inclusive price for you in seconds.
If GST is new territory, this sits alongside our 2026-27 income tax rates guide and our small business deductions checklist — between them they cover the three taxes almost every small business deals with.
How GST works — the plumbing, in plain English
GST looks simple until the paperwork starts. The concept has three moving parts:
- You collect GST on your sales. If you’re registered and sell a taxable supply for $110 including GST, $10 of that belongs to the ATO — it’s never really yours.
- You claim credits on your business purchases. When you buy goods or services for the business and the supplier charged you GST, you can usually claim that GST back as a “GST credit” (also called an input tax credit).
- Each BAS period you pay the difference. GST collected minus GST credits = what you owe the ATO. If your credits are bigger than your collections, you get a refund instead.
The arithmetic everyone gets wrong: when a price already includes GST, the GST component is price ÷ 11, not price × 10%. On a $2,200 invoice, the GST is $200 and your sale is $2,000. Get that wrong on every invoice for a quarter and your BAS becomes a mess of corrections — and corrections are what draw the ATO’s attention.
GST figures that matter for 2026-27
| Item | 2026-27 figure |
|---|---|
| GST rate | 10% — GST-inclusive price ÷ 11 = GST component |
| Mandatory registration threshold | $75,000 GST turnover in any 12-month period |
| Non-profit threshold | $150,000 GST turnover |
| Time to register once triggered | 21 days |
| BAS cycle for most small businesses | Quarterly; monthly mandatory at $20 million+ GST turnover |
| Quarterly BAS due dates | 28 Oct (Q1), 28 Feb (Q2), 28 Apr (Q3), 28 Jul (Q4); monthly BAS due the 21st of the next month |
| Tax invoice needed to claim credits | For purchases over $82.50 (including GST) |
| Minimum stay if you register voluntarily | Generally 12 months |
| Small business GST concessions | Available under $10 million aggregated turnover |
Sources: ATO — Registering for GST; ATO — Due dates for lodging and paying your BAS; business.gov.au — Register for GST.
Do you actually need to register?
The ATO’s registration test has two prongs, and most guides only mention one. You must register if either test is met:
- Current GST turnover test: this month’s turnover plus the previous 11 months hits $75,000. This looks backwards.
- Projected GST turnover test: you reasonably expect to hit $75,000 in the next 12 months. This looks forwards. Land a big contract in March that takes you over the line by September? The obligation starts when the expectation becomes reasonable, not when the money lands.
A crucial detail: GST turnover is gross business income, not profit. If you invoice $80,000 in a year but expenses leave you $30,000 of profit, you’ve still crossed the threshold. GST turnover also excludes the GST itself and certain things like residential rent, but don’t do this arithmetic from memory — the ATO’s “Working out your GST turnover” page lists exactly what counts.
And the exceptions that catch people out:
- Taxi, limousine and ride-sourcing drivers (Uber, DiDi) must register from the first dollar — no threshold at all, even a few hours a week.
- Fuel tax credits: if you want to claim fuel tax credits for the business, you must be GST-registered regardless of turnover.
- Sharing-economy and platform work: food delivery and other platform income has its own rules — check the ATO’s sharing-economy guidance rather than assuming the $75,000 threshold applies the way you’d expect.
If none of those apply, registration is optional — and that’s a genuine business decision, not just paperwork. Registering voluntarily lets you claim GST credits on your purchases (great if you’re spending heavily on stock and equipment before revenue picks up), but it means charging your customers 10% more, lodging BAS regularly, and staying registered for at least 12 months. If your customers are mostly ordinary consumers rather than GST-registered businesses, the price increase can cost you sales.
Worked example: a café’s quarterly BAS
Maya runs a café in Adelaide. She’s registered for GST and lodges quarterly. Here’s her September quarter (Q1):
| Item | Amount | GST treatment |
|---|---|---|
| Total sales (G1 on the BAS) | $88,000 (incl. GST) | GST on sales (1A): $8,000 |
| Commercial rent | $16,500 (incl. GST) | GST credit: $1,500 |
| Stock and supplies | $11,000 (incl. GST) | GST credit: $1,000 |
| New espresso machine | $5,500 (incl. GST) | GST credit: $500 |
| Total GST credits (1B) | $3,000 | |
| Net GST payable | $8,000 − $3,000 = $5,000 |
On her Simpler BAS, Maya reports three numbers: G1 (total sales: $88,000), 1A (GST on sales: $8,000), and 1B (GST on purchases: $3,000). The ATO does the subtraction and she pays $5,000 by 28 October. She lodges online, which can earn an extra two weeks — a small breathing-room bonus worth knowing about.
Notice what the espresso machine does: that $500 credit reduces this quarter’s GST bill, which is why timing major purchases just before a BAS period ends is one of the few legitimate bits of GST “planning” small businesses get.
Cash vs accruals: a choice most guides bury
When you register, you choose your accounting method, and it genuinely affects your cash flow:
- Cash accounting: you account for GST when money actually changes hands. Invoice a client in June, get paid in July — the GST goes in the July quarter’s BAS. Small businesses (under the small-business entity thresholds) can choose this.
- Accruals (non-cash) accounting: you account for GST when you issue the invoice or receive payment, whichever comes first. Invoice in June, get paid in July — the GST still belongs to the June quarter’s BAS.
For a business with slow-paying clients, accruals accounting means paying GST to the ATO before the customer has paid you — a cash-flow sting that surprises first-time registrants. Cash accounting removes that sting, which is why most small service businesses choose it. Larger businesses don’t get the choice.
GST-free vs input-taxed: the distinction that ruins BAS reconciliations
Not everything you sell or buy attracts GST, and the two exemptions work differently:
- GST-free: no GST on the sale, but you can still claim credits on the related purchases. Examples: most basic food, many health and medical services, education courses, exports.
- Input-taxed: no GST on the sale, and no credits claimable on the related purchases. Examples: residential rent, most financial services.
Treating an input-taxed or GST-free sale as a standard taxable one (or vice versa) is one of the most common reconciliation errors the ATO sees. A café owner is a good example: the milk in takeaway coffees is GST-free (basic food), but the café still claims credits on the milk it buys — while the shop’s residential flat upstairs generates input-taxed rent with no credits claimable on its maintenance. Get the categories backwards and your BAS numbers quietly drift from reality all year.
Exports get a special mention: exports of goods are generally GST-free, which is a genuine advantage for small e-commerce businesses selling overseas — no GST charged, credits still claimable. Keep the shipping and export records; the ATO can ask for proof.
The mistakes that cost real money
1. Forgetting to add GST to an invoice. If you’re registered and send a $2,200 invoice without mentioning GST, the ATO treats the price as GST-inclusive: your sale is deemed to be $2,000 and you owe $200 in GST out of your own pocket. Always state whether a quote is GST-inclusive or exclusive — in writing.
2. Missing the 21-day registration window. It’s 21 days, not a month, not end of quarter. Register late and the ATO can backdate your registration to the date you were required to register, creating retrospective GST obligations on sales you already made — plus penalties and interest (the general interest charge accrues daily).
3. Claiming credits without a valid tax invoice. For purchases over $82.50 including GST, you need a proper tax invoice showing the supplier’s ABN and the GST amount. A bank statement isn’t enough. Photograph receipts into your accounting software the day you get them.
4. Mixing private and business use. Buy a $5,500 car used 60% for business? You can only claim 60% of the GST. The ATO expects apportionment, not vibes.
5. Quoting GST-exclusive to consumers. Consumers compare GST-inclusive shelf prices. Quote a tradie job at “$2,000” to a homeowner who sees “$2,200” on the invoice and you have a trust problem, not a tax problem. For business clients, GST-exclusive quotes are normal because they claim the credit back — for consumers, quote inclusive.
6. Using the wrong accounting basis inconsistently. Pick cash or accruals at registration and stick with it. Flipping between them (or accidentally mixing them in your software) distorts every BAS you lodge.
Practical tips for staying compliant
- Set aside 1/11 of every sale into a separate account the day it lands. GST money is the ATO’s money held in trust — spending it is how businesses end up unable to pay their BAS.
- Check your turnover monthly as you approach $75,000. Run the current-turnover and projected-turnover tests on the first of each month; waiting for your accountant to notice at tax time is too late.
- Choose your reporting cycle deliberately. Quarterly is the default under $20 million turnover, but monthly reporting is available on request — smaller, more manageable payments and faster refunds if you’re usually in a net-refund position. Voluntarily registered businesses under $75,000 turnover may be able to report annually.
- Small-business GST concessions: under $10 million aggregated turnover you can access concessions like cash accounting, GST instalments, and simplified private-use adjustments — ask your BAS agent which ones you’re using.
- Keep records for five years from when you lodge. Everything the BAS is built on — tax invoices, receipts, the turnover calculations — needs to survive an ATO review.
FAQ: the questions small business owners actually ask
Do sole traders need to register for GST?
Only when GST turnover hits $75,000 (current or projected), with the usual taxi/ride-sourcing and fuel-tax-credit exceptions. Below that, it’s voluntary. The structure doesn’t matter — sole trader, company, partnership, trust all face the same threshold.
How do I calculate GST from a GST-inclusive price?
Divide by 11. A $1,100 price contains $100 of GST; a $330 price contains $30. To add GST to a GST-exclusive price, multiply by 1.1. Our GST calculator does both directions instantly.
What’s the difference between GST and BAS?
GST is the tax; BAS (Business Activity Statement) is the form you report and pay it on. A BAS can also include PAYG withholding, PAYG instalments and other obligations — it’s your business’s tax dashboard, not just a GST form.
Can I claim GST on a car used partly for personal use?
Only the business-use percentage. A car used 60% for business means 60% of the GST is claimable. Keep a logbook or other reasonable basis for the percentage.
What happens if I register late?
The ATO can backdate your registration to the date you first met the threshold, which means GST on sales you’ve already made becomes payable retrospectively — plus failure-to-lodge penalties and daily interest charges. The 21-day clock starts the day you meet or expect to meet the threshold.
Do I charge GST on exports and sales to overseas customers?
Exports of goods are generally GST-free — you don’t charge GST but you can still claim credits on your costs. Keep export and shipping records as proof; digital products and services to non-residents have their own rules worth checking with the ATO.
The bottom line
GST isn’t a tax on your business — it’s a tax your business collects, and the businesses that treat it that way have no drama with it. Register on time (21 days, not eventually), track the two turnover tests monthly as you grow, keep every tax invoice, and never spend the 1/11 of each sale that belongs to the ATO. Do those four things and the BAS becomes a 20-minute quarterly chore instead of an annual crisis. Then run your numbers through the GST calculator before every BAS to make sure the maths matches.
