Getting your tax settings right early can make running your small business much smoother. One of the first questions many founders ask is whether they need to register for Goods and Services Tax (GST), and if so, when.
In Australia, the GST threshold is the key trigger. If your turnover is at or above that threshold, GST registration isn’t optional - it’s required. If you’re just starting out, it’s also smart to understand how to forecast your turnover so you don’t get caught out mid-year.
In this guide, we’ll break down what the GST threshold is, how to work out if you’ll cross it, when to register, and what GST registration means for your day-to-day operations. We’ll keep it practical and business-focused so you can make confident decisions and stay compliant.
What Is The GST Threshold In Australia?
The GST threshold for most Australian businesses is $75,000 in annual GST turnover. If your business is a not-for-profit, the threshold is $150,000. Once you meet or expect to meet that threshold, you must register for GST.
Some businesses must register for GST regardless of turnover. For example, if you provide ride‑sourcing or taxi travel, GST registration is mandatory from day one.
“GST turnover” is the amount of money your business earns from sales that count toward the threshold. It’s measured excluding GST itself (so don’t double-count the tax). There are special rules about what to include and what to exclude. For instance, some categories like input‑taxed supplies are not counted toward the threshold. If your business makes a mix of taxable and other supplies, it’s wise to get tailored advice on how the rules apply to you.
How Do You Work Out If You’ll Cross The GST Threshold?
The law looks at both your current and projected GST turnover. That means you need to check:
- Your current GST turnover: what you’ve earned over the last 11 months plus the current month.
- Your projected GST turnover: what you expect to earn for the current month plus the next 11 months.
If either figure is $75,000 or more (or $150,000 for not‑for‑profits), you’re over the threshold and must register. You don’t need to wait until you physically receive the cash - it’s about the value of supplies you’ve made or are likely to make.
Let’s say you’ve just signed a large annual contract that will push your revenue above $75,000 within the next few months. Even if you’re currently below $75,000, you would generally be considered over the threshold because your projected GST turnover has crossed it. This is where forecasting matters.
A practical way to approach this is to build a simple revenue tracker and regularly estimate your pipeline. If your pipeline shows you’ll exceed the threshold, plan to register now rather than scrambling later. If you’re not sure whether your activities even count as carrying on a business, start by clarifying what qualifies as a business activity in Australia.
When And How Should You Register For GST?
Once you pass (or expect to pass) the threshold, you should register within 21 days. You’ll need an Australian Business Number (ABN) first, because GST registration is linked to your ABN. If you haven’t obtained one yet, consider whether having an ABN suits your plans and structure.
Registration is done online through the government portals. You’ll nominate your reporting period (most small businesses report quarterly) and provide basic business details.
It’s also a good time to review your structure. You can operate as a sole trader, partnership or company. Many owners opt to register a company to access limited liability and a clearer separation between personal and business affairs, but it’s not mandatory - it depends on your risk profile and growth goals. Also check that your trading name is properly registered. If you’re trading under a name that’s not your own legal name, you’ll need a registered business name linked to your ABN.
Tip: Build your GST registration into your launch plan. If you’re pricing products or services now, decide whether you’ll be GST‑registered at launch. It’s easier to start with correct pricing than to reprice after you cross the threshold.
What Changes After You Register For GST?
Once you’re registered for GST, a few obligations kick in:
- Charge GST on taxable sales: You must add 10% GST to your taxable supplies (unless they’re GST‑free or input‑taxed). Update your pricing and systems accordingly.
- Issue valid tax invoices: For sales of $82.50 (including GST) or more, customers can request a tax invoice. Make sure your invoices include the required details, like your ABN and the GST amount.
- Lodge Business Activity Statements (BAS): Most small businesses lodge quarterly. You’ll report the GST you collected and the GST credits you can claim for business purchases.
- Keep good records: Accurate records of sales, purchases, and GST amounts help you report correctly and claim credits you’re entitled to.
Your invoicing and contract settings may need an update. Clear Terms of Trade should set out pricing as “plus GST” where appropriate, outline how and when you’ll invoice, and clarify who pays any additional taxes or duties. It’s also smart to lock in your payment terms so you get paid on time and can meet your BAS deadlines.
In some industries, customers issue the invoice instead of the supplier - these are called Recipient Created Tax Invoices (RCTIs). If you’ll be working under RCTIs, make sure you have the right written agreement in place and your BAS processes accommodate them.
How To Calculate GST In Day-To-Day Operations
Here’s a simple snapshot of how GST flows once you’re registered:
- You add 10% GST to the price of taxable supplies you sell.
- For business purchases, you generally claim GST credits for the GST embedded in your supplier’s invoice (if it’s a creditable acquisition).
- Each BAS period, you pay the net amount (GST you collected minus GST credits you’re entitled to claim). If your credits exceed what you collected, you may get a refund.
It’s easy to get tripped up if your business falls into special categories (for example, making some GST‑free or input‑taxed supplies, or buying capital equipment). Accounting software helps, but the settings must be right. Build periodic checks into your process so your BAS reflects reality.
If you import goods into Australia, factor in how GST is treated at the border. The rules can vary depending on the value of goods and who is responsible for the importation. If this affects you, read more about GST on importation to plan for cash flow and compliance.
Common Scenarios And FAQs About The GST Threshold
Can I Register For GST Even If I’m Below The Threshold?
Yes. You can voluntarily register for GST at any time. Some businesses choose to register early to look more established to B2B clients or to claim GST credits on start‑up costs. If you sell primarily to consumers (who can’t claim credits), consider how adding 10% will impact your pricing and margins.
What If I Run Multiple Activities Or Brands?
The threshold applies to your GST turnover for the entity (the ABN holder), not per brand or project. If you have several ventures under one ABN, you aggregate their turnover when testing the threshold. If different ventures run through separate entities with their own ABNs, each entity tests the threshold separately.
Do I Have To Change My Invoices And Contracts?
If you’re registering for GST, update your invoices to show GST correctly and review contract wording to make sure prices are clearly “plus GST” or “including GST” (as intended). Adjust your Terms of Trade so they align with how you’ll charge and collect GST, and consider whether to allow late fees to support cash flow (within legal limits).
What If My Turnover Drops Below The Threshold?
If your turnover falls and you expect it to stay below the threshold, you can apply to cancel your GST registration. Think carefully before doing so - if your customers are mainly businesses that claim credits, remaining registered can still make sense. If you do cancel, you’ll need to make a final BAS and adjust your systems and pricing.
When Do I Need To Register By?
Once you know your turnover will exceed the threshold, you generally have 21 days to register. Don’t wait until you’ve actually received the income - registration is triggered by the expectation you’ll cross the line in the next 12 months.
How Does My Business Structure Affect GST?
GST registration attaches to the entity with the ABN (sole trader, partnership or company). The rules for threshold testing and reporting are similar, but your choice of structure impacts liability, branding and investor readiness. If you’re scaling, it might be time to register a company and align your GST, invoicing and contracts under that entity. Also ensure your trading name is covered with a registered business name if you’re not operating under the company’s exact legal name.
Practical Compliance Tips For Small Businesses
- Put GST in your pricing strategy: Decide whether to quote “inc GST” or “plus GST” and use that consistently across proposals, contracts and invoices.
- Update your templates: Configure your invoice template and contract boilerplate so GST wording is accurate, and the right tax fields appear every time.
- Use reliable accounting software: Set tax codes correctly for common transactions (local sales, exports, GST‑free items, imports). Review exception reports before lodging BAS.
- Schedule BAS tasks: Create a recurring checklist for reconciling bank accounts, reviewing debtor/creditor ledgers, and generating BAS drafts ahead of the due date.
- Tighten payment processes: Strong payment terms, clear late‑payment processes and consistent follow‑up help you keep cash flowing so BAS time isn’t stressful.
- Clarify special arrangements: If customers will raise invoices for you through RCTIs, put the required agreement in place and check the numbers reconcile to what you deliver.
- Plan for imports and marketplace rules: If you import stock or sell through platforms that handle tax in a particular way, understand how that affects your GST reporting and pricing. If you import regularly, read up on GST on importation.
Legal Documents That Support GST Compliance
While GST is a tax topic, several legal documents play a practical role in helping you charge, collect and report GST cleanly.
- Terms of Trade: Sets out how you price (inc/plus GST), invoice, when payment is due, and who covers additional taxes or duties. This reduces disputes and keeps your BAS inputs consistent.
- Client or Supplier Contracts: Make sure the pricing clause clearly states whether amounts are inclusive or exclusive of GST, and that the invoice clause addresses tax invoice requirements.
- Recipient Created Tax Invoices: If you’ll be using RCTIs, include the required RCTI agreement wording so both sides meet the ATO conditions.
- Payment Terms and Collections Processes: Align your terms with your operational processes so you can collect GST on time and maintain cash flow for BAS lodgements.
- Website Terms & Conditions: If you sell online, reflect your GST approach (for example, how prices are displayed and when GST applies at checkout), keeping it consistent with your contracts and invoices.
Getting these documents tailored to your business model can save you time each quarter, reduce errors in your GST reporting, and support smoother client relationships.
Key Takeaways
- The GST threshold is $75,000 in annual GST turnover for most businesses ($150,000 for not‑for‑profits). Ride‑sourcing and taxi providers must register regardless of turnover.
- Check both current and projected turnover. If you expect to cross the threshold, register within 21 days and plan your pricing and invoicing accordingly.
- Once registered, charge 10% GST on taxable sales, issue valid tax invoices, lodge BAS (usually quarterly), and keep accurate records.
- Update contracts and invoicing templates so GST wording is clear and consistent. Practical documents like Terms of Trade and RCTI agreements help you stay compliant.
- Choose an appropriate business structure, obtain an ABN, and make sure your business name and entity details are aligned before you register.
- If you import goods or sell through special arrangements, understand how GST on importation and platform rules affect your cash flow and reporting.
If you’d like a consultation on the GST threshold and how to set up your business processes and contracts the right way, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no‑obligations chat.
