Sorting out your tax obligations early is one of the easiest ways to set your small business up for success. A common question we hear from founders and owners is: when does a business need to register for GST?
Goods and Services Tax (GST) touches how you price, invoice and report to the ATO. Getting it right from the start means fewer surprises later and a smoother cash flow as you grow.
In this guide, we’ll walk you through when registration becomes mandatory, how to calculate GST turnover properly, special cases (like ride-sourcing and overseas sales), and practical steps to register and stay compliant. We’ll also cover what happens if your company isn’t registered for GST when it should be, and how to avoid common pitfalls.
What Is GST And Who Needs To Register?
GST is a 10% tax on most goods and services sold or consumed in Australia. If your business is registered, you:
- Charge 10% GST on taxable sales to customers (unless the sale is GST-free or input taxed).
- Claim GST credits on eligible business purchases.
- Lodge Business Activity Statements (BAS) to report and pay or receive refunds.
You’ll usually need an Australian Business Number (ABN) first. If you’re not sure about the value of holding an ABN, it’s worth reading through the advantages and disadvantages of having an ABN. If you’re currently running a business without an ABN, moving to an ABN plus GST registration (when required) is a key compliance step.
When Does A Business Need To Register For GST?
In Australia, your business must register for GST when any of the following applies:
- Your GST turnover is $75,000 or more (for most businesses).
- You expect your turnover to reach $75,000 or more in the next 12 months.
- You are a not‑for‑profit and your turnover is $150,000 or more.
- You provide ride‑sourcing or taxi travel (including through platforms like Uber) at any turnover level.
GST turnover is not just your last financial year’s revenue. It’s a rolling figure that you check on an ongoing basis using two tests:
- Current GST turnover: the value of all taxable and GST‑free supplies in the current month plus the previous 11 months.
- Projected GST turnover: the value of all taxable and GST‑free supplies in the current month plus the next 11 months (what you reasonably expect).
Importantly, you exclude GST itself, input taxed supplies (e.g. most financial supplies and residential rent), supplies that aren’t connected with Australia, and sales of capital assets. If you meet or are likely to meet the threshold, you must register-generally within 21 days of becoming required to register.
Practical Examples
- You sign a new 12‑month contract that will take your turnover above $75,000. Even if you haven’t invoiced yet, your projected turnover is now over the threshold, so you need to register.
- Your shop’s revenue has grown steadily and your last 12 months (on a rolling basis) just tipped over $75,000. You now need to register and start charging GST on taxable sales.
You can also register voluntarily below the threshold. Many early‑stage businesses choose to register so they can claim GST credits on start‑up costs. Just keep in mind that once registered, you must charge GST on taxable sales and lodge BAS regularly.
How To Calculate GST Turnover Correctly (And Avoid Mistakes)
Mistakes in turnover calculations are common-especially around what to include and exclude. Here’s a quick checklist to help you avoid issues:
- Include taxable supplies (sales where GST would normally apply).
- Include GST‑free supplies (e.g. most basic foods, some health and education services).
- Exclude input taxed supplies (e.g. residential rent, most financial supplies).
- Exclude sales not connected with Australia (e.g. certain overseas supplies).
- Exclude sales of capital assets (e.g. selling a significant piece of equipment you used in the business).
- Exclude the GST component itself (use net values).
If you sell imported goods or plan to import stock, factor in how GST is collected at the border or through your supplier. For a broader view of how import taxes interact with your business, see GST on importation.
Finally, if you trade through a company, partnership or trust, remember that the legal structure doesn’t change the threshold-it’s still $75,000 for most entities. If you’re considering a company, it’s smart to get the structure right first through a proper company set up and ensure the name you use aligns with your brand strategy (and isn’t just a business name-see business name vs company name).
Do You Need To Register Before You Hit $75,000?
Yes-if you reasonably expect to exceed the threshold in the next 12 months, you must register when that expectation arises. A signed contract, confirmed purchase orders, or a clear growth trajectory can trigger this requirement.
If your sales are seasonal or lumpy, monitor both current and projected turnover monthly. It’s better to register a little early than to be forced to backdate (and potentially fund GST on past sales that you didn’t charge to customers).
Ride‑Sourcing And Taxi Travel
If you provide ride‑sourcing or taxi travel (including through a platform), you must register for GST regardless of turnover. If you’re juggling this as a side business with another venture, consider your combined compliance obligations and the best way to organise your invoicing and record‑keeping.
Not‑For‑Profits
Registered charities and not‑for‑profits have a higher threshold ($150,000). If you’re approaching that level, build GST into your grant reporting, sponsorship agreements and any paid service offerings.
Non‑Residents And Online Sales To Australia
Non‑resident businesses that sell digital products or low‑value imported goods to Australian consumers often need to register once Australian GST turnover reaches $75,000. If you sell through an online marketplace, the platform may be treated as the supplier for GST-but not always. Review your marketplace terms carefully and get advice if you’re unsure which entity must register and charge GST.
What If My Company Is Not Registered For GST (But Should Be)?
If you’re required to register and haven’t, several things can happen:
- You may need to backdate your registration and account for GST on past taxable sales from the date you were required to register.
- If you didn’t charge customers GST, you might need to remit GST from your existing revenue (which can hurt cash flow). Sometimes customers will agree to pay the difference, but not always.
- You won’t be able to claim input tax credits for purchases until your GST registration is in place (and backdating those credits isn’t guaranteed for all periods and circumstances).
- Penalties and interest may apply if there’s a delay in registration or payment.
If you discover you’ve crossed the threshold, act quickly: apply for GST registration, speak with your accountant about BAS lodgements, and update your pricing and invoices so you’re compliant going forward.
Some customers, particularly larger organisations, use recipient‑created tax invoices (RCTIs). To use RCTIs, you generally need to be registered for GST and have a compliant RCTI agreement with the customer. If you’ve been paid under an RCTI arrangement while unregistered, this is another sign to fix your registration urgently.
How To Register And Set Up GST Properly
Once you’ve decided (or are required) to register, set yourself up so GST doesn’t become a time‑sink.
1) Confirm Your Business Structure And ABN
Make sure your ABN and structure match how you actually trade. If you plan to scale, consider a company (separate legal entity, easier to bring in investors) and ensure you have the right foundation documents like a constitution and founder arrangements. If you’re co‑founding, align expectations early and document ownership and roles through a Shareholders Agreement. If you’re still weighing up names and structure, start by clarifying business name vs company name and then proceed with a company set up if it suits your goals.
2) Apply For GST Registration
You can apply online using your myGovID or through your tax agent. Registration dates matter-if you’re already required to register, the ATO may backdate your start date.
3) Choose Cash Or Accrual Accounting
Cash basis means you account for GST when you receive or pay money. Accrual basis means you account for GST when you issue or receive invoices (regardless of payment). Many small businesses use cash basis for simpler cash flow, but discuss with your accountant which method best suits your model.
4) Set Your Reporting Cycle
Most small businesses report quarterly via BAS. High‑turnover businesses may need monthly reporting. Keep on top of deadlines to avoid penalties and cash flow shocks.
5) Update Your Invoicing And Pricing
Once registered, your tax invoices must include specific details (e.g. your identity, ABN, that it’s a tax invoice, GST amounts or a statement that GST is included). Align your pricing strategy too-decide whether listed prices are “GST inclusive” and ensure your website and point‑of‑sale systems reflect this. The Australian Consumer Law expects accuracy in price displays, so your internal processes should reflect advertised price laws.
While you’re refining your order flow, it’s a good moment to tighten your invoice payment terms and your customer Terms of Trade so there’s no confusion about pricing, GST, and due dates.
6) Set Up Record‑Keeping And Systems
Use accounting software that can produce compliant tax invoices, track GST on purchases, and generate BAS reports. Build a simple monthly checklist so you reconcile regularly-this saves stress at BAS time.
Voluntary Registration: Should You Register Before You Have To?
Voluntary registration can be a smart move if:
- You’re investing in equipment, stock or professional services and want to claim GST credits.
- Your customers are predominantly GST‑registered businesses (they can claim credits, so adding GST doesn’t usually affect your competitiveness).
- You want to appear “established” with compliant tax invoices.
On the other hand, if your customers are mainly consumers who aren’t registered (e.g. retail shoppers), adding 10% can affect price sensitivity. Also, once registered you take on obligations to charge, report and pay GST on time, so make sure you have the admin capacity to handle BAS.
Special Cases And Tricky Scenarios
Some businesses sell a mix of taxable and GST‑free items (e.g. certain food retailers) or make input taxed supplies (e.g. financial services). You may need to apportion purchases and keep careful records to support the credits you claim.
If you sell through marketplaces, check who is treated as the supplier for GST purposes. In some cases, the platform is responsible for charging GST to the customer; in others, you are. This can also affect invoicing and RCTI arrangements.
Imports And Exports
Imports generally attract GST at the border unless a concession applies. Exports can be GST‑free if conditions are met. Be clear on your supply chain and consider how customs treatment and logistics partners will handle GST. If importing is a core part of your model, revisit the overview of GST on importation so you can plan prices and margins confidently.
Contracting To Larger Customers
Large business customers often expect their suppliers to be GST registered. They may also prefer RCTIs. Review customer onboarding forms carefully-if they require RCTIs, confirm you are registered and put a compliant agreement in place referencing recipient‑created tax invoices.
What Legal Documents Help You Manage GST Day‑To‑Day?
Beyond registration, several core documents make GST compliance easier and protect your cash flow:
- Terms of Trade: clarify prices (including whether they’re GST inclusive), payment terms, and what happens if invoices are late.
- Payment Terms: lock in due dates, interest on late payments and invoicing mechanics so BAS time doesn’t collide with cash shortages.
- Customer Contract or Service Agreement: outline deliverables, milestones and whether prices include or exclude GST, reducing disputes at billing time.
- Supplier Agreement: confirm whether your supplier charges GST and who bears import duties or taxes if you source from overseas.
- Website Terms & Conditions and Privacy Policy: if you sell online, make sure your checkout reflects GST correctly and your policy covers data collected for invoicing.
If your growth plans include a company structure, align your governance and ownership early with documents such as a Shareholders Agreement and a Company Constitution. This makes it easier to standardise billing and tax processes across the business as you scale.
Common Pitfalls To Avoid
- Waiting too long to register: if you tip over the threshold, you may have to fund GST on past sales yourself.
- Forgetting the projected turnover test: a big contract can trigger registration even before the cash lands.
- Incorrect invoicing: missing “Tax Invoice” wording, ABN or itemised GST can slow customer payments and jeopardise GST credits.
- Mixing personal and business expenses: this complicates GST claims and record‑keeping.
- Ignoring marketplace terms: platforms may set rules about tax handling and RCTIs-ensure your processes match.
- Under‑ or over‑claiming credits: know the difference between taxable, GST‑free and input taxed supplies, and keep evidence.
Key Takeaways
- You must register for GST when your current or projected GST turnover reaches $75,000 ($150,000 for not‑for‑profits), or if you provide ride‑sourcing/taxi travel at any turnover.
- GST turnover is a rolling measure: include taxable and GST‑free supplies, exclude input taxed supplies, sales not connected with Australia and capital asset sales.
- Register promptly-generally within 21 days of becoming required-or you may need to backdate registration and fund GST on past sales.
- Set yourself up for success with compliant invoices, clear Terms of Trade and solid accounting systems to simplify BAS and cash flow.
- Voluntary registration can make sense if you want to claim credits or sell mainly to GST‑registered customers, but it does add reporting obligations.
- If you import or sell via marketplaces, check who must charge GST and how to handle RCTIs and platform rules to stay compliant.
If you’d like a consultation on GST registration and setting up your small business the right way, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no‑obligations chat.
