If you run a business in Australia, understanding when you need to register for GST is important. Registering too late can create compliance problems, while registering unnecessarily can add reporting responsibilities to your business.
Generally, a business must register for GST when its GST turnover reaches the relevant threshold. For most businesses, that threshold is $75,000. Some businesses have different rules, including non-profit organisations and taxi or ride-sourcing operators.
This guide explains when GST registration is required, how the threshold works and what changes after you register.
What Is GST Registration?
GST, or Goods and Services Tax, is a 10% tax on most goods and services sold or consumed in Australia.
When a business is registered for GST, it generally:
- charges GST on taxable sales
- reports GST through its Business Activity Statements (BAS)
- can generally claim eligible GST credits on business purchases
- keeps records needed to support its GST reporting.
GST registration is separate from your income tax obligations. A business can have income tax obligations even when it is not registered for GST.
When Does a Business Need to Register for GST?
For most Australian businesses, GST registration becomes compulsory when the business has GST turnover of $75,000 or more.
The threshold is generally based on GST turnover rather than simply looking at your profit.
The rules can also depend on the type of business and the nature of its sales. For example, registered non-profit organisations generally have a $150,000 threshold, while taxi and ride-sourcing operators have specific GST registration requirements regardless of turnover.
If you are approaching the threshold, it is important to monitor your turnover rather than waiting until the end of the financial year.
What Happens When You Reach the GST Threshold?
Once you are required to register, the ATO states that you generally have 21 days to register for GST. Missing the registration requirement can result in GST obligations applying from the date you should have registered.
This is why businesses with rapidly increasing sales should monitor their GST turnover regularly.
For example, a small service business may begin the year comfortably below $75,000 but experience a significant increase in contracts. The owner should monitor the business’s GST position as turnover changes rather than assuming registration only matters at tax time.
Can You Register for GST Before Reaching $75,000?
Yes. A business below the compulsory threshold can generally choose to register voluntarily.
Voluntary registration may be appropriate in some circumstances, but it also means taking on GST-related reporting and record-keeping responsibilities.
Before making the decision, consider:
- your expected turnover
- the type of customers you serve
- whether your prices are GST-inclusive
- whether you make business purchases that include GST
- your ongoing BAS and record-keeping requirements.
Voluntary registration is therefore a business decision, not simply a way to claim GST credits.
What Changes After You Register?
GST registration changes how you manage your business transactions.
Depending on the nature of your sales, you may need to:
- Include GST in the prices you charge for taxable sales.
- Issue tax invoices where required.
- Track GST collected and GST paid.
- Lodge BAS according to your reporting obligations.
- Keep appropriate business records.
- Claim eligible GST credits for business purchases.
The BAS is used to report GST and may also include other obligations such as PAYG withholding and PAYG instalments.
For businesses that are new to GST, setting up the bookkeeping and accounting process correctly from the beginning can make future BAS preparation much easier.
GST Registration vs ABN Registration
An ABN and GST registration are not the same thing.
Most businesses need an ABN, while GST registration depends on whether the business meets the relevant GST requirements or chooses to register voluntarily.
You generally need an ABN to register for GST, and you can apply for an ABN and GST registration together when setting up a business.
If you are starting a new business, getting the right registrations in place early can help avoid problems later.
Common GST Registration Mistakes
Some common mistakes include:
- assuming GST is based only on annual profit
- waiting until the end of the financial year to review GST turnover
- overlooking the 21-day registration requirement
- charging GST when the business is not registered
- failing to keep adequate records
- treating GST reporting as the same thing as income tax reporting
- not updating accounting software after registration.
If you are unsure whether your business has reached the GST threshold, it is better to check your position before issuing further invoices.
Frequently Asked Questions
Do I have to register for GST if my business earns less than $75,000?
Not generally. Businesses below the compulsory threshold can usually choose whether to register, subject to their particular circumstances.
Is GST based on profit?
No. GST registration uses GST turnover rules. Profit is calculated differently for income tax purposes.
How long do I have to register after reaching the threshold?
The ATO states that you generally need to register within 21 days of becoming required to register.
Does GST registration mean I need to lodge BAS?
Generally, yes. GST-registered businesses report GST through BAS.
When Should You Get Professional Help?
GST registration can affect your invoicing, bookkeeping, BAS reporting and cash flow. If your turnover is approaching the threshold, your business structure is changing or you are unsure whether your sales count towards GST turnover, professional advice can help you determine the appropriate registration position.
D & B Accountants assists Australian businesses with GST and PAYG registration, as well as business tax returns and BAS preparation.
You can also explore the broader D & B Accountants business accounting services if you need ongoing accounting support.
Conclusion
GST registration is an important business responsibility, but the $75,000 threshold is not the only consideration. Your type of business, turnover, sales and reporting obligations can all affect the correct approach.
Monitoring your GST position throughout the year can help you identify when registration may be required and avoid last-minute compliance problems.
For official guidance, see the ATO information on GST registration and the Australian Government’s tax registration guidance for businesses.
If you need help determining your GST registration requirements, D & B Accountants can assist with GST registration and ongoing business tax obligations.