Tax & ATO
Goods and Services Tax
Goods and Services Tax (GST) is Australia's broad-based 10% tax on most goods, services and other items sold or consumed in Australia. Businesses must register once GST turnover reaches $75,000 in any rolling 12-month period, charge 10% on taxable sales, claim credits on business purchases, and report the difference on their BAS.
Once your business is registered for GST, you add 10% to the price of taxable sales and you can claim back the GST included in the price of your business purchases as GST credits (also called input tax credits). Each activity statement period you report the GST you collected on sales and the credits you are claiming on purchases, then pay the ATO the difference, or receive a refund when credits exceed collections.
Registration is compulsory once your GST turnover reaches $75,000 in any rolling 12-month period ($150,000 for non-profit organisations, and from the first dollar for taxi and rideshare drivers). You can register voluntarily below the threshold: that lets you claim GST credits, but it also obliges you to charge GST and lodge a BAS. Some sales never carry GST. GST-free sales (most basic food, exports, and many health and education services) charge no GST but still allow you to claim credits on related purchases; input-taxed sales (residential rent, most financial supplies) charge no GST and block the credits. Businesses with aggregated turnover under $10 million can account for GST on a cash basis, so GST is only payable once the customer actually pays. The full rules are set out in the ATO's GST guidance on ato.gov.au.
GST touches almost every part of running a business: how you price, how you invoice, and how much cash you actually keep. Prices advertised to consumers in Australia must be GST-inclusive, so a registered tradie quoting $550 is really earning $500 plus $50 that belongs to the ATO. Treating collected GST as your own money is the classic small-business cash-flow trap: the safest habit is to transfer roughly one-eleventh of GST-inclusive takings into a separate account as you go, so the quarterly BAS never lands on an empty account.
Registration timing matters too. If you should have registered and did not, the ATO can backdate your registration up to four years, making you liable for GST on past sales you never collected it on, plus penalties and interest. On the purchasing side, you generally need a valid tax invoice to claim a GST credit on anything costing more than $82.50 GST-inclusive, so chasing proper invoices from suppliers directly protects your refund. If you sit just under the $75,000 threshold, monitor your rolling 12-month turnover monthly: you have 21 days to register once you know you will cross it.
The two everyday GST calculations trip people up in opposite directions. To add GST to a GST-exclusive price, multiply by 1.1. To find the GST hiding inside a GST-inclusive price, divide by 11 (not 10% of the total, which overstates the GST).
| Task | Method | Example |
|---|---|---|
| Add GST to a GST-exclusive price | Multiply by 1.1 | $500 x 1.1 = $550 |
| Find the GST inside a GST-inclusive price | Divide by 11 | $550 / 11 = $50 |
| Convert a GST-inclusive price back to GST-exclusive | Divide by 1.1 | $550 / 1.1 = $500 |
The common error: taking 10% of a GST-inclusive total. On a $550 invoice that gives $55, but the actual GST is $50, because the 10% was applied to the $500 base, not the $550 total. For quick checks either way, use the OneBookPlus GST calculator, which adds or extracts GST from any amount.
The definitions above only get you so far; the free OneBookPlus GST calculator turns them into your own figures in seconds, no sign-up needed.
Registration is compulsory once your GST turnover reaches $75,000 in any rolling 12-month period, or $150,000 for non-profits. Taxi and rideshare drivers must register from their first dollar of fares. Below the threshold, registration is optional: you can claim GST credits, but you must charge GST and lodge a BAS.
Divide the GST-inclusive price by 11. A $2,200 invoice contains $200 of GST. To add GST to a GST-exclusive price, multiply by 1.1. Taking 10% of a GST-inclusive total is the common mistake, because it applies the rate to the wrong base.
Most basic food, exports, and many health, medical and education services are GST-free: you charge no GST but can still claim credits on related purchases. Input-taxed sales such as residential rent also carry no GST, but you cannot claim credits on the purchases used to make them.
Last reviewed and updated: by Bishal Shrestha