GST registration: when you have to, when you should, and how

The threshold

Registration becomes compulsory when your GST turnover is $75,000 or more. For a not-for-profit organisation the threshold is $150,000. Once you cross it — or once you reasonably expect to — you have 21 days to register.

There is one group who must register no matter how little they turn over: anyone providing taxi, limousine or ride-sourcing travel for passengers. That applies whether you own the vehicle or lease it, and there is no threshold at all.

What counts as GST turnover

GST turnover is your gross business income — not your profit, and not what is left after expenses. Two people with identical $90,000 of sales are both over the threshold, whether one of them made $60,000 profit and the other made $5,000.

It is measured on a rolling twelve-month basis, looking at both the current month plus the previous eleven, and the current month plus the next eleven. Some income is excluded from the calculation — GST-free exports for some purposes, sales not connected with Australia, and input-taxed sales such as residential rent.

Registering voluntarily when you are under the threshold

If you are below $75,000 you can still choose to register. Whether that is a good idea depends almost entirely on who your customers are.

Registering early usually helps if

• You sell mostly to other businesses. Your GST-registered customers claim back the GST you charge, so your price is effectively unchanged for them — while you start claiming GST on your own costs.
• You have significant start-up purchases. Equipment, a vehicle, a fit-out: registration lets you claim the GST on those back.
• You are going to cross the threshold soon anyway. Registering on your own timetable is calmer than registering inside a 21-day deadline.

Registering early usually hurts if

• You sell to consumers. Your prices effectively rise by 10%, or your margin absorbs it. Consumers cannot claim it back.
• Your costs are mostly wages or GST-free. Little GST to claim, all of the extra paperwork.
• You have no bookkeeping system. Registration means lodging a BAS on a schedule, forever.

If you do register voluntarily and your turnover is under $75,000, you can report annually rather than quarterly — one annual GST return due 31 October, which keeps the admin manageable.

How to register

1. Get an ABN first if you do not have one. You cannot register for GST without one. ABN registration is free through the Australian Business Register.
2. Register for GST through ATO online services for business, through your registered tax or BAS agent, or by phone. There is no fee.
3. Choose your accounting basis — cash or accruals. Under $10 million aggregated turnover you can choose cash, which usually suits a small business better.
4. Pick your reporting cycle if you have a choice. Quarterly is the default for most small businesses.
5. Set your start date. You can register from a date in the past, but doing so makes you liable for GST on sales since that date, so be deliberate.

What changes the day you are registered

• Your invoices become tax invoices. They must show your ABN, the words "tax invoice", the GST amount or a statement that the total includes GST, and the date and your identity.
• You charge 10% GST on taxable sales. Some sales are GST-free (most basic food, most health and education) and some are input-taxed.
• You can claim GST credits on business purchases, as long as you hold a valid tax invoice for anything over $1,000.
• You lodge a BAS on your reporting cycle. See BAS explained.
• The GST you collect is not your money. It sits in your account until you remit it. Treating it as revenue is the single most common way small businesses end up with an ATO debt.

Cancelling your registration

If your turnover drops below the threshold you can cancel, but you must have been registered for at least twelve months before you can. The ATO can also cancel a registration it believes is no longer required. Cancelling has consequences — you may have to repay GST credits claimed on assets you still hold — so it is worth checking with an agent first.