What Is GST in Australia? A Plain-English Guide for Small Businesses

By Joshua Occhino, Co-founder, Ezyiah

Short answer: GST (goods and services tax) is a 10% tax on most goods, services and other items sold or consumed in Australia. GST-registered businesses add it to their prices, claim back the GST included in their business purchases, and report the difference to the ATO on their BAS. You must register once your GST turnover reaches $75,000.

What is GST?

GST is a broad-based tax of 10% on most goods, services and other items sold or consumed in Australia, according to the ATO.

The customer pays it, but businesses collect it. A GST-registered business:

• includes GST in the price of its taxable sales
• claims GST credits (also called input tax credits) for the GST included in the price of things it buys for the business
• reports both on its business activity statement (BAS) and pays the difference to the ATO, or gets a refund if its credits are larger.

Do I need to register for GST?

You must register for GST if any of these apply, per the ATO:

• your business has a GST turnover of $75,000 or more. GST turnover is gross income minus GST, not profit
• you start a new business and expect to reach $75,000 in the first year
• you're a non-profit with a GST turnover of $150,000 or more
• you provide taxi or limousine travel, including ride-sourcing, whatever your turnover
• you want to claim fuel tax credits.

Once you're required to register, you have 21 days to do it, and you need an ABN first. Below the threshold, registration is optional. If you choose to register, you generally must stay registered for at least 12 months.

For how the threshold is worked out, and what happens with backdating, see our GST registration threshold guide.

How do I calculate GST?

Two formulas cover almost every case:

• Adding GST to a price: multiply the GST-exclusive price by 10%. A $500 job has $50 GST, so you charge $550.
• Finding the GST in a GST-inclusive price: divide by 11. A $1,100 invoice includes $100 GST.

The ATO's tax-invoice rules use the same one-eleventh rule. If the GST is exactly 1/11 of the total, an invoice can simply state "Total price includes GST". To check a figure quickly, use our free GST calculator.

What's the difference between taxable, GST-free and input-taxed sales?

If you're registered for GST, everything you sell in Australia is a taxable sale unless it's GST-free or input-taxed, as the ATO explains. The difference that catches people out is whether you can still claim credits on your costs.

	Taxable	GST-free	Input-taxed
GST in your sale price?	Yes, 10%	No	No
Can you claim GST credits on related purchases?	Yes	Yes	No
Common examples	Most goods and services, including business assets such as vehicles and equipment	Most basic food, some medical, health and education services, exports	Financial supplies (such as lending money), selling or renting residential premises

Sources: ATO pages on taxable sales, GST-free sales and input-taxed sales.

If a sale can be split into identifiable parts and some of them are GST-free or input-taxed, it's partly taxable, and you only pay GST on the taxable part.

When can I claim a GST credit?

You can claim a GST credit when all of these apply:

• you're registered for GST
• you bought the item to use in your business, and not for making input-taxed sales
• the price included GST
• you've paid, or must pay, for it
• you hold a tax invoice for purchases over $82.50 including GST.

For purchases that are partly private, you can only claim the business-use share. Credits also don't last forever: there's a 4-year time limit on claiming them. We cover what that means in practice in GST credits and the 4-year limit.

What must a tax invoice show?

For taxable sales under $1,000, a tax invoice must make seven things clear:

1. that it's intended to be a tax invoice
2. the seller's identity
3. the seller's ABN
4. the date it was issued
5. a brief description of what was sold, including the quantity (if applicable) and the price
6. the GST amount, or "Total price includes GST" if the GST is exactly 1/11 of the total
7. the extent to which each item is a taxable sale.

For sales of $1,000 or more, it must also show the buyer's identity or ABN. If a customer asks for a tax invoice, you must provide one within 28 days, unless the sale was $82.50 (including GST) or less. PDF and other digital invoices are fine.

How is GST reported on the BAS? A worked example

This is an illustrative example.

Priya runs a plumbing business with a GST turnover well under $10 million. She reports quarterly and accounts for GST on a cash basis, so she reports GST in the quarter she's actually paid or pays. Businesses with an aggregated turnover under $10 million can choose this method.

For the July to September quarter, Priya's bank shows:

Item	Amount incl. GST	GST (÷ 11)
Customer payments received for taxable plumbing work	$33,000	$3,000 GST collected
Business purchases paid, all with valid tax invoices or receipts	$11,000	$1,000 GST credits
Net GST payable on her BAS		$2,000

Her July–September BAS is due 28 October if she lodges it herself. If she lodges online or through a registered tax or BAS agent, she may get extra time. For every quarter's date, see BAS due dates.

How often do I report GST?

According to the ATO:

• Monthly, if your GST turnover is $20 million or more, or if the ATO tells you to
• Quarterly, if your GST turnover is under $20 million and the ATO hasn't told you to report monthly
• Annually, if you're voluntarily registered with a GST turnover under $75,000 ($150,000 for non-profits).

FAQ

Is GST the same as VAT?

They work on the same principle: businesses collect tax on sales and claim credits on purchases. In Australia, the tax is called GST and the ATO administers it.

Do sole traders have to charge GST?

Only if they're registered, or required to be. A sole trader with a GST turnover under $75,000 who hasn't registered doesn't charge GST, unless they provide taxi or ride-sourcing travel, which must register at any turnover.

Can I claim GST credits if I'm not registered?

No. You must be registered for GST to claim GST credits. If you aren't registered, the ATO says you can generally claim the full cost of a business purchase, including the GST, as an income tax deduction.

Does GST affect my income tax deductions?

Yes. If you're registered and claim a GST credit, your income tax deduction is the price less that credit. The ATO's example: $22 of stationery gives a $2 GST credit on the BAS and a $20 deduction on the tax return.

Keep GST right without the spreadsheet

The ATO itself suggests using accounting software to produce tax invoices and GST reports at BAS time. Ezyiah connects to your bank, codes each transaction and its GST treatment, matches your receipts and tax invoices, and prepares your BAS from the reconciled data. Your accountant then reviews and approves it before lodgement. Plans for businesses start from $79/month billed yearly, and from $299/month billed yearly for accounting firms. See how the AI bookkeeper for business owners works, or start your free trial.

This article is general information, not tax advice. Check your own situation with a registered tax or BAS agent.

Related reading

• What Is an AI Bookkeeper? How AI Bookkeeping Works for Australian Businesses
• GST on Mixed-Use Expenses: How Accountants Get It Wrong
• How Long Can You Amend a BAS in Australia? The ATO Time Limits Explained
• BAS Not Matching in Xero? 7 Causes and How to Fix Them

Sources

• ATO, How GST works, accessed 2 November 2026
• ATO, Registering for GST, accessed 2 November 2026
• ATO, When to charge GST (and when not to), accessed 2 November 2026
• ATO, Taxable sales, accessed 2 November 2026
• ATO, GST-free sales, accessed 2 November 2026
• ATO, Input-taxed sales, accessed 2 November 2026
• ATO, When you can claim a GST credit, accessed 2 November 2026
• ATO, Time limit on GST credits, accessed 2 November 2026
• ATO, Tax invoices, accessed 2 November 2026
• ATO, Choosing an accounting method for GST, accessed 2 November 2026
• ATO, When and how to report and pay GST, accessed 2 November 2026
• ATO, Due dates for lodging and paying your BAS, accessed 2 November 2026
• ATO, Accounting for GST in your business, accessed 2 November 2026
• ATO, Effect of GST credits on income tax deductions, accessed 2 November 2026