A growing business can reach the GST registration threshold sooner than expected. A strong month of invoices, a new contract or a seasonal rush may push turnover beyond the limit, bringing new BAS and recordkeeping responsibilities with it. Knowing when registration is compulsory helps you act early, price work correctly and avoid the stress of an unexpected ATO issue.
For most Australian businesses, the key figure is $75,000 in annual GST turnover. However, that figure is not your profit, and it is not simply the total shown in last year’s tax return. The rules look at your business turnover across a moving 12-month period, including what you expect to earn next.
What is the GST registration threshold?
The GST registration threshold is the annual turnover point at which a business must register for goods and services tax. For sole traders, partnerships, companies and trusts, the threshold is generally $75,000. Non-profit organisations have a higher threshold of $150,000.
You must also register for GST regardless of turnover if you provide taxi travel or ride-sourcing services for a fare, such as driving through a ride-share platform. This requirement applies even if the activity is small or part-time.
GST turnover is not the same as taxable income or profit. It is broadly the value of your business sales and income before expenses are deducted. A business can have modest profits after wages, materials, rent and other costs, while still exceeding the GST threshold.
For threshold purposes, turnover can include both taxable sales and GST-free sales. Some amounts are excluded, including sales that are input taxed, such as many residential rents and financial supplies, and certain sales not connected with Australia. Selling a business asset may also be treated differently in the projected turnover calculation. These details matter, particularly for businesses with mixed income streams.
How the $75,000 turnover test works
The ATO uses two practical measures: current GST turnover and projected GST turnover. Current GST turnover is what you have earned in the current month plus the previous 11 months. Projected GST turnover is what you have earned in the current month plus what you reasonably expect to earn over the following 11 months.
You generally need to register if your projected GST turnover is at or above the threshold. You may also need to register when your current GST turnover reaches the threshold and your projected turnover is not expected to fall below it.
This approach means you do not need to wait until your sales have already passed $75,000. If you sign a contract that will take expected sales beyond the threshold, registration may be required before all of those invoices are issued.
Consider a Perth consultant who has earned $58,000 over the past 11 months and invoices $8,000 in the current month. Their current turnover is $66,000, so they are still below the threshold. If they have accepted a further $30,000 project over the next few months, however, their projected GST turnover is likely to exceed $75,000. They should assess registration promptly rather than waiting for cash to arrive.
The opposite can also occur. A one-off contract may lift turnover temporarily, while future income is clearly expected to reduce. The rules can be less straightforward in that situation, so it is worth obtaining advice based on the facts rather than assuming a short-term spike can be ignored.
Turnover is measured before GST
When working out whether you have reached the threshold, use the value of sales excluding any GST charged. If you are not yet registered, this is usually the amount you invoice or receive for your work. Do not reduce the figure by business expenses, superannuation, wages or loan repayments.
Good bookkeeping makes this assessment far easier. Regularly reconciling your bank account, invoices and sales records gives you a current picture of turnover instead of relying on a year-end estimate.
When do you need to register?
Once you determine that registration is required, you generally have 21 days to register. Delaying can create practical problems. You may need to account for GST from the date you should have registered, even if your quotes and invoices did not include an amount for GST.
That can be costly. If you quoted a client $1,100 for services and should have been registered, part of that $1,100 may need to be treated as GST. Unless your agreement allows you to revise the price, the GST may come out of your margin.
Registration is completed through the Australian Business Register, usually using your existing Australian Business Number. You can register directly or arrange for a registered tax agent to assist. Before registering, it is sensible to decide whether you will report GST monthly, quarterly or annually, where you are eligible to do so. Most small businesses report quarterly, but the appropriate option depends on turnover, cash flow and ATO requirements.
Should you register voluntarily before reaching the threshold?
Businesses below the threshold can choose to register voluntarily. This can make sense when your customers are mainly GST-registered businesses, because they may be able to claim a credit for the GST you charge. Voluntary registration may also allow you to claim GST credits on eligible business purchases, such as equipment, software, stock or professional services.
There is a trade-off. Once registered, you must charge GST on taxable sales, issue compliant tax invoices when required, keep appropriate records and lodge BAS statements on time. If you sell mainly to private consumers, adding GST can make your prices less competitive unless you absorb the cost. If your expenses are low, the GST credits you can claim may not outweigh the added administration.
Voluntary registration is therefore a business decision, not simply a tax-saving exercise. It should be considered alongside your pricing, client base, cash flow and expected growth.
What changes after GST registration?
GST registration affects the way you manage day-to-day transactions. For taxable sales, you generally add 10 per cent GST to the price. You collect that GST on behalf of the ATO and report it through your BAS. You can then claim credits for GST included in eligible business expenses, provided you hold the required records and the purchase relates to your business.
A clear invoicing process is essential. Tax invoices need to show the required information, including that the price includes GST or the GST amount payable. Accounting software can help, but it still needs to be set up correctly. Common errors include applying GST to GST-free income, claiming credits on private purchases, or coding expenses inconsistently.
You should also keep records for at least five years. This includes sales invoices, supplier invoices, receipts, bank records, contracts and calculations that support your BAS figures. For a sole trader, separating business and personal spending as much as possible will reduce confusion and make quarterly reporting more reliable.
Cash flow deserves attention
GST is not extra income for the business. It is money collected that may later be payable to the ATO after credits are applied. Setting aside a portion of GST received can prevent a BAS payment becoming an unwelcome surprise.
This is especially useful for service businesses with few GST-creditable expenses. A contractor who collects GST on most invoices but has low operating costs may have a significant amount to pay each quarter. Regular bookkeeping and a cash flow plan provide a clearer view of that liability before the BAS deadline arrives.
Can you cancel GST registration later?
If your business turnover falls below the threshold and you do not expect it to rise again, you may be able to cancel your registration. This is not always an automatic decision. Cancelling means you stop charging GST and lodging BAS statements for GST, but you may need to make adjustments for assets or stock held when deregistering.
The right timing depends on your expected sales, business plans and the nature of your remaining assets. A temporary quiet period is different from a genuine change in how the business operates.
A practical way to stay ahead of the threshold
Review turnover at least monthly, particularly if you are winning new work, changing your prices or moving from part-time to full-time trading. Keep a simple 12-month sales forecast alongside your actual income. This allows you to identify the GST registration threshold before it becomes urgent and gives you time to update quotes, invoices and software settings properly.
If the numbers are close or your income includes unusual transactions, a registered tax agent can help you assess the rules in plain English. Hire An Accountant can support business owners with GST registration, bookkeeping and BAS lodgements so the next step is clear, accurate and manageable.
