GST: Guide to Goods and Services Tax, Registration & Obligations

Goods and Services Tax (GST) is a broad-based consumption tax applied to most supplies of goods and services in Australia. The standard rate is 10%. Suppliers collect GST at the point of sale and remit net GST to the tax authority after offsetting eligible input tax credits on business purchases.

This practical guide explains GST basics, registration thresholds, charging rules, claiming credits, record-keeping obligations, BAS lodgement, special rules, penalties and compliance steps for small business owners, sole traders, bookkeepers and not-for-profits.

What is GST?

Goods and Services Tax (GST) is a broad-based consumption tax applied to most supplies of goods and services. The standard rate is 10% (effective as at January 2026). Suppliers collect GST at the point of sale and remit net GST to the tax authority after offsetting eligible input tax credits on business purchases.

GST applies to taxable supplies made in the course of an enterprise. The net GST payable is calculated as GST collected on sales minus GST credits on eligible purchases.

Common calculations:

• To add GST: Price_incl = Price_excl × 1.10
• To extract GST from a GST-inclusive price: GST = Price_incl ÷ 11

For official guidance see the ATO GST overview.

Who must register for GST?

You must register for GST if your GST turnover meets or exceeds the registration threshold. Key thresholds (effective as at January 2026):

• $15,000 — compulsory threshold for businesses and sole traders.
• $150,000 — threshold for most not-for-profit organisations.
• Compulsory registration also applies if you provide ride-sourcing or taxi-like services.

GST turnover is your gross business income (excluding GST) from taxable supplies; it generally excludes input-taxed sales and capital receipts. You should test turnover on a rolling 12-month basis or use projected turnover for the next 12 months.

You must register from the date you exceed the threshold or from when you start providing ride-sourcing services. If unsure, you can voluntarily register to claim input tax credits early.

For step-by-step registration, see GST registration guidance.

More detail: ATO Registering for GST.

When to charge GST and when not to

You must charge GST on taxable supplies. Supplies fall into three broad categories:

Common scenarios:

• Retail sale of goods — usually taxable; charge GST.
• Medical consultations — often GST-free; check ATO guidance.
• Residential rent — typically input-taxed; do not charge GST and generally cannot claim related GST credits.
• Exports — generally GST-free if export rules are met.

When selling bundled or mixed supplies, allocate each component correctly and apply the relevant GST treatment. See ATO GST categories.

Further reading on supply classifications: tax invoices and receipts.

Claiming input tax credits (GST credits)

If registered for GST, you can generally claim an input tax credit for the GST included in business purchases when:

• The purchase is for use in your enterprise.
• You hold a valid tax invoice (for purchases above the tax invoice threshold).
• The purchase includes GST and is used in making taxable supplies (or where partial claims are allowed).

Tax invoice requirement and threshold:

A tax invoice is required to claim credits for purchases over $12.50 (incl. GST) — check the ATO for the current threshold as it may change. A valid tax invoice must include specific elements: seller ABN, date, description, GST amount or a statement that the price includes GST.

Apportionment for mixed-use and partial business use:

For items used partly for private and partly for business (such as a car or phone), apportion the GST credit to the business portion. Keep a clear log or reasonable basis for apportionment (business kilometres, percentage use).

Timing of claims:

Claim input tax credits on your BAS for the reporting period in which you received the tax invoice (or when you paid, depending on your accounting method). Special adjustment rules apply if invoices are corrected or goods are returned.

More detail: ATO guidance on input tax credits and GST credit claiming information.

Tax invoices, records and record-keeping requirements

Tax invoice — minimum elements:

A tax invoice should include:

• Seller's identity and ABN.
• Buyer's identity (if required for the sale).
• Date of issue.
• Description of items sold.
• Amount payable showing GST amount separately or a statement that the price includes GST.
• Simplified tax invoices are acceptable for smaller sales under the threshold.

Record keeping — practical rules:

Keep records that support your BAS and GST claims: sales records, purchase invoices, tax invoices, contracts, bank statements and electronic records. Keep records for at least five years from the date you prepare or obtain them, or the date you prepare your BAS (whichever is later). Electronic records are acceptable provided they remain accessible and legible.

Good practice:

• Keep invoices in order and backed up.
• Reconcile your accounting system to BAS figures each period.
• Use clear naming and storage conventions for digital files.

See tax invoices and receipts information for templates and ATO guidance on record keeping.

Lodging BAS, reporting and payment cycles

How GST is reported:

Report GST on the Business Activity Statement (BAS). Key items include GST on sales (G1), GST on purchases (G10), and net GST payable (G2). BAS may also include PAYG instalments, PAYG withholding and other obligations.

Reporting frequency:

Reporting cycles are typically quarterly (most small businesses), monthly (higher turnover or required), or annually in special arrangements. You may be on a GST-only BAS if you only need to report GST.

Payment due dates:

BAS payment due dates depend on your reporting cycle and payment arrangements; late payments attract interest and penalties. Consider instalment options to smooth cash flow where appropriate.

Need help with BAS lodgement? See BAS lodgement guidance and ATO BAS guidance.

Special rules and common complications

Some supplies attract special GST rules:

• Margin scheme (property) — GST on property sales may be calculated on the margin rather than the full sale price; strict records and contracts are required. See margin scheme information.
• Sale of a business as a going concern — may be GST-free if conditions are met (agreement in writing, both parties registered, business sold as a going concern). See going concern information.
• Imported goods and services — GST applies to imported goods at the border and to certain imported services and digital products supplied to consumers. See ATO guidance and imported services information.
• Reverse charge — for some cross-border supplies, the recipient accounts for GST and may claim an input tax credit at the same time.
• Adjustments and credit notes — issue adjustments on your BAS when you give refunds, discounts or credit notes.

Other practical complications:

• Multi-jurisdiction supplies (property in different states) require careful treatment.
• Bundled supplies need disaggregation to apply different GST treatments to components.

Related topics: tax invoice information, Novated Lease, Finance Lease, BAS information.

Penalties, audits and enforcement

What triggers reviews or audits:

Large or persistent discrepancies between reported and expected GST, late lodgements, missing BAS, or whistleblower reports may trigger reviews. Data-matching and electronic analytics increase detection likelihood.

Common penalties and interest:

• Failure to register when required can lead to penalties and retrospective GST liabilities.
• Late BAS lodgement or payment attracts administrative penalties and the General Interest Charge (GIC).
• False or misleading statements can attract penalties and, in serious cases, criminal prosecution.

If contacted by the tax authority — practical steps:

• Respond promptly and within timelines.
• Gather supporting documents: sales records, tax invoices, bank statements and reconciliations.
• Prepare a clear explanation for discrepancies and, if necessary, engage a registered tax agent or accountant.
• Keep copies of all communications.

For general penalty guidance see ATO compliance pages.

Common mistakes and practical compliance checklist

Frequent errors to avoid:

• Not registering at the correct time.
• Charging GST on GST-free supplies or failing to charge GST on taxable supplies.
• Missing or incorrect tax invoices.
• Incorrect apportionment of mixed-use purchases.
• Failing to adjust GST when issuing credit notes or refunds.

Practical compliance checklist:

• Determine GST turnover and test against the $15,000 / $150,000 thresholds (effective as at January 2026).
• If required or beneficial, register for GST.
• Issue correct tax invoices for sales above the threshold and keep simplified invoices where allowed.
• Keep records for at least five years and reconcile bookkeeping monthly.
• Lodge your BAS on the correct cycle; set reminders or use a tax agent.
• Review sales classifications quarterly (taxable / GST-free / input-taxed).
• Confirm GST is shown on invoices before claiming credits.
• Prepare documentation before responding to any audit request.

Short worked examples

Example 1 — Extract GST from a GST-inclusive price:

You sell a product for $120 including GST. To extract the GST: $120 ÷ 11 = $10. The GST-exclusive price is $100.

Example 2 — Claiming an input tax credit:

You buy office equipment for $1,100 (invoice shows $100 GST). If the equipment is 100% for business use and you are registered, you can claim the $100 GST as an input tax credit on your BAS for the period you received the tax invoice.

For calculators and tools see MoneySmart GST calculator.

FAQ

Key takeaways

GST registration, charging and claiming credits are critical compliance obligations for most Australian businesses. Test your turnover against the current thresholds ($15,000 for businesses; $150,000 for not-for-profits), maintain proper tax invoices and records for at least five years, and lodge your BAS on time to avoid penalties. When in doubt about whether a supply is taxable, GST-free or input-taxed, consult the ATO guidance or a registered tax agent.

Further reading

• ATO GST overview
• ATO Registering for GST
• business.gov.au Register for goods and services tax (GST)
• MoneySmart GST basics and calculators

This article is general information only and is not legal, tax or financial advice.