When to Register for GST in Australia: The $75,000 Question

GST registration is one of the first tax questions many Australian sole traders, contractors and small businesses face, and the key issue is usually whether your business turnover has reached the GST registration threshold of $75,000. In simple terms, if your GST turnover is at or above $75,000, you generally need to register for GST. For non-profit organisations, the threshold is $150,000. GST registration matters because once you are registered, you must charge GST on most taxable sales, report it through Activity Statements, and keep the right records. If you are not sure whether you have crossed the line, it is worth checking early rather than waiting until the ATO asks questions.

The $75,000 test is not based on your gross bank deposits or your profit. It is based on your GST turnover, which is broadly your business income from taxable supplies, excluding GST itself and excluding some items such as sales of capital assets in certain circumstances. There are two turnover tests that matter: the current GST turnover test and the projected GST turnover test. You must register if either test is met. Your current GST turnover is the value of your business supplies in the current month plus the previous 11 months, while your projected GST turnover is the value you expect for the current month plus the next 11 months. If either reaches $75,000 or more, registration is usually required within 21 days. This is why a business can have a temporary spike in work and still trigger a registration obligation even if its annual revenue later ends up lower than expected.

The projected turnover test is often the one that catches people out. For example, if you are a contractor who signs several large jobs and it becomes clear that your invoices for the next 12 months will exceed $75,000, you may need to register before you actually receive all that income. On the other hand, if you only go over $75,000 because of an isolated sale of a business asset, that amount may not always count in the same way, so the details matter. It is also important to remember that an employee’s salary does not count towards GST turnover, but income from an ABN business does. If you operate more than one business structure, the turnover test can also be affected by how those entities are connected or grouped, so a simple look at one bank account may not tell the full story.

Even if you are below the threshold, you can register for GST voluntarily. Some businesses choose to do this because their suppliers charge GST and they want to claim input tax credits, or because they want a more professional business image and expect to grow quickly. Voluntary registration can also suit start-ups making GST-free or low-margin sales where the input tax credits help cash flow. The trade-off is that once you register, you have to charge GST where applicable, lodge BAS on time, and keep proper tax invoices and records. Voluntary registration is not always the right answer, especially for businesses selling mainly to the public where adding GST can make your prices less competitive.

If you are late to register when you should have, the ATO can require you to backdate your GST registration to the date you became liable. That can mean you need to account for GST on sales you made during the late period, even if you did not actually charge it to your customers. In some cases, the ATO may allow you to absorb the GST or try to recover it from customers, but that is often commercially difficult. Late registration can also create interest and penalties, particularly if the omission led to underpaid tax or incorrect BASs. If you realise you should have registered earlier, it is usually best to correct it quickly rather than hoping it will go unnoticed. Voluntary disclosure can reduce the risk of tougher penalties.

Once registered, your GST obligations do not stop at charging 10 per cent on taxable sales. You need to lodge Business Activity Statements or Instalment Activity Statements, usually monthly, quarterly or annually depending on your reporting cycle. On your BAS, you report your GST on sales, claim input tax credits for eligible business purchases, and pay the net amount to the ATO or receive a refund if your credits exceed your GST collected. You also need to issue tax invoices when requested, separate business and private spending, and keep records for at least five years. GST can be manageable if your bookkeeping is set up properly, but it becomes a problem quickly when income, expenses and invoices are not tracked accurately.

If you are unsure whether you need to register for GST, whether your turnover has reached the threshold, or what to do if you may have registered late, SolAeon Tax can help you work it out and put the right BAS and GST processes in place for your business.