One of the most common questions from Australian sole traders is: “Do I need to charge GST?” The answer depends on your annual turnover relative to the $75,000 GST registration threshold. Here is everything you need to know.
What is the GST threshold?
The GST registration threshold for most businesses in Australia is $75,000 in annual turnover. For non-profit organisations, the threshold is $150,000. Once your turnover reaches or is expected to reach this amount in any 12-month period, you must register for GST.
Importantly, “annual turnover” does not mean the financial year. The ATO looks at any 12-month period — either the past 12 months, or the next 12 months if you expect to exceed the threshold.
What counts toward the $75,000 threshold?
Your “annual turnover” for GST purposes includes:
- All sales you make in the course of your business in Australia
- Taxable sales, GST-free sales, and input-taxed sales
- Income from all your business activities (if you have multiple)
Your annual turnover does NOT include:
- Sales that are not in the ordinary course of business (e.g. selling a business asset)
- GST collected on sales (the threshold is based on pre-GST amounts)
- Private income such as salary from employment, interest, or dividends
What happens when you reach $75,000?
Once your turnover reaches or is expected to reach $75,000 in any 12-month period, you must register for GST within 21 days. Failing to register on time can result in penalties and you may be liable for GST on sales made while unregistered — even though you did not collect it from clients.
After registering, you must add 10% GST to your taxable supplies, issue tax invoices (not just invoices), file Business Activity Statements (BAS) regularly, and pay the collected GST to the ATO.
Should you register for GST voluntarily?
If your turnover is under $75,000, you can choose to register for GST voluntarily. There are scenarios where this makes sense:
Pros of voluntary registration: You can claim GST credits on your business expenses (making your costs 10% cheaper). If your clients are GST-registered businesses, adding GST to your invoices does not increase their actual cost, since they claim it back — so you appear equally competitive.
Cons of voluntary registration: You must file BAS (quarterly or monthly), add administrative overhead, and deal with the complexity of tracking GST on all transactions. If your clients are primarily consumers (not businesses), adding 10% GST makes you more expensive from their perspective.
The best approach depends on your specific situation. Consult a registered tax agent if you are unsure.
What to put on your invoice while under the threshold
If you are under $75,000 and not GST-registered, your invoice must be titled “Invoice” (not “Tax Invoice”), must not include a GST amount, and must include your ABN. See our invoice template without GST for the correct format.