What is GST and how to register for GST in Australia

How GST works in Australia

What does GST stand for? It stands for goods and services tax, and it’s added to the price of most goods, services, and other items sold in Australia.

Next, what is Australian GST? Australia’s GST rate is 10%. GST-registered businesses add this to the prices they charge, collect it on the government’s behalf, then pay it to the Australian Taxation Office (ATO). Although a business pays GST on its supplies and purchases, it can usually claim the money back through its tax returns.

Although businesses collect GST and forward it to the government, in the end it’s the consumer who pays this tax on most goods and services.

GST on imports

You have to pay GST on most imported goods. It’s added to the price you paid for the goods plus shipping costs, and you may have to pay it before Customs releases the shipment. You can generally claim the GST back when submitting a GST return. GST-registered businesses don’t have to pay GST on some services or subscriptions provided by overseas suppliers.

Learn what goods are non-taxable on the ATO website.

GST on exports

You don’t have to charge GST on exports as long as the goods leave Australia within 60 days of you receiving payment or issuing an invoice, whichever comes first.

Who needs to register for GST?

• Businesses based in Australia with an annual turnover of $75,000 or more
• All taxi and ride-sharing drivers
• Not-for-profit organisations with an annual turnover of $150,000 or more
• Businesses that want to claim fuel tax credits
• International retailers with total Australian sales of $75,000 or more per year

Why registering for GST is important for your business

It’s a legal requirement to pay GST if your business meets the criteria above. Your business could be penalised if you don’t apply for GST registration.

Registering for GST ensures regular record-keeping and allows you to claim GST credits on business purchases, reducing your tax liability and making your financial year-end easier.

And don’t forget: GST registration gives your business more credibility and presents a professional image to your customers.

Which items are exempt from GST?

Some things are free from the 10% tax because they’re considered basic living essentials. GST exemptions include:

• Most basic food staples
• Some medical, health, and care services, and some medical aids, appliances, and medicines
• Menstrual products
• Some childcare services
• Some education courses, including materials and related field trips
• Some religious services and charitable activities

Generally, GST-exempt foods are dietary staples – relatively healthy and everyday – rather than processed or luxury fare. But context matters: basic foods (like bread rolls) will be taxed when eaten in a restaurant.

See the full list of GST exempt sales on the ATO website.

How to register for GST in Australia

Choose from these options:

Register for GST online

You can register for GST with the government’s Business Registration Service. You can also register through the ATO business portal, which is the main way businesses communicate with the ATO and where you submit your business activity statements (BASs). You can also submit your BAS with online accounting software.

Fill out a NAT 2954 form

If you don’t want to register online, you can fill out a NAT 2954 form using the ATO publication ordering service. Order your form here.

Register for GST on the phone

You can also call the ATO to register for GST.

Use a registered tax or BAS agent

A registered professional can handle the process for you. Check with the Australian Tax Practitioners Board to see whether your current tax practitioner is registered.

Account for GST in your financial records

Your business must account for GST in its records so the ATO can see how much you’ve paid on purchases, and how much your customers have paid you.

You first need to choose a suitable accounting method for your GST, and work out how to keep accurate records for your reporting.

GST accounting methods

1. Cash accounting: the business records income when it’s received and expenses when they’re paid, instead of when the transaction takes place. Businesses doing this only owe GST on a sale once the customer has paid it.
2. Accrual basis accounting: the business records income when the transaction takes place. The business owes GST on a sale as soon as it raises the invoice or when it gets paid, whichever comes first.
3. Simpler accounting method: food retailers can use the simplified accounting method (SAM). Check out this ATO page to see if it’s for you.

Many businesses use cash accounting for GST and accrual accounting for income tax. That might sound complex, but good accounting software makes it easy to move between the two. An accountant or bookkeeper can help you account for GST.

FAQs on goods and services tax registration

What happens once my business is registered for GST?

Once you’ve completed the GST registration process, update your invoices to include GST and tell your customers you’ve done this. You’ll then need to regularly report and pay your GST to the ATO, most likely quarterly, using BAS forms.

Here’s more info from the ATO on paying your GST.

Can I charge GST if my business is not registered?

No – only businesses registered for GST can charge it to their customers or claim GST credits.

Xero software simplifies your GST admin

It’s hard to follow the GST rules when you’re knee-deep in your business.

Xero’s cloud-based software does the work for you. It streamlines your financial admin by easily capturing receipts and sending invoices, calculating your GST, and sending your BAS forms directly to the ATO.

Learn more about how Xero can help.