Chapter 1

What is GST?

You’ve probably heard about GST – it stands for goods and services tax and is added to most prices in Australia.

A small business owner holding up a price tag

How can GST affect my business?

If you’re a business, you may be required to register for and collect GST. This means:

  • you may need to add GST to your prices
  • you will need to send that extra money to the ATO
  • you can claim back any GST that you’re charged on business supplies and expenses

How much is GST?

10% is the GST rate. It’s charged on most sales in Australia, but not all of them.

GST-free sales

Some types of products and services can be sold without adding GST, including:

  • staple foods such as fruit and vegetables, meat, most dairy, spices, and sauces
  • some education courses and resources
  • some medical and healthcare products and services
  • financial products and services

How does GST work?

The GST on any item is designed to be paid by the consumer in the end, rather than by the businesses involved in its supply. Take this example:

An infographic on how GST works

GST on imports

You will 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 will release the shipment. You can generally claim the cost back when submitting a GST return.

GST-registered businesses don’t have to pay GST on services or subscriptions from overseas suppliers.

GST on exports

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

Disclaimer: Xero does not provide accounting, tax, business or legal advice. This guide has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the provided content.

Guide to GST & BAS

Making a start with GST and BAS? Don’t worry. It’s a little extra admin, but follow our guide to get on top of it.

Download the guide to GST

Get your small business tax sorted. Fill in your details to get our full GST guide as a PDF.

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