What is GST & how does it work?

Not clear on your GST commitments? Don’t stress. It’s not as tricky as you might think. Here’s what to focus on.

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Do you need to register for GST

woman standing in a shop learning about what gst is
Yes, if yearly turnover is $75K or more.

(It’s also compulsory if you want to claim a fuel tax credit, or you're a taxi or ride-sharing driver.)

Optional if yearly turnover is less than $75K.

(You can’t claim GST on expenses if you don’t register.)

Registering for GST

You can register online with the ATO. You’ll need an Australian Business Number (ABN).

 

Adding GST to your prices

Calculator showing how to find out what the GST inclusive price is

Old price x 1.1 = GST inclusive price

Issuing tax invoices

tax invoice

You need to be able to issue tax invoices (include those words), with extra details like:

  • the seller’s name and ABN

  • notes showing GST has been charged

More on tax invoices in Xero’s GST guide

Recording GST

recording what gst was collected on sales and what gst was paid on purchases

 

Keep a running tally of the GST you’ve collected on sales.

Do the same for the GST you’ve paid on purchases.

You’ll use these numbers to figure out your GST bill or refund at step 6.

*You will most likely collect more than you pay.

Preparing a BAS (business activity statement)

prepare bas statement from GST collected and GST paid

 

Figure out your GST bill (or refund).

$2819.74 – $1342.87 = $1476.87 (Money you owe the ATO.)

Include this in your BAS and lodge it online with the ATO.

lightbulb

GST tip

Think of GST as money you’re collecting for the ATO. Treat it as their money and you won’t get caught short.

seven

GST due dates

Most businesses lodge quarterly. You can check due dates on the ATO website.

calendar for GST due dates

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Au GST cheat sheet

Make GST less taxing

Learn how software can help with GST invoicing, accounting, and BAS lodgement.

Simplify GST
devices showing Xero making GST less taxing