TAX • 24 APRIL 2025 • 6 MIN READ
GST essentials for business owners in Australia
GST (Goods and Services Tax) is a tax on most goods and services sold by businesses. While it feels like a tax on businesses, it really isn’t. Instead, it’s ultimately paid by people living out their day-to-day lives.
Businesses act like tax collectors for the government – charging an additional 10% on top of each sale, which they later forward to ATO.
A business’s process of reporting the GST to the government is called a Business Activity Statement (BAS).
When do businesses need to register for GST
We've got a whole article about GST registration if you want to dive into this topic.
In summary:
If your turnover is over $75,000 per annum, you must register for GST.
If your turnover is under $75,000 per annum, GST registration is voluntary. It could be a beneficial move for you if:
- You want to claim back GST on a large asset purchase, and you’re fairly sure your sales will be over $75,000 at some point
- Most of your sales are to overseas entities – you won’t collect GST on this income, but you can claim GST on the expenses you incur in Australia
For non-profit organisations where annual turnover exceeds $150,000 or if you're a taxi driver or ride-sharing driver (no matter your income), you will be required to register for GST.
Capturing your GST information – your GST basis
When you register for GST, you’ll need to select what’s called your GST basis. It’s how and when your GST records are entered into your BAS.
Your GST basis can be either:
- A Cash basis – Businesses with an aggregated turnover of less than $10 million can choose to account for their GST using the cash accounting method. Whenever cash is received into or paid from your bank account, your GST is entered into your BAS.
- A Non-Cash basis – your GST calculation is based on the dates of invoices you send and receive, rather than what goes through your bank account
Charging GST
Once you’re registered for GST, you must charge it.
If you send out invoices for more than $82.50 (including GST), you need to record the following:
- document is intended to be a tax invoice
- your (the seller’s) identity (Company name or your name)
- Your (the seller’s) Australian business number (ABN)
- date the invoice was issued
- brief description of the items sold, including the quantity (if applicable) and the price
- GST amount (if any) payable – this can be shown separately or, if the GST amount is exactly one-eleventh of the total price, as a statement which says 'Total price includes GST'
- extent to which each sale on the invoice is a taxable sale
If your invoices are over $1,000, you also need to include:
- The name and address of the buyer
- The quantity of whatever they have purchased, with the GST exclusive and inclusive amounts separately noted
Use our handy GST calculator to get GST exclusive and inclusive price for goods or services.
If you’re using an accounting system for invoicing, it’s usually set up to capture all the information you need.
Claiming GST
You can claim GST on most transactions, and we’ll discuss in detail the situations when you can’t further down. Some of the transactions that commonly confuse business owners are outlined below.
GST can be claimed on the following
- Asset purchases
- You can claim GST on second-hand items even if the seller is not registered*
- You can claim GST upfront on assets purchased on finance
- GST can be claimed on the market values of existing assets you bring into the business
- Software providers
- Subscriptions to overseas providers such as Microsoft, Spotify, Facebook, Google AdWords etc can be claimed for GST
- Reimbursements to employees for business costs (including motor vehicle), but excluding mileage reimbursements
* If you claim GST on the purchase of second-hand assets, GST must be paid when it’s sold.
GST on property transactions (including land) is a complex area and you need specialised advice before signing any documents.
GST cannot be claimed on the following
- Transaction charges (known as financial services – which are all exempt from GST)
- Bank fees
- Interest expenses
- Loan fees
- Surcharge on credit card charges
- Donations
- Wages and salaries
- Goods purchased overseas (but you can claim any import duty charged by Customs)
- Penalties
- Loans and loan payments
- Sale of a business as a going concern
- Sales of investments such as shares, bonds and term deposits
- Payments to suppliers who are not registered for GST (except for second-hand assets as described above)
- Allowances paid to employees
- Residential rental expenses
- Personal expenses
For a more general application of what you cannot claim - refer to the ATO website.
GST and purchases for private use
If you purchase goods or services for both business and private use, you can only claim a GST credit for the part of the purchase relating to your business use.
If you later find your actual use differed from your intended use, you may need to adjust the amount of GST credits you have claimed.
If you are a small business, you may be able to account for the private portion of your business purchases once a year, rather than each time you lodge an activity statement. To do this you need to make an annual private apportionment election.
Example – comparing goods sold to a consumer and to a business
At the beginning of this post, we said that GST is ultimately paid by people living out their day-to-day lives. The example below shows how this happens.
GST filing and deadlines
How often does GST need to be filed (as part of a BAS return)?
Quarterly – if your GST turnover is less than $20 million – and the ATO have not told you that you must report monthly.
Monthly – if your GST turnover is $20 million or more.
Annually – if you are voluntarily registered for GST and your GST turnover is under $75,000 ($150,000 for not-for-profit bodies).
Key deadlines for GST submissions
The dates for BAS returns differ based on the above filing frequency and entity size.
View our key dates page to find the relevant dates for your business/entity.
Penalties for late filing
Failure to lodge (FLT) on time penalties are set by the Australian Tax Office. The penalty will depend on the size of your entity and the period of time since the due date for lodgement.
Find out more about FLT penalties from the ATO's website.
GST for businesses
Best practices for managing GST effectively
Managing GST efficiently is crucial for maintaining compliance and optimising cash flow. Here are some best practices to ensure your GST processes run smoothly:
- Stay organised: Ensure you keep a record of all transactions, including supporting evidence such as sales invoices and purchase receipts or invoices. Maintaining up-to-date records will help ensure your BAS returns are accurate.
- Use accounting software: Accounting software like Xero or MYOB can automate much of the GST management process, making it easier to track GST on sales and purchases and file your returns. These tools can help generate GST reports, calculate GST due, and ensure you're always on top of your GST obligations.
- Regular reconciliation: Ensure your BAS returns align with your financial statements. Reconcile your GST records regularly with your bank statements, sales data, and purchase invoices to identify any inconsistencies before filing your return.
- Stay on top of deadlines: Set reminders in your calendar for key BAS deadlines. This helps ensure your VAT returns are filed on time, avoiding late fees or penalties.
By using accounting software like Xero or MYOB and following these best practices, managing GST becomes more efficient, less stressful, and ensures you stay compliant with ATO regulations.
Do you need an accountant to submit your BAS?
You don’t necessarily need an accountant or tax agent to file your BAS. However, tax compliance can be complex and time-consuming. Managing tax obligations on your own can also add unnecessary stress. Working with a professional can make the process easier, help you avoid costly errors, and free up your time.
How Beany can help
Beany's team of accounting and tax experts can help with your BAS and everything else accounting related. Book a call if you want to discuss your accounting requirements and how we can help your business.
At Beany, we help people make smarter decisions for their business and lifestyle through our responsive, friendly expertise.
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