How GST Works in Australia

Goods and Services Tax (GST) is a broad-based tax of 10% on most goods, services and other items sold or consumed in Australia. Businesses registered for GST collect it from customers and pass it on to the ATO — but they also get credits for the GST included in their business purchases.

How the GST system works

Each registered business in a supply chain pays GST on its inputs and charges GST on its sales. Through its Business Activity Statement (BAS), it pays the ATO the difference between GST collected and GST credits claimed. The end consumer, who can't claim credits, effectively bears the tax.

Three types of supplies

• Taxable supplies — most goods and services. GST is included in the price.
• GST-free supplies — such as most basic food, some medical and health services, some education courses and exports. No GST is charged, but you can still claim credits on related purchases.
• Input-taxed supplies — such as residential rent and most financial supplies. No GST is charged, and you generally can't claim credits on related purchases.

Who needs to register?

You generally must register when your GST turnover is $75,000 or more ($150,000 for non-profit organisations). Taxi and ride-sourcing drivers must register regardless of turnover. Businesses below the threshold can register voluntarily.

Tax invoices

If you're registered, you generally need to provide a tax invoice within 28 days when a customer asks for one, for taxable sales over $82.50 including GST. To claim GST credits on purchases over $82.50, you generally need to hold a valid tax invoice.

Reporting GST

Registered businesses report GST on their BAS, usually quarterly. Businesses with turnover under $10 million can generally choose to account for GST on a cash basis — reporting GST when they receive or make payments — rather than when invoices are issued.