GST for Small Business Australia 2025–26: What Every Owner Needs to Know
Running a small business in Australia means wearing many hats — and one of the most important is understanding your GST obligations. Whether you’re just starting out or have been trading for years, getting GST right protects your cash flow, keeps the ATO happy, and ensures you’re claiming every credit you’re entitled to.
This guide breaks down everything Australian small business owners need to know about GST in 2025–26: from the registration threshold to BAS lodgement, input tax credits, and the ATO’s latest compliance focus areas.
What Is GST and How Does It Work?
Goods and Services Tax (GST) is a 10% tax applied to most goods and services sold in Australia. As a GST-registered business, you:
- Collect GST from customers on taxable sales (included in the price)
- Claim GST credits (input tax credits) on eligible business purchases
- Report the difference via your Business Activity Statement (BAS) — paying the net amount to the ATO, or receiving a refund if credits exceed collections
A quick calculation tip: to find the GST component in a GST-inclusive price, simply divide the total by 11. For example, a $1,100 purchase includes $100 in GST.
The $75,000 Registration Threshold
When Must You Register?
You are required to register for GST when your GST turnover reaches or is projected to reach $75,000 in any 12-month period (current or projected). For non-profit organisations, the threshold is $150,000.
GST turnover is your gross business income — not profit — with certain exclusions such as GST itself, input-taxed sales, and sales not connected with Australia.
Two rolling tests apply:
- Current GST turnover: the past 12 months (current month + previous 11)
- Projected GST turnover: the next 12 months (current month + next 11)
If your current turnover hits $75,000 but your projected turnover will fall below it, you may not be required to register. However, if you’re a new business expecting to reach the threshold in your first year, you must register from the start.
Register Within 21 Days
Once you’re required to register, you have 21 days to do so. You can register:
- Online via the ATO’s Online Services for Business
- By phone on 13 28 66
- Through a registered tax agent or BAS agent
You’ll need an Australian Business Number (ABN) first. Only one GST registration is needed even if you operate multiple businesses.
Compulsory Registration Regardless of Turnover
Some businesses must register for GST no matter their turnover, including:
- Taxi, limousine, and ride-sourcing drivers (e.g., Uber)
- Businesses wanting to claim fuel tax credits
Voluntary Registration
If you’re below the threshold, you can still register voluntarily — but you must stay registered for at least 12 months. Voluntary registration gives you access to GST credits on business purchases, but also brings ongoing obligations like charging GST on sales and lodging BAS.
Types of Sales: Taxable, GST-Free, and Input-Taxed
Not all sales are treated the same under GST. Understanding the three categories is essential:
| Sale Type | GST Charged? | Credits on Related Purchases? |
|---|---|---|
| Taxable | Yes — 10% included in price | Generally available |
| GST-free | No | Generally available |
| Input-taxed | No | Generally NOT available |
GST-free examples: basic food, most health and education services, exports. You don’t charge GST but can still claim credits on related purchases.
Input-taxed examples: residential rent, financial services (e.g., lending money). No GST charged and generally no credits on related purchases.
Misclassifying sales is one of the most common GST errors — and one the ATO actively looks for.
Claiming GST Credits (Input Tax Credits)
You can claim a GST credit on a business purchase when:
- The purchase is wholly or partly for business use
- It does not relate to making input-taxed supplies
- The price included GST
- You hold a valid tax invoice (required for purchases over $82.50 including GST)
Tax Invoice Requirements
For purchases over $82.50 (GST-inclusive), you must hold a valid tax invoice before claiming the credit. A supplier has 28 days to provide one if requested.
For purchases $82.50 or less, keep a receipt, cash register docket, or invoice showing the supplier’s name, ABN, date, description, and amount.
Mixed Business and Private Use
Only the business-use portion of a mixed purchase is creditable. If you buy a laptop used 70% for work and 30% personally, you can only claim 70% of the GST. Eligible small businesses may be able to make an annual private apportionment election to simplify this process.
Cash vs. Non-Cash GST Accounting
Your GST accounting method determines when you report GST — and it’s separate from your income tax accounting method.
Cash basis: GST on sales is reported when payment is received; credits are claimed when payment is made. This closely follows your actual cash flow and is available to businesses with aggregated turnover below $10 million.
Non-cash (accruals) basis: GST on sales is reported when an invoice is issued or payment received (whichever comes first); credits are claimed at the same trigger point. This can create GST obligations before you’ve been paid.
Most small businesses prefer cash accounting for its simplicity and cash-flow alignment. If you change methods, the switch can only take effect from the first day of a new tax period.
Completing and Lodging Your BAS
Simpler BAS for Small Businesses
If your GST turnover is below $10 million, you use Simpler BAS — the default reporting method. You only need to complete three fields:
- G1: Total sales
- 1A: GST on sales
- 1B: GST on purchases
No GST calculation worksheet is required. Even if you have nothing to report, you must still lodge a nil BAS by the due date.
BAS Lodgement Cycles and Due Dates
| Reporting Cycle | Who It Applies To | Due Date |
|---|---|---|
| Quarterly | Turnover below $20 million (most small businesses) | 28 Oct, 28 Feb, 28 Apr, 28 Jul |
| Monthly | Turnover $20M+, voluntary election, or ATO direction | 21st of the following month |
| Annual | Voluntary registrants with turnover below $75,000 | Generally 31 October |
If a due date falls on a weekend or public holiday, it moves to the next business day. Online quarterly lodgers may receive an extra two weeks (except Q2, which already has a one-month extension).
ATO Compliance Focus Areas in 2025–26
The ATO has been actively targeting GST non-compliance. From 1 April 2025, approximately 3,500 small businesses with poor compliance histories were moved from quarterly to monthly GST reporting under the ATO’s “Getting it right” campaign. This is not a blanket change — it targets businesses with histories of late lodgements, incorrect reporting, or unpaid debts.
Common GST Mistakes the ATO Looks For
- Omitting cash or EFTPOS sales from G1
- Claiming credits for private expenses
- Claiming credits where the price didn’t include GST
- Failing to apportion mixed-use purchases
- Claiming credits on input-taxed supplies
- Double-counting invoices
- Using estimates instead of actual records
- Lodging or paying late
Correcting GST Errors
- Credit errors (you overpaid GST): can generally be corrected on a later BAS within four years
- Debit errors (you underpaid GST): can be corrected on a later BAS only if within 18 months of the original due date, the net error is under $12,500, and it wasn’t due to recklessness
If conditions aren’t met, you must amend the original BAS.
Practical GST Tips for Small Business Owners
- Monitor your turnover monthly while unregistered — don’t wait until year-end
- Set aside GST in a separate account so it’s not spent as working capital
- Reconcile all income sources — cash, EFTPOS, online payments, and bank deposits — before lodging
- Verify supplier GST registration via ABN Lookup before claiming credits
- Keep records for five years — the ATO can review BAS lodgements within four years
- Contact the ATO before the due date if you can’t lodge or pay on time — penalties are avoidable with proactive communication
Get Expert GST Help from TaxServe Australia
GST compliance doesn’t have to be stressful. Whether you’re registering for the first time, catching up on missed BAS lodgements, or navigating complex mixed supplies, the team at TaxServe Australia is here to help.
Our registered tax and BAS agents work with small businesses across Australia to ensure your GST obligations are met accurately and on time — so you can focus on running your business.
📞 Contact TaxServe Australia today for a free consultation. Visit taxserve.com.au or call us to speak with an expert.
Sources
- Australian Taxation Office — Register for GST
- Australian Taxation Office — How GST works
- Australian Taxation Office — Claiming GST credits
- Australian Taxation Office — Simpler BAS
- Australian Taxation Office — GST accounting methods
- Australian Taxation Office — GST reporting and payment cycles