GST made simple: What is it and why does it matter?

If you’re running a business in Australia, chances are you’ve heard about GST. But figuring out exactly what it means for you, and whether you even need to register, can get a bit confusing.

From how it changes your prices to what you have to report to the ATO, understanding GST is key to staying compliant and avoiding any nasty surprises—and we're here to help demystify it all.

Whether you’re just getting started or are doing a bit of financial housekeeping, read on for a clear walkthrough on what GST is and how to handle it in your day-to-day as a business owner.

What is GST and how does it work?

GST, or Goods and Services Tax, is a general tax of 10% applied to the price of most products and services sold or consumed in Australia (certain transactions are exempt, but we'll get to that soon) [1]. It was introduced back in July of 2000 to replace a bunch of state and federal taxes and simplify the whole tax system.

The way it works is: if your business is registered for GST, you add 10% to the price you charge your customers. So, let's say you're providing a service for $150. With the GST on top, the total becomes $165.

When you make business-related purchases from another GST-registered business—think rent, equipment, and inventory—you can claim credits for the GST. These are called input tax credits [2].

Finally, you lodge your business activity statement (BAS) to report and pay GST to the Australian Taxation Office (ATO).

Most businesses do this on a quarterly basis, but depending on your GST turnover, it could also be monthly or annually [3].

Who needs to register for GST in Australia?

Having a business doesn't automatically mean you have to register for GST. You only have to if you meet any one of these criteria:

• Your business has a GST turnover (that means your gross business income, not profit) of $75,000 or more
• You’re a non-profit with a GST turnover of $150,000 or more
• You provide taxi or limousine services, no matter your turnover
• You want to claim fuel tax credits, even if you’re under the turnover threshold

If none of those apply, registering is optional. Many smaller businesses register anyway to claim input tax credits and keep more cash in hand. It's your call.

One thing to keep on your radar: if you haven’t registered yet but realise you're on track to hit that $75,000 turnover threshold, you have 21 days to register from the moment you know. Our advice? A quick monthly check-in can save you a big admin headache (and awkward calls from the ATO) down the line.

How to register for GST

Alright, so you’ve figured out you need to register. Before you jump into the process, there's one thing you need: an ABN, or Australian Business Number. Don't have one yet? There’s a simple online application process—if you need a hand, we explain it step by step in our ABN guide.

Once you have your ABN handy, registering for GST is straightforward, free, and quick (we're talking minutes here). You can register [4]:

• Online through the ATO business portal
• By phone on 13 28 66
• With the help of a registered tax or BAS agent

What is GST-free in Australia?

Like we said earlier, not everything gets taxed with GST. Certain goods and services are considered GST-free (although you can still claim credits on related expenses). These include [5]:

• Basic food like fresh vegetables, fruit, meat, fish, and eggs (prepared or takeaway food usually does attract GST)
• Some healthcare services, plus some menstrual products, medicines, and medical appliances
• Some education services from registered providers
• Sales through duty-free shops
• Some sales by charities, gift-deductible organisations, and government schools

Look, we know we used the word 'some' a fair bit here, which can be frustrating. (Heads up: we're going to use it some more in the next section). Here's the thing: we can't give you a neat, one-size-fits-all list of what is and isn’t GST-free, because the ATO applies specific rules depending on how and where each product or service is provided.

But don’t stress, the ATO’s website has detailed lists and examples, and your accountant or BAS agent can help you get it right. When in doubt, always double-check rather than to guess—especially when the tax office is involved.

Do you need to pay GST on exports and imports?

When it comes to trade across borders, GST works a little differently depending on whether you're exporting goods or importing them.

Exports: Usually GST-free

If you export goods from Australia, they’re generally GST-free—as long as they physically leave Australia within 60 days of payment or invoicing, whichever comes first.

The same applies to some services you provide to customers outside Australia, like consulting or digital products.

Imports: GST generally applies

When you bring goods into Australia, GST is usually charged at the border by the Australian Border Force or your customs broker. This GST is 10% of the customs value, plus transport and insurance costs.

If your business is registered for GST, you might be able to put off paying it upfront and claim it back later in your BAS. It all depends on your accounting method (which we'll cover shortly) and eligibility for the deferral scheme.

How to pay GST to the ATO

We explained before that when you collect GST from your customers and claim credits for GST paid on expenses, you report the net amount to the ATO on your BAS. On this form, you include:

• GST collected on sales
• GST paid on purchases

The ATO then crunches the numbers, and one of two things happens:

• If you collected more than you paid, you hand over the difference
• If you paid more, you get a refund

If you end up owing the ATO, don’t stress—you’ve got a few ways to pay:

• BPAY
• Credit card
• Direct debit
• Through accounting software, if it’s set up to integrate with the ATO

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How to account for GST in your financial records

There are three main ways to handle GST in your bookkeeping [6]. The right choice depends on your business size, cash flow, and accounting preferences.

Cash accounting method

Best for: Smaller businesses with simpler cash flow

If your aggregated turnover is less than $10 million, the cash accounting method lets you report GST when you actually receive money (not when you issue invoices) and claim GST credits on purchases only when you pay your suppliers.

This is a pretty simple method, and it matches your actual cash flow, so there's no risk of having to pay GST before you've even received it. Great if you mostly get paid upfront or quickly.

Accrual accounting method

Best for: Larger businesses or those with complex invoicing and credit terms

Not a small business anymore? In that case, you might want to go for the accrual accounting method, where you record GST when invoices are issued or received, regardless of when payment happens.

Full disclosure: this can be more complex to manage, but it does give you a clearer picture of your business performance during that period. Useful if you offer credit or payment terms and want to match income and expenses correctly.

Simpler BAS method

Best for: Startups with a GST turnover of less than $10 million wanting to reduce paperwork

With the simpler BAS method, you only need to report GST on sales, GST on purchases, and total sales. You don't need to break it all down by categories, which saves time and makes BAS way easier to manage.

Why GST matters—and why you want to get it right

GST might seem like just another form to tick off—and we know, as a business owner, you've got more than enough on your plate. But GST is actually a key part of keeping your business running smoothly. Staying on top helps you:

• Avoid penalties: The ATO takes GST compliance seriously. Falling behind often means fines or interest charges.
• Keep your cash flow healthy: Claiming input tax credits means you’re not paying tax on money you’ve already spent on your business.
• Build trust: Keeping accurate GST records shows lenders, investors, and suppliers you’re running a proper business.
• Price confidently: Knowing when and how much GST to charge helps you avoid surprises on your invoices and keep customers happy.

Need a hand managing your cash flow or funding your next business move?

Staying on top of GST and other financial commitments can sometimes stretch your cash flow tight. That's exactly where Valiant comes in.

We help Australian SMEs like yours access fast, flexible loans tailored to your needs—whether it’s covering GST payments, jumping on growth opportunities, or buying a shiny new piece of equipment. Getting started couldn’t be easier: just tell us a bit about your loan needs, and we’ll handle the approval from beginning to end, so you can focus on what matters—your business. Get a quote today.

Tips to stay on top of GST

Here's a quick-fire round:

• Track your turnover monthly to know when to register
• Keep good records of all sales and expenses with GST amounts recorded
• Lodge your BAS on time—quarterly is standard but check if monthly https://www.valiantfinance.com/blog/what-is-gstsuits your business better
• Use accounting software or a BAS agent to simplify reporting and reduce errors
• Don’t hesitate to ask a tax professional if you’re unsure—it pays to get GST right from the start

FAQs

What's the difference between TFN and GST?

TFN, or Tax Filing Number, is a unique identifier for an individual or business entity in the Australian tax system. All businesses need a TFN. GST, on the other hand, is a 10% applied to most products and services in Australia, and only businesses with an annual turnover of $75k or more need to register for it.

What's the difference between BAS-excluded and GST-free items?

BAS-excluded transactions don’t appear on your BAS at all, while GST-free items must be reported despite no GST being charged. Understanding the difference between BAS-excluded and GST-free helps you avoid mistakes when preparing your BAS and manage cash flow more effectively.

What happens if I registered for GST but my turnover drops below $75k?

If your business turnover falls below $75k—and you don’t expect to exceed it in the next 12 months—you may be able to cancel your GST registration. This means you don't need to charge GST or lodge BAS, but still have to report any final GST obligations.

How long should I keep GST records and tax invoices?

Australian tax law requires you to keep all GST records for at least 5 years, starting from when you prepared or obtained them [7].