Registration
Compulsory GST registration
Compulsory GST registration applies when your GST turnover meets or is expected to meet the registration threshold, or you provide taxi or ride-sourcing services, and you must register for GST.
Compulsory GST registration is the legal requirement to register once your business reaches the registration threshold. If your GST turnover is $75,000 or more, or $150,000 or more for a non-profit organisation, you must register. The requirement applies if either your current turnover or your projected turnover for the next 12 months meets the threshold. There is no choice in the matter.
Certain activities trigger compulsory registration regardless of turnover. Taxi and ride-sourcing drivers must register from the time they start providing those services, because the law removes the small business threshold for them. If you drive for a ride-sourcing platform in addition to another job, the income from the driving still requires registration, even if it is a small side income.
Timing matters. ATO guidance is that you generally need to register within 21 days of the point at which you know you have reached or will reach the threshold. If you register late, you can be liable for GST on your sales from the date you should have registered. Since you did not charge your customers GST, you may have to pay it from your own pocket, and you may also face penalties for late registration or late lodgment.
To register you need an ABN. Registration is usually done through the Australian Business Register or ATO online services, and you will be assigned a start date for GST. From that date you must charge GST on taxable sales, issue tax invoices, claim credits on business purchases with valid invoices and lodge BAS. The BAS is typically quarterly, although you can choose monthly in some cases.
Once registered, your obligations continue until you cancel. You can cancel only if your turnover has dropped below the threshold and is expected to stay below it, or you have stopped carrying on the enterprise. When a registered business cancels, there can be GST on assets it still holds that were bought with credits, so planning is needed.
A frequent mistake is waiting until the end of the financial year to check turnover. Another is believing that registration only starts after a notice from the ATO. The obligation arises by law whether or not you hear from the ATO. A third mistake is mixing up GST turnover with profit, which can lead a business with modest earnings to think it is under the threshold.
This is general information. For borderline turnover or complex structures, confirm your obligations with the ATO or a registered tax professional.
Worked example
Dan's landscaping business has sales of $79,000 excluding GST over the last 12 months, including the current month. Because that is above $75,000, registration is compulsory. If he registers on time, he charges GST on all taxable jobs from the start date. If he registers months late, he owes GST on sales since the date he should have registered, for example 10% of $12,000, which is $1,200, even though he never collected it.
Practical tips
- Apply to register as soon as you meet or expect to meet the threshold, and aim for within 21 days.
- Taxi and ride-sourcing drivers must register from the first fare, regardless of turnover.
- Do not charge GST until your registration is effective, and then charge it on all taxable sales.