Registration
GST registration threshold
The GST registration threshold is the turnover level at which a business must register for GST: $75,000 for most businesses and $150,000 for non-profit organisations.
The GST registration threshold is the line that separates businesses that must register for GST from those that may choose whether to. For most businesses it is a GST turnover of $75,000 a year. For non-profit organisations it is $150,000. If your GST turnover is at or above the relevant amount, or you expect it to be, you are required to register.
The test is applied on a rolling basis. You compare your current GST turnover, which is the current month plus the previous 11 months, and your projected GST turnover, which is the current month plus the next 11 months, against the threshold. Reaching it under either test triggers the requirement. The threshold is a turnover figure, not a profit figure, so it is based on sales before expenses.
Some businesses must register regardless of how small their turnover is. Taxi drivers and ride-sourcing drivers, for example, must register for GST from their first fare. Ride-sourcing includes services provided through apps where the driver is carrying passengers for a fare. This rule exists because these services are treated as taxable, and the law removes the small business threshold for them.
Below the threshold, registration is voluntary. You can choose to register if you have an ABN and are carrying on an enterprise. The benefit is that you can claim input tax credits on business purchases. The cost is that you must charge GST on your taxable sales and lodge BAS, which can mean extra record keeping and an effect on your prices, particularly if your customers are individuals who cannot claim the GST back.
Once registered, you must stay registered until you cancel, and you can cancel only if you meet the conditions, such as your turnover being below the threshold and expected to stay below. Cancelling can have GST consequences on assets you still hold, so it should be planned. Registration also affects how you issue invoices, because you must provide tax invoices on request for taxable sales over $82.50.
A common mistake is treating the threshold as an annual financial-year test. Another is forgetting that related businesses, such as a company operating under a connected structure, may need their turnover considered carefully. And some people assume that because the threshold is not reached, they cannot charge GST, but without registration you must not charge it.
This is general information. The threshold is set by legislation, so check ato.gov.au for the current amount and confirm your own position with a registered tax professional.
Worked example
Mei earns income from freelance photography. Her GST-exclusive sales for the last 12 months, including the current month, are $68,000, and she expects them to stay at about that level over the next 12 months. Both tests are under the $75,000 threshold, so she is not required to register. If a large wedding contract lifted her projected total to $80,000, she would need to register.
Practical tips
- Remember the threshold applies to turnover, not profit, and is tested on a rolling 12-month basis.
- If you drive for a ride-sourcing service or taxi, you must register from the start regardless of turnover.
- Think carefully before registering voluntarily, because you must then charge GST on taxable sales.