Who can register
Anyone with an ABN who is carrying on an enterprise. Registration is compulsory once your GST turnover reaches $75,000 in any 12 months, and optional below it. You can register online through your ATO account or business.gov.au, through your tax or BAS agent, or on the same form when you apply for your ABN, and you nominate the date it takes effect.
When registering early pays off
- Your clients are businesses. They claim the GST back on their own BAS, so "$2,000 plus GST" costs them the same as "$2,000" from someone who isn't registered.
- You buy things with GST in them. Equipment, software, materials, a workspace, part of your car and phone. Registered, you claim that GST back. Unregistered, it's simply part of your costs.
- You're about to spend. Credits start from your registration date, so a new business with set-up costs ahead of it gets more back by registering first.
- You'll pass $75,000 soon anyway. Registering on a date you choose beats registering within 21 days of discovering you have to, and re-quoting half your clients mid-job.
- A client asks for it. Some larger organisations prefer suppliers who are registered, and their accounts teams check ABN Lookup.
When it doesn't
- Your customers are households. They can't claim GST back, so it's a real 10% on your price. Hold your prices instead and one-eleventh of every sale goes to the ATO.
- You have few costs with GST in them. A service with no equipment has little to claim back, so the paperwork buys you nothing.
- You'd rather not take on the admin. Tax invoices, GST records and a return to lodge. Small, but not nothing.
The admin you're signing up for
- Tax invoices: the heading "Tax Invoice", your ABN and the GST on every taxable sale.
- Reporting: a Business Activity Statement (BAS) every quarter by default. While you're voluntarily registered and under $75,000 you can choose annual GST reporting instead: one return after the financial year ends, with a check each 31 July that you still qualify.
- Records: a tax invoice for every purchase over $82.50 you claim GST on, kept for five years.
- A 12-month minimum. Voluntary registration generally has to stay in place for at least a year. Cancel later and you may have to pay back some GST credits on business assets you still hold.
Worked example
Two sole traders, each with $40,000 of work a year and $5,500 of expenses that include $500 of GST. The designer works for businesses. The cleaner works for households and keeps the same prices after registering.
| Designer | Cleaner | |
|---|---|---|
| Kept after expenses, not registered | $34,500.00 | $34,500.00 |
| Prices once registered | $40,000 + GST | $40,000 incl. GST |
| GST collected | $4,000.00 | $3,636.36 |
| GST credits on expenses | $500.00 | $500.00 |
| Paid to the ATO | $3,500.00 | $3,136.36 |
| Kept after expenses, registered | $35,000.00 | $31,363.64 |
| Difference | +$500.00 | −$3,136.36 |
The designer's clients pay $4,000 more and claim all of it back, so registering puts $500 a year in her pocket. The cleaner could only avoid losing $3,136 by raising prices 10%, which households notice.
If you decide to wait
Keep invoicing without GST, title your documents "Invoice", and check your turnover every month: the last 12 months and the next 12. The moment you're heading for $75,000 you have 21 days to register. Invoicing when you're not registered has the wording and a free template, and what changes when you register covers the switch.