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A Guide to Understanding GST for Small Businesses in Australia

Nov 25, 2025By Anas Khawam
Anas Khawam

What is GST?

The Goods and Services Tax, commonly known as GST, is a value-added tax levied on most goods and services sold for domestic consumption in Australia. As a small business owner, understanding GST is crucial as it impacts your pricing, accounting, and compliance requirements.

GST tax

Who Needs to Register for GST?

In Australia, businesses with an annual turnover of $75,000 or more must register for GST. If your business is below this threshold, registration is optional, but it can still be beneficial in some cases. For non-profit organizations, the threshold is $150,000.

Once registered, you'll need to include GST in your prices and issue tax invoices to your customers. You'll also have to lodge regular Business Activity Statements (BAS) to report your GST liabilities and credits.

Calculating GST

The standard GST rate is 10%. To calculate the GST on a product or service, multiply the price by 10% or use the formula: GST = Price x 0.10. For example, if an item is priced at $100, the GST would be $10, making the total price $110.

calculator business

Claiming GST Credits

When you purchase goods or services for your business, you can claim a credit for any GST included in the price. This is known as an Input Tax Credit. To be eligible, you must have a valid tax invoice from your supplier and ensure the purchase is for business use.

Lodging Your BAS

As a GST-registered business, you need to lodge a Business Activity Statement (BAS) either monthly, quarterly, or annually, depending on your business size and preference. The BAS helps you report and pay your GST, PAYG withholding, and other tax obligations.

BAS form

Steps to Lodge Your BAS

  1. Gather all relevant financial documents and tax invoices.
  2. Calculate your total sales and the GST collected.
  3. Determine your GST credits from purchases.
  4. Complete the BAS form, either online or on paper.
  5. Submit the form and pay any outstanding GST to the ATO.

Common GST Mistakes

Some common mistakes small businesses make regarding GST include failing to register when required, not keeping accurate records, and claiming credits for ineligible purchases. Staying informed and organized can help you avoid these pitfalls.

business mistakes

Tips for Managing GST

  • Keep accurate records: Regularly update your financial records to ensure compliance and make BAS lodgement easier.
  • Use accounting software: Consider using software to automate GST calculations and BAS reporting.
  • Consult a tax professional: If you're unsure about any aspect of GST, seek advice from a qualified accountant or tax advisor.