GST in Australia: how to register, calculate, and claim refunds for the goods and services tax

Understanding GST is essential for businesses operating in Australia. It affects pricing, invoicing, tax reporting and compliance. Businesses must know when to register, how to calculate GST correctly and how to claim GST credits. Keeping accurate records and lodging Business Activity Statements (BAS) on time helps avoid penalties.[ez-toc]

A quick guide to GST

Goods and Services Tax (GST) is a 10% tax on most goods and services sold or consumed in Australia. Businesses that meet the $75,000 turnover threshold for GST must register and charge GST on sales, and lodge Business Activity Statements (BAS). Some items like healthcare and basic food are GST-free. Correct GST management ensures businesses stay compliant and avoid penalties.

What is GST and how does it apply to businesses?

Goods and Services Tax (GST) is a tax of 10% added to most goods and services sold or consumed in Australia. Businesses that meet the GST turnover (gross income from all businesses minus GST) threshold must register for GST and pay the Australian Taxation Office (ATO) when it’s due.Businesses collect GST from customers at the point of sale. They then report and pay this amount to the ATO through a Business Activity Statement (BAS). GST is one-eleventh of the sale price, meaning businesses must calculate it correctly to avoid errors in pricing and reporting.

Which goods and services include GST?

Most goods and services sold in Australia have GST included in the price. However, some are exempt.GST applies to:

• Retail products like electronics clothing and furniture
• Professional services such as accounting legal and consulting
• Restaurant and takeaway food
• Hotel stays and short-term accommodation

GST-free items include:

• Most healthcare services
• Basic food items like fresh fruit vegetables and bread
• Education courses and materials
• Some financial services such as loans and bank fees

For a full list of GST-free goods and services, visit the ATO's website.

How to calculate GST in a transaction

Businesses must know how to calculate GST correctly when setting prices and issuing invoices.ScenarioPrice before GSTGST (10%)Total priceProduct A$100$10$110Service B$200$20$220If GST is already included in the price, businesses can find the GST amount by dividing the total price by 11. This helps them report the correct GST liability to the ATO.Understanding GST ensures businesses charge, collect, and pay the right amount while staying compliant with Australian tax laws.

Who needs to register for GST?

Businesses must register for GST if they reach the GST turnover threshold. Some businesses must register regardless of turnover. Understanding these rules helps businesses avoid fines and comply with tax laws.

GST turnover threshold

Businesses must register for GST if:

• Their GST turnover (the gross income from all businesses minus GST) is $75,000 or more in a financial year
• Their non-profit organisation has a GST turnover of $150,000 or more

GST turnover is the gross income from all businesses exclusive of GST. Businesses should check their turnover regularly. If they expect to reach the threshold, they must register within 21 days.

Who must register regardless of turnover?

Some businesses must register for GST no matter their GST turnover:

• Ride-sharing and taxi drivers – All drivers using platforms like Uber or DiDi must register and pay GST on fares.
• Businesses claiming fuel tax credits – If a business wants to claim fuel tax credits, it must register for GST.

What happens if a business fails to register?

A business that does not register when required may face:

• ATO penalties and interest charges on unpaid GST
• Liability for backdated GST payments from when the business should have registered
• Loss of GST credits on business expenses

Failing to register can result in costly errors. Businesses should register on time to avoid unnecessary penalties and ensure they claim GST credits where applicable.

How to register for GST in Australia

Businesses that meet the GST turnover threshold must register for GST. Even if a business does not meet the threshold, it may still benefit from registering early. The process is simple and can be done online, by phone or through a tax agent.

Step-by-step guide to registering for GST

Businesses can register for GST through the Australian Business Register (ABR) or the ATO’s Business Portal. The steps are:

1. Get an Australian Business Number (ABN) – A business must have an ABN before registering for GST. Apply through the ABR website if needed.
2. Gather required details – This includes:
   • Business structure (sole trader, company, partnership or trust)
   • Estimated GST turnover
   • Business contact details
   • Bank account details for GST refunds (if applicable)
3. Choose a registration method – Businesses can register:
   • Online via the Business Registration Service
   • By calling the ATO
   • Through a registered tax agent or BAS agent
4. Receive confirmation – Once approved, the ATO will confirm the registration. Businesses must then start including GST in prices and lodging Business Activity Statements (BAS).

When should a business register voluntarily?

Some businesses register for GST before reaching the threshold. Voluntary registration may be useful if a business:

• Wants to claim GST credits on purchases
• Plans to grow quickly and exceed the threshold soon
• Works with clients who prefer to deal with GST-registered businesses

Once registered, businesses must collect GST on sales, lodge BAS and pay the ATO when it’s due.

How to calculate GST correctly

Businesses must charge and report GST correctly to stay compliant. GST is set at 10% of the sale price. Understanding how to calculate GST ensures accurate invoicing and reporting.

GST-inclusive vs GST-exclusive pricing

Prices can be GST-inclusive or GST-exclusive. Businesses must state clearly whether GST is included in prices they advertise or quote.

• GST-exclusive price – GST is added at the point of sale.
• GST-inclusive price – The price already includes GST.

For example, if a product costs $100 before GST, the total price will be $110 after adding GST.

How to calculate GST manually

Use these formulas to calculate GST:

• To add GST to a price (GST-exclusive to GST-inclusive):Price before GST × 1.10 = Total price
• To find the GST amount:Price before GST × 0.10 = GST amount
• To extract GST from a GST-inclusive price:Total price ÷ 11 = GST amount

Invoice itemGST exclusive ($)GST (10%) ($)GST inclusive ($)Product X$500$50$550Service Y$1,200$120$1,320

Common mistakes in GST calculations

• Forgetting to include GST in customer invoices
• Incorrectly extracting GST from a total price
• Misclassifying GST-free items and charging GST incorrectly
• Failing to round amounts properly leading to reporting errors

Businesses can use online GST calculators or accounting software to avoid errors. Keeping accurate records ensures businesses pay GST correctly and claim GST credits where applicable.Business Kitz GST-registered invoice template can help get you started. Sign up today and get access to over 100 document and contract templates, secure document storage, e-signing and many more features.

How to manage GST reporting and payments

Businesses must report and pay GST to the ATO on time. Keeping accurate records and meeting deadlines helps avoid penalties.

How to complete a Business Activity Statement (BAS)

Businesses registered for GST must lodge a Business Activity Statement (BAS). This form reports GST collected from sales and GST credits claimed from business expenses. The ATO sends BAS forms based on a business’s reporting cycle.To complete a BAS, businesses must:

1. Report total sales – Include all taxable and GST-free sales.
2. Calculate GST collected – This is the GST charged on sales.
3. Claim GST credits – Businesses can claim GST paid on eligible expenses.
4. Determine GST payable – Subtract GST credits from GST collected. If credits are higher, the ATO will issue a refund.
5. Lodge the BAS – Submit it through the ATO’s Business Portal, a registered tax agent or accounting software.

GST payment deadlines and penalties

Most businesses lodge and pay GST quarterly. Large businesses with a turnover over $20 million must lodge monthly.Payment deadlines:

• Quarterly BAS – Due on the 28th day after each quarter ends.
• Monthly BAS – Due on the 21st of the next month.

The ATO charges interest and penalties for late payments. Businesses can avoid these by paying on time or arranging a payment plan.

ATO payment plans for financial difficulties

Businesses struggling to pay the ATO can set up a payment plan. The ATO allows businesses to pay in instalments to reduce financial stress. Businesses can apply for a payment plan online or by calling the ATO.

Record-keeping for GST compliance

Businesses must keep records to support their BAS and GST claims. These include:

• Invoices received and issued
• Receipts for purchases with GST
• BAS lodgements and ATO correspondence

Records must be kept for at least five years. Keeping organised records helps businesses track GST liability, claim credits correctly and avoid compliance issues.You can securely store and manage you documents in Business Kitz Document vault. Get started today and minimise compliance risks.

How to claim back GST on business expenses

Businesses can claim GST credits on certain expenses. Claiming correctly reduces GST liability and ensures businesses do not overpay the ATO.

What business expenses are eligible for GST credits?

Businesses can claim GST credits on expenses used for business operations in their BAS statements. These must include GST and have a valid tax invoice.GST credits apply to:

• Office supplies (stationery, printers, computers)
• Business travel (flights, taxis, accommodation)
• Rent and utilities for business premises
• Marketing costs (advertising, website hosting)
• Tools and equipment for work purposes

Some expenses do not have GST and cannot be claimed. These include employee wages, loan repayments and bank fees.Expense typeGST claimable?NotesOffice suppliesYesMust have a tax invoiceBusiness travelYesFlights, taxis, hotelsEmployee wagesNoGST does not apply to wages

Common mistakes when claiming GST credits

Businesses should avoid:

• Claiming GST on GST-free or input-taxed items
• Using incorrect amounts from invoices
• Forgetting to keep tax invoices for proof
• Claiming GST for private expenses

Keeping accurate records helps businesses claim the right GST credits and avoid ATO penalties.

How to claim GST refunds under the Australian Tourist Refund Scheme (TRS)

International visitors who buy goods in Australia may be able to claim back GST under the Tourist Refund Scheme (TRS). This scheme allows travellers to get a refund on GST paid for goods they take out of Australia. Refunds are processed at Australian airports before departure.

Who can claim a GST refund?

Travellers must meet these conditions to claim a GST refund:

• Spend at least $300 (including GST) in total from a single business.
• Buy the goods within 60 days before departing Australia.
• Carry the goods in hand luggage or checked baggage on an international flight.
• Have a valid tax invoice from the retailer.

Some items do not qualify for a refund. These include alcohol and tobacco already used, services like accommodation and items used in Australia before departure. Check TRS requirements if you are unsure if your purchase qualifies for a GST refund.

Step-by-step process for claiming a GST refund

1. Buy eligible goods – Ensure the total amount meets the TRS threshold. Keep the tax invoice.
2. Check travel details – Depart from an international airport within 60 days of purchase.
3. Arrive early at the airport – The TRS counter is after security. Allow extra time before the flight.
4. Show documents and items – Present the tax invoice, passport, boarding pass and goods to TRS staff.
5. Receive the refund – The refund is processed via credit card, bank transfer or cheque.

Important reminders

• The name on the invoice must match the traveller’s passport.
• Refunds do not apply to items that have been partly used in Australia.
• TRS does not cover GST on services like flights or tours.

Travellers should become aware of the TRS rules before buying to ensure they meet the conditions.

Frequently asked questions about GST

What GST amount should a business charge on sales?

A business must charge a tax of 10% on most goods or services sold in Australia. The GST amount is one-eleventh of the sale price. If a product costs $110 including GST, the GST amount is $10. Businesses must ensure every invoice issued correctly shows the GST component.

How does a business’s GST turnover affect registration?

A business needs to register for GST if its turnover reaches $75,000 per financial year ($150,000 for non-profits). If a business is likely to go over this threshold soon, it should register early to stay compliant.

What is the correct price format for invoices with GST?

A GST invoice must clearly state whether the total price includes GST. It should show:

• The total price of the goods or services
• The GST amount
• The seller’s ABN
• The date the invoice was issued

Businesses should check invoices are received with the correct GST details before claiming credits.

Can businesses claim GST on imports?

Yes, businesses can claim GST credits on imports if the goods are used for business. The GST paid at the border can be included in a BAS report. Businesses should keep import records for compliance.

Where can a business find a form to register for GST?

Businesses can find the form to register on the business.gov.au website or through the ATO’s Business Portal. They need an ABN to complete the process.

How does GST apply to an electronic distribution platform?

An electronic distribution platform (EDP), like an online marketplace, may be responsible for collecting and paying GST on sales made through the platform. The business selling through the EDP should check GST obligations with the platform provider.

Does GST apply to delivery charges?

Yes, if a business charges for delivery, GST usually applies. If the goods sold are GST-free, the delivery fee is also GST-free.

Can a business claim GST if the goods are worth less than $300?

Yes, businesses can claim GST credits on purchases worth less than $300 if they have a valid tax invoice.

How does the new tax system affect GST reporting?

Australia’s new tax system introduced GST in 2000. It requires businesses to report GST through a BAS. Businesses must keep accurate records to meet reporting rules.

How can you provide your feedback on GST rules?

You can provide your feedback to the Australian government through the ATO or business advisory groups.

Stay compliant and simplify GST management

GST compliance is essential for businesses in Australia. Charging, reporting and paying GST correctly helps avoid penalties and ensures smooth operations. Businesses must track GST obligations, claim GST credits where applicable, and lodge Business Activity Statements on time.Using digital tools makes GST management easier. Automated systems help track invoices, calculate GST amounts and generate accurate reports. This reduces errors and saves time.Business Kitz provides simple solutions for document management to help streamline your business processes. Sign up for a free Business Kitz account today!Disclaimer: This content is intended to be used for educational and informational purposes only. Business Kitz does not offer legal advice and cannot guarantee the accuracy, reliability, or suitability of its website content for a particular purpose. We encourage you to seek professional advice from a licensed professional and verify statements before relying on them. We are not responsible for any legal actions or decisions made based on the information provided on our website.Unless expressly stated otherwise, all content, materials, text, images, videos and other media on this website and its contents are the property of their respective copyright owners.