GST registration and BAS for sole traders

Most sole traders meet GST in the same way: an accountant mentions a threshold, the number sounds distant, and then one busy quarter it isn’t distant any more. By then you’re trying to work out whether you were supposed to register three months ago and what that means for the invoices you’ve already sent.

It’s worth understanding properly, because GST is one of the few parts of running a small business where the rules are genuinely clear. Once you know the shape of it, the ongoing work is mostly bookkeeping discipline rather than judgement.

General information, not tax advice. The ATO is the authority - see ato.gov.au or ask a registered tax or BAS agent.

When you have to register

You must register for GST if your business turnover reaches $75,000 or more in a 12-month period. Two details in that sentence do most of the damage:

It’s turnover, not profit. This is the mistake that catches people out. Turnover is your gross business income - what you invoiced, before you subtract a single expense. A contractor who bills $82,000 and spends $30,000 on materials has turnover of $82,000, not profit of $52,000. They’re over the threshold.

It’s any 12-month period, not the financial year. The test is rolling. It looks at your current month plus the previous 11 months, and your current month plus the next 11 projected months. So you can cross the threshold in November even though the financial year started in July, and a run of unusually good months can put you over on projection alone.

Once you become aware you’re going to exceed $75,000, you have 21 days to register. That obligation starts from when you should have known, not from when you got around to checking - which is why a figure you can see continuously matters more than one you calculate annually.

A few situations override the threshold entirely. If you drive taxi, rideshare, or limousine services for passengers, you must register for GST regardless of turnover, even if you earn $8,000 a year doing it. Non-profit organisations have a higher threshold of $150,000.

Registering voluntarily

If you’re under the threshold you can still register, and sometimes it’s worth it.

The case for registering early is that you get to claim GST credits on your business purchases. If you’re setting up and buying tools, equipment, or a vehicle, that’s a real amount of money you can claim back. It also matters if your customers are other GST-registered businesses: they claim back the GST you charge them, so your price is effectively the same to them either way, and being registered makes you look established rather than tiny.

The case against is that if you sell to consumers, registering means either raising your prices by 10% or absorbing the cost yourself. You also take on quarterly lodgement obligations forever, and “forever” is the part people underestimate - a BAS is due whether or not you had a good quarter, and whether or not you had any income at all.

The rough rule: if you sell business-to-business, or you’re about to make significant purchases, registering early usually pays. If you sell to the public and you’re comfortably under the threshold, waiting usually does.

What changes the day you register

Three things.

You add 10% to your prices. GST applies to most goods and services sold in Australia. Some things are GST-free - most basic food, most medical and health services, some education - but for the majority of trades and professional services, everything you sell now carries GST.

Your invoices become tax invoices. They have to meet a specific format, including the words “Tax invoice”, your ABN, and the GST amount. Getting this wrong is worse than it sounds: your customer can’t claim their GST credit without a compliant document, so a badly formatted invoice becomes their problem and then your phone call. (We’ve written about the exact requirements separately.)

You start claiming credits. The GST you paid on business purchases comes back to you. This is the part that offsets the pain: you’re collecting GST on sales and claiming it on expenses, and you only send the ATO the difference.

Working out GST on a price

The arithmetic trips people up constantly, because it isn’t symmetrical.

To add GST to a price, multiply by 1.1. A $500 job becomes $550.

To find the GST inside a price that already includes it, divide by 11. That $550 contains $50 of GST.

The mistake is taking 10% off a GST-inclusive price to get back to the original. 10% of $550 is $55, not $50 - you’d be out by five dollars on every invoice, and understating what you owe. Divide by 11, always.

The other habit worth forming early: decide whether you quote GST-inclusive or GST-exclusive, and be consistent about saying which. “Two thousand dollars” means two different numbers to a builder and to a homeowner, and the conversation where you discover that is not a fun one. Consumers should always see the GST-inclusive total, because that’s what they’ll pay.

The BAS

The Business Activity Statement is how you report and pay. Most small businesses lodge quarterly:

Quarter	Period	Due
1	July – September	28 October
2	October – December	28 February
3	January – March	28 April
4	April – June	28 July

Quarter 2 gets the extra time because of the Christmas shutdown. If you lodge through a registered BAS or tax agent, you generally get further extensions - one of the quieter arguments for using one.

Businesses with turnover over $20 million lodge monthly. Some very small businesses can report annually. For most sole traders, quarterly is the reality.

What you’re actually reporting for GST is two numbers: the GST you collected on sales, and the GST you paid on purchases. The difference is what you owe - or, if you spent more than you earned in the quarter, what the ATO refunds you. Getting the second number right depends on the same habits covered in small business deductions and record keeping - a receipt with no GST captured is a credit you can’t claim. Your BAS may also include PAYG instalments toward your own income tax, and PAYG withholding if you have employees.

Lodging a nil BAS

If you’re registered and you had no activity in a quarter, you still have to lodge. A nil BAS takes about two minutes and can be done by phone, but skipping it entirely triggers failure-to-lodge penalties that accrue per 28-day period. People who go quiet for a quarter - illness, a slow patch, a trip - are the ones this catches.

Why the quarterly scramble happens

The genuine difficulty with BAS isn’t the form. It’s that most people do their bookkeeping in the week the BAS is due, for a quarter that finished weeks ago.

By then you’re reconstructing three months of activity from bank statements and memory. Which of these transactions were business? Was that hardware run for the Henderson job or for the house? Where is the receipt for the thing you bought in the second week of February? Every one of those questions is easy on the day and hard ninety days later, and the expensive ones are the deductions you simply can’t substantiate and therefore don’t claim.

The fix is unglamorous: capture each transaction close to when it happens, with its GST already separated. It doesn’t much matter whether that’s software, a spreadsheet, or an envelope system you actually maintain - what matters is that the work is spread across the quarter instead of concentrated into the two days before the 28th.

If your invoicing and expenses live in the same system, this mostly takes care of itself. Every invoice you issue records its GST as you issue it; every expense you log records its GST as you log it. The BAS figures are then a summary of records that already exist, rather than a project.

A short checklist

If you’re approaching the threshold or have just crossed it:

1. Work out your rolling 12-month turnover - gross income, not profit - and check it monthly, not annually.
2. Register within 21 days of knowing you’ll exceed $75,000. You register through the ATO or your agent, and you’ll need an ABN first.
3. Update your invoice template to meet the tax invoice requirements.
4. Decide and document whether your quoted prices include GST.
5. Start recording GST separately on both income and expenses from day one of registration.
6. Put the four BAS due dates in your calendar, with a reminder a fortnight before each.

None of this is difficult in isolation. The difficulty is entirely in leaving it until it’s urgent.