Australian GST for Small Business: Registration, BAS Lodgement, and Cash vs Accrual

The $75,000 GST Registration Threshold

In Australia, you must register for GST if your annual turnover is $75,000 or more ($150,000 for non-profit organisations). Turnover means your gross income — not profit. Once you reach or expect to reach the threshold in any 12-month period, you must register within 21 days.

Voluntary registration is available below $75,000 and is often worthwhile for businesses with significant GST-inclusive purchases, as you can claim GST credits on inputs.

GST Rate

Australia has a single flat rate of 10% on most taxable supplies. This simplicity is one of the advantages of the Australian system compared to multi-rate systems like India's GST.

GST-Free and Input-Taxed Supplies

GST-free supplies: Basic food (fresh unprocessed food), medical services, educational courses, childcare, exports. You do not charge GST but can still claim GST credits on related purchases.

Input-taxed supplies: Residential rent, financial services. You do not charge GST and cannot claim GST credits on expenses related to these supplies.

For grocery retailers, the distinction between GST-free and GST-applicable food items is critical. Fresh fruit, vegetables, meat, and dairy are GST-free; prepared food, confectionery, soft drinks, and snack foods attract GST at 10%.

Cash vs. Accrual Accounting for GST

Small businesses (under $10 million turnover) can choose cash or accrual accounting for GST:

• Cash basis: GST is reported when payment is received or made. Simpler for cash flow management.
• Accrual basis: GST is reported when the invoice is issued or received, regardless of when payment occurs.

Most retail businesses use cash basis because their transactions are paid at the time of sale. Service businesses with invoicing cycles typically use accrual.

Business Activity Statement (BAS)

GST is reported through the Business Activity Statement. Most small businesses lodge quarterly; businesses with turnover above $20 million must lodge monthly. The BAS due dates are:

• Q1 (July–September): 28 October
• Q2 (October–December): 28 February
• Q3 (January–March): 28 April
• Q4 (April–June): 28 July

Late lodgement carries a Failure to Lodge (FTL) penalty of one penalty unit per 28-day period, up to a maximum of five penalty units (currently $330 per unit).

Tax Invoices

For sales of $82.50 or more (including GST), you must issue a tax invoice if your customer requests one. The invoice must include: your ABN, a description of the supply, the GST amount or a statement that the price includes GST, and the date. Your POS system should generate compliant tax invoices automatically.