Do I need to register for GST? A decision guide for sole traders

Step 1: Are you required to register?

You must register if any of these apply:

• Your GST turnover for the last 12 months is $75,000 or more.
• Your GST turnover for the next 12 months is likely to be $75,000 or more.
• You provide taxi or rideshare travel (Uber, DiDi, Ola and the like), regardless of turnover.
• You are a non-profit with turnover of $150,000 or more.
• You want to claim fuel tax credits.

GST turnover is gross business income excluding GST, input-taxed sales and sales of capital assets. It is not profit, and it does not include wages from a job. For the full detail see the $75,000 threshold explained.

If any of those apply, stop here and register. You have 21 days.

Step 2: If it is optional, would it help you?

Below the threshold, registration is a choice. The trade-off is simple to state: registering lets you claim back the GST on business purchases, and obliges you to add 10% to your prices and lodge a BAS.

Registration tends to pay off when:

• Your customers are mostly GST-registered businesses. They claim the GST back, so your price is effectively unchanged to them.
• You have significant taxable expenses: materials, equipment, fuel, subcontractors, software. The credits add up.
• You are about to buy an expensive asset and want the GST back on it.
• You want to look established; some larger clients expect a tax invoice.

Registration tends to cost you when:

• Your customers are the public and price-sensitive. A tutor charging $80 an hour becomes $88, or absorbs the difference.
• Your expenses are small, so the credits do not cover the extra admin.
• You are close to the threshold anyway and will register soon regardless; in that case the timing question is small.

Step 3: A quick worked example

A freelance designer earns $60,000 a year from business clients and spends $8,000 on taxable expenses (software, hardware, co-working). Registered, she adds $6,000 GST to invoices, which her clients claim back and do not mind; she claims $727 in credits on her expenses; she pays the ATO $5,273 net and is $727 better off, for four BAS lodgements a year.

A mobile hairdresser earns $60,000 from the public and spends $6,000 on products. Registered, she either raises prices by 10% and risks losing clients, or absorbs $5,455 of GST and claims back $545, ending up $4,909 worse off. She stays unregistered until she has to.

Step 4: How to register

Registration is free. Do it through the Australian Business Register when you apply for your ABN, later through ATO online services (Tax, then Manage, then Registrations), or ask your accountant. You will choose:

• Start date. It can be backdated up to four years, though you will owe GST on sales from that date.
• Reporting cycle. Quarterly is the default for most sole traders; monthly is optional; annual is available for some voluntary registrants under the threshold.
• Accounting method. Cash basis (report when money moves) suits most sole traders. Accruals (report when invoiced) is available if you prefer or if your turnover is high enough to require it.

Once registered, your ABN Lookup entry shows GST registered from your start date, which clients sometimes check.

Step 5: What changes on day one

Add GST to taxable sales and show it on your invoices, which now need to say Tax invoice and include your ABN. Keep tax invoices for purchases over $82.50 so you can claim the credit. Lodge a BAS each quarter (due 28 October, 28 February, 28 April, 28 July). Set aside one eleventh of every GST-inclusive payment you receive so the BAS is funded. And start categorising expenses properly, because the GST on each one now matters. Software that reads your bank statement and flags GST on every line, such as FlowFi, turns that from a chore into a review.