The $75,000 GST registration threshold explained

What counts as GST turnover

GST turnover is your gross business income, before expenses, excluding a few things. It includes all taxable sales and all GST-free sales (exports, for example). It excludes the GST component itself, input-taxed sales such as residential rent and financial supplies, sales not connected with Australia, and sales of capital assets like selling your old work ute.

It is not profit. A cleaner who bills $80,000 and spends $30,000 on supplies and fuel has a GST turnover of $80,000. And if you run two businesses under the one ABN, their turnover is combined.

The rolling 12-month test

The threshold is tested two ways, and you must register if either is met:

• Current GST turnover: your turnover for the current month plus the previous 11 months is $75,000 or more.
• Projected GST turnover: your turnover for the current month plus the next 11 months is likely to be $75,000 or more.

The projected test is the one that surprises people. If you sign a contract in your third month of trading that will pay $8,000 a month, you are expected to register then, not when the money passes $75,000. Keeping a running 12-month total makes this easy to watch; FlowFi shows it on your dashboard.

The 21-day rule

Once you know, or should reasonably know, that you have hit the threshold, you have 21 days to register. Registration is free and can be done through the Australian Business Register, ATO online services, or by your accountant. You will be asked to choose your reporting cycle (quarterly for most) and accounting method (cash for most sole traders).

Your registration takes effect from the date you nominate, and you can backdate it. From that date you must charge GST on taxable sales, issue tax invoices when asked, and lodge a BAS.

The exceptions

Two groups do not use the $75,000 figure. Non-profit organisations have a threshold of $150,000. Taxi and rideshare drivers must register from the first dollar of fares; the ATO treats rideshare as taxi travel and the threshold does not apply. Food or parcel delivery alone is not taxi travel, so a delivery-only driver uses the normal threshold. If you do both, the rideshare rule applies to your whole ABN.

What changes once you register

Your prices either go up by 10% or your margin drops by roughly 9%, depending on whether your customers are businesses (who claim the GST back and will not mind) or the public (who will notice). You start issuing tax invoices. You lodge a BAS each quarter and pay the GST you collected minus the GST on your business purchases. And you can now claim back the GST on those purchases, which for a tradie buying materials or a photographer buying gear is real money.

If you had a large purchase in the months before registering, ask your accountant whether any of that GST can still be claimed; there are rules for assets still on hand at the registration date.

If you register late

If you crossed the threshold in March and register in September, the ATO can backdate your registration to March. That means GST is payable on everything you sold since then, even though you did not add it to your invoices. You either absorb it (about 9% of that income) or go back to business customers and ask them to pay the GST, which some will and some will not. Penalties and interest can apply on top.

This is the strongest reason to track turnover as you go and register as soon as the projected test is met, not after.

Dropping back below the threshold

If your turnover falls and you expect it to stay under $75,000, you can apply to cancel your registration, provided you have been registered at least 12 months. Some people stay registered anyway because their customers are businesses and the GST credits on purchases are worth the BAS effort. It is a choice, not an obligation, once you are below the line.