GST (Goods and Services Tax)
Australia’s flat 10% tax on most goods and services.
GST is a flat 10% tax added to the price of most goods and services in Australia. If you’re registered, you add 10% to what you charge, collect it for the ATO, and claim back the GST on your business purchases. To find the GST inside a price, divide the total by 11.
You must register for GST once your business turnover reaches $75,000 a year; below that it’s optional. Registered businesses report GST on a Business Activity Statement (BAS).
Worked example
You invoice a client $1,100 including GST. The GST inside that is $1,100 ÷ 11 = $100, so $1,000 is your income and $100 is the ATO’s. In the same quarter you buy a $550 laptop — $50 of that is GST you can claim back. You’d hand over $100 − $50 = $50.
Common mistake
Treating the full invoice as your money. That $100 was never your income — spending it and finding it again at BAS time is the single most common cash-flow shock for newly registered sole traders.
Grounded in ATO guidance. Figures last checked . General information, not tax advice.
Related terms
BAS (Business Activity Statement)
The form GST-registered businesses use to report GST and PAYG.
GST turnover ($75,000 threshold)
The gross income figure that triggers GST registration.
Tax invoice
The GST-compliant invoice that lets a buyer claim the GST back.
ABN (Australian Business Number)
The 11-digit number that identifies your business.
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Questions about this term
GST (Goods and Services Tax): common questions
- Do I have to register for GST if my turnover is under $75,000?
- No — below $75,000 a year, registering for GST is optional. Once your business turnover reaches $75,000 you must register, add 10% to what you charge, collect it for the ATO, and report it on a Business Activity Statement. Registration is what lets you claim back the GST on your business purchases, so some people choose it before the line.
- How do I work out how much GST is inside a price?
- Divide the total by 11. A $1,100 invoice that includes GST holds $100 of GST, so $1,000 is your income and $100 belongs to the ATO. The same arithmetic works on purchases: a $550 laptop carries $50 of GST you can claim back if you are registered. The GST calculator on this site does the division for you in either direction.
- Is the GST I collect on an invoice part of my income?
- No — the GST on an invoice was never your income. On a $1,100 invoice, $1,000 is yours and $100 is collected on the ATO’s behalf. Treating the full amount as spendable is the most common cash-flow shock for newly registered sole traders, because the $100 has to be found again at BAS time. Setting it aside as it arrives keeps each BAS uneventful.
- Do I hand over all the GST I collected at BAS time?
- Not all of it — you pay the GST you collected minus the GST on your business purchases. In the worked example, $100 collected on a $1,100 invoice less $50 of GST on a $550 laptop leaves $50 to hand over. Both sides are reported on the Business Activity Statement, and a valid tax invoice is what supports the purchase side.
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