GST and BAS Basics for Small Businesses and Sole Traders

Updated for the 2025–26 income year, with 2026–27 changes noted. Reviewed 19 October 2026.

GST is a 10% tax on most goods and services sold in Australia. If you're registered, you collect it on your sales, claim credits for GST in your business purchases, and report the difference on your business activity statement (BAS). Here's what new business owners need to know.

Do I need to register?

• You must register within 21 days once your GST turnover reaches (or is likely to reach) $75,000 ($150,000 for non-profits).
• Taxi and ride-sourcing drivers must register from day one, whatever their turnover.
• You can register voluntarily below the threshold, which lets you claim GST credits but means charging GST.
• GST turnover is your gross business income (not profit), excluding GST, input-taxed sales and some other amounts.

How GST works

• Charge 10% on taxable sales and issue tax invoices.
• Claim GST credits for business purchases. You need a tax invoice for purchases over $82.50 (including GST).
• Some supplies are GST-free (most basic food, many health and education services, exports) and some are input-taxed (residential rent, most financial supplies).

Your BAS

• Most small businesses lodge quarterly. Due dates are usually the 28th of the month after the quarter (the December quarter is due 28 February).
• Registered tax and BAS agents may be able to get you extra time to lodge.
• Your BAS may also include PAYG withholding for employees and PAYG instalments.
• Businesses with GST turnover under $10 million generally use Simpler BAS, and can choose to account for GST on a cash or accruals basis.

Good habits

• Use accounting software (Xero, MYOB or QuickBooks) and reconcile your bank feed every week or month.
• Put GST collected aside in a separate account.
• Don't claim GST on private purchases, wages, bank fees or purchases from suppliers who aren't registered for GST.
• See our top 10 GST mistakes.

Worked example

Example (illustrative figures only – not real client data): Lily is a GST-registered graphic designer. In the September quarter she invoices $22,000 including GST and buys $5,500 of business software and equipment including GST, with tax invoices.

She reports and pays $1,500 GST by 28 October.

Checklist

• Track turnover monthly so you know when you hit $75,000.
• Keep tax invoices for purchases over $82.50.
• Reconcile accounts before preparing each BAS.
• Diarise due dates.

Common mistakes to avoid

• Registering late after passing the threshold.
• Claiming GST credits without a tax invoice.
• Claiming GST on items that include no GST.
• Spending GST collected before BAS is due.

Record-keeping tips

• Keep BAS working papers and invoices for 5 years.
• Keep a GST-coded chart of accounts.

When to see an accountant

Get personal advice from a registered tax agent if:

• you're near or over $75,000 turnover;
• you sell property or have mixed GST-free and taxable sales;
• you're behind on BAS lodgments;
• you have an ABN, side business or rental property as well as your job;
• you have received an ATO letter, review or amended assessment.

Related guides

• BAS services
• Sole traders
• Home-based business
• all deduction guides

ATO sources for this guide

• ATO: GST
• ATO: Registering for GST
• ATO: Business activity statements
• ATO: BAS due dates
• ATO: Copyright notice

This guide is written in our own words. It draws on information published by the Australian Taxation Office, and some short phrases are quoted with attribution. Source material: © Australian Taxation Office for the Commonwealth of Australia. Top Accountants is not endorsed by, or affiliated with, the ATO.