What is GST in Australia?

GST is Australia’s 10% Goods and Services Tax. It’s a broad-based consumption tax applied to most goods and services sold or consumed in Australia, charged at the point of sale and ultimately paid by the end consumer. Businesses with turnover above $75,000 must register, collect GST on what they sell, claim credits on what they buy and lodge the net with the ATO each quarter through the Business Activity Statement.

The rate has been 10% since GST started on 1 July 2000. Below we walk through how it actually works, who pays, who has to register and the categories of goods and services that sit outside the GST net.

How GST works

GST is what economists call a value-added tax. It runs through the entire supply chain – every business that touches a product adds GST when it sells, claims a credit on what it paid and remits the difference to the ATO. The end consumer is the only party that doesn’t claim a credit, which is why they effectively bear the full 10%.

A short example. A Bunnings supplier sells a tin of paint to Bunnings for $50 + $5 GST. Bunnings then sells the same tin to a customer for $80 + $8 GST. The supplier remits $5 to the ATO. Bunnings remits $8 but claims back the $5 it paid the supplier as an input tax credit, so its net contribution is $3. Total GST collected by the ATO: $8 – which is exactly 10% of the $80 retail price.

The structure means businesses are tax collectors rather than taxpayers in the GST system. They don’t lose money on the GST they charge; they pass it on. The cost falls on whoever sits at the end of the chain.

When GST started in Australia

GST started on 1 July 2000 under the Howard government. It replaced the federal wholesale sales tax (a narrower tax that only applied at the wholesale stage) along with several state-level duties that were rolled into the new system. The original rate was 10% and it has not changed since.

Two attempts to lift the rate – in 2015 (to 15%) and again around 2019 (to 12.5%) – stalled politically. As of 2026 the rate is still 10%.

Who pays GST?

Three groups interact with GST in different ways:

• Consumers. You and I pay GST every time we buy a taxable good or service. The price tag at Coles, JB Hi-Fi or Officeworks is GST-inclusive under ACCC pricing rules, so the 10% is already in the figure.
• GST-registered businesses. They charge GST on taxable sales and claim credits on taxable purchases. The net flows through to the ATO via the Business Activity Statement.
• Unregistered businesses. If your turnover is below the registration threshold and you haven’t voluntarily registered, you don’t charge GST and you don’t claim it back. You’re treated as the end consumer for GST purposes – the GST on your business expenses is just part of the cost.

Who has to register for GST?

Registration is mandatory for any business or sole trader whose GST turnover hits the threshold. The current thresholds are:

• $75,000 for businesses, sole traders and self-employed individuals
• $150,000 for non-profit organisations
• From the first dollar for rideshare drivers (Uber, Ola, DiDi) and taxi operators – no threshold applies

The figure that matters is rolling 12-month turnover, not financial-year turnover. Once you cross the threshold, you have 21 days to register with the ATO. Registration is free, takes about ten minutes through Online Services for Business or your registered tax agent and gives you an Australian Business Number (ABN) tied to GST.

You can also register voluntarily below the threshold. Some sole traders do – it lets them claim GST credits on business purchases (laptops, software, vehicle expenses), which can be worth more than the GST collected on sales when the business is in start-up mode. The trade-off: every taxable sale needs a GST line on the invoice from the day registration takes effect.

How GST is calculated

The maths is short.

• Adding GST: ex-GST price × 1.1 = inclusive price
• Reversing GST: inclusive price ÷ 11 = GST amount

We’ve covered the formulas, worked examples and common mistakes in detail on the how to calculate GST and reverse GST calculator pages.

GST-free goods and services

Some sales sit deliberately outside the GST net. A GST-registered business making GST-free supplies doesn’t charge GST on them, but can still claim GST credits on its inputs. The main GST-free categories under the GST Act are:

• Basic food. Bread, milk, fresh fruit and veg, raw meat, plain rice. Once it’s processed or prepared (cooked sandwiches, takeaway, soft drink), GST applies.
• Most health and medical services. GP consultations, hospital services, certain medicines and medical aids.
• Most education. University courses, school fees, some course materials.
• Childcare. Eligible registered or approved care.
• Exports. Goods exported from Australia within 60 days of payment or invoice.
• Some menstrual products. Removed from the GST net on 1 January 2019.

The Coles trolley test is the easiest way to remember it: an unprocessed loaf of bread doesn’t attract GST, but a hot cooked chicken from the deli does.

Input-taxed supplies

The third category catches people out. Input-taxed supplies don’t have GST charged on them, but the seller can’t claim GST credits on related inputs either. The main examples:

• Financial services. Bank loans, share trading, life insurance.
• Residential rent. Renting out a house or unit as a long-term residence is input-taxed (commercial rent is different – that attracts GST).
• Sales of existing residential property. The first sale of a brand-new property is taxable, but second-hand residential is input-taxed.

The result for a residential landlord: no GST on rent, no GST credits on the property’s running costs.

GST and the Business Activity Statement

Registered businesses report GST through the Business Activity Statement (BAS). Three labels do most of the work:

• G1 – Total sales (GST-inclusive)
• 1A – GST collected on sales
• 1B – GST credits on purchases

Net BAS payable = 1A – 1B. If 1B is bigger than 1A (common in start-up phases or quarters with big asset purchases), the ATO pays you a refund.

Lodgement frequency depends on turnover:

• Quarterly is the default for most small businesses and sole traders. Due dates: 28 October, 28 February, 28 April, 28 July.
• Monthly is mandatory for businesses with turnover over $20 million and optional below that.
• Annually is available for some voluntarily registered businesses under $75,000.

GST on imports

Two import scenarios catch most situations:

• Goods over $1,000 (customs value). GST is charged at the border by Australian Border Force, calculated on the customs value plus duty plus transport and insurance.
• Low-value imported goods (under $1,000). Since 1 July 2018, overseas suppliers selling directly to Australian consumers must register and collect GST themselves once they sell over $75,000 a year into Australia. That’s why an Amazon US order arrives with GST already charged at checkout.

Imported services and digital products (Netflix, Adobe Creative Cloud, Spotify) follow the same logic – the offshore supplier collects and remits GST.

What happens if you get GST wrong

The ATO is reasonably patient with honest mistakes if you fix them quickly. The harder consequences arrive when:

• You miss the registration threshold. Backdated registration applies from the day you should have registered, and the ATO can recover 1/11 of every taxable sale you made in that gap – whether or not you actually charged GST.
• You charge GST without being registered. The same 1/11 recovery applies. Issuing what looks like a tax invoice (with a GST line) implies registration.
• You lodge late. Failure-to-lodge penalties accrue per 28-day block, and interest charges run on unpaid GST.
• You claim credits incorrectly. Most commonly: claiming on input-taxed purchases, or on personal expenses dressed up as business. Random reviews catch this regularly.

If you find an error in a past BAS, the cleanest fix is a self-amendment through Online Services for Business. Penalties for self-corrections are significantly lower than for ATO-initiated reviews.

FAQs

The calculators and guides on gstcalculator.net.au are for general information only and do not constitute tax, financial, or legal advice. Consult a registered tax agent for advice specific to your situation.