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GST for small business

Last updated 22 July 2019

The goods and services tax (GST) is a tax of 10% on most goods and services sold in Australia.

If you run a business, you are likely to have some GST obligations.

If your business is registered for GST, you need to:

  • include GST in the price of sales to your customers
  • claim credits for the GST included in the price of purchases for your business.

This means, if your business is registered for the GST, your customers pay the cost you charge plus 10% extra. This 10% is the GST. When GST applies, you should always include GST in the price of your sale.

You then pay the 10% GST amounts, usually four times each year. To do this, we send you a business activity statement (BAS), which you need to fill in and send back to us.

Start of example

Example: charging customers GST

Anh runs a small bakery selling sandwiches, cakes, hot foods and drinks. She charges her customers an extra 10% to cover the GST. For example, she sells salad sandwiches for $5.50 including GST. She keeps $5 and sends the GST amount of 50 cents to the ATO when she fills in her next BAS.

End of example

Media: How GST works and when to register for GST Link (Duration: mm:ss)

Registered tax or BAS agent

A tax or BAS agent registered with the Tax Practitioners Board may be able to help you with your tax obligations.

Search the TPB registerExternal Link for a registered agent.

Find out more:

See also:

  • More topics and information in Your language
  • More detailed information about GST is available in English

Register for GST

You must register for GST if:

  • your annual business income is $75,000 or more a year (or you think it will be) or $150,000 or more for non-profit organisations
  • you provide taxi or limousine travel for passengers as part of your business (including ride-sourcing, including companies like Uber and Ola etc)
  • you want to claim fuel tax credits.

You can still choose to register even if you don't fit one of these categories.

Business activity statements

When you register for an Australian business number (ABN) and GST we will automatically send you business activity statements (BAS) when it's time to lodge.

Find out more:

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'Taxable sales' and 'GST-free' items

Most goods and services sold by a business include GST – these are called 'taxable sales'.

Some goods and services are 'GST-free', meaning you don't charge your customer GST. Even if you sell GST-free items, such as plain bread, you can claim GST credits for the GST included in the price of things bought to produce the items, for example, baking trays, measuring cups and mixing bowls.

'GST-free' items include:

  • most basic food
  • some education courses, course materials and related excursions
  • some medical, health and care services
  • some medical aids
  • some medicines
  • some goods produced for export
  • some childcare
  • some religious services and charitable activities.
Start of example

Example: GST-free products

Not everything Anh sells in her bakery will include GST. Here are some examples of basic food she sells that is 'GST-free' (no GST is charged):

  • bread and bread rolls without icing
  • bottled drinking water
  • fruit juice containing at least 90% by volume of juice
  • milk.

Here are some examples of food she sells that do include GST ('taxable sales'):

  • sandwiches
  • cakes, slices, pastries, pies and sausage rolls
  • soft drinks and flavoured milk
  • platters of prepared food.

If Anh is not sure, she checks our English publication on GST and food.

End of example

Reporting GST amounts and claiming GST credits 

Businesses use business activity statements (BAS) to tell us:

  • how much the business earned
  • the amount of GST collected
  • GST the business paid for goods and services.

Keep the GST you've collected separate; this makes it easier when it's time to pay your BAS.

When you get your BAS, fill it in, send it to us and pay any money you owe by the due date. The due date is on the BAS.

Claim back GST paid to suppliers (GST credits)

You can claim back any GST you paid for things you have bought for your business. This is called a GST credit.

To claim a GST credit for a purchase that cost more than $82.50 (including GST) you:

  • must be registered for GST
  • have a valid tax invoice that records what you have purchased for your business.

To claim a GST credit for purchases that cost $82.50 or less (including GST), you must:

  • be registered for GST
  • keep documents such as cash register dockets, receipts or invoices to support your claims.

You must also keep your tax invoices and other GST records for five years.

Start of example

Example: registering for GST

Anh's bakery sells a variety of pre-packaged drinks, including soft drinks and flavoured milks such as chocolate milk.

Every three months, Anh purchases 200 pre-packaged chocolate milks from her supplier for $110 which includes $10 GST. She receives the invoice from her supplier and she pays the supplier $110.

As Anh's business is registered for GST she can claim the $10 GST as a credit on her BAS. Anh needs to keep her tax invoice to do this.

End of example

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Tax invoices

In most cases, a business or supplier selling the goods or services provides a tax invoice. When you receive this invoice, make sure it includes:

  • the supplier's business or trading name
  • the supplier's Australian business number (ABN)
  • the date of the tax invoice
  • a brief description of the items sold including the quantity and the price
  • the GST amount payable (or a statement that says 'The total price includes GST')
  • your business name or ABN (if the taxable sale is $1,000 or more)
  • the document is intended to be a tax invoice.

Issuing a tax invoice

If a customer asks for a tax invoice, you must provide one within 28 days. You must be registered for GST to issue a tax invoice.

Start of example

Example: preparing a tax invoice

Anh's bakery is getting a lot of catering orders lately. She knows that sandwich, cake and fruit platters will include GST in the price. She prepares a tax invoice for her clients and clearly states the GST she has charged. She sends the tax invoice along with their order so she doesn't forget to do it later.

End of example

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