GST Frequently Asked Questions

1. What is GST in Australia?

GST (Goods and Services Tax) is a broad-based consumption tax of 10% that applies to most goods, services, and other items sold or consumed in Australia. It was introduced on 1 July 2000 as part of a major overhaul of the Australian tax system under The New Tax System (Goods and Services Tax) Act 1999. The reform replaced a patchwork of previous indirect taxes, including the wholesale sales tax and a range of state and territory stamp duties and levies, with a single, transparent national tax.

The GST is administered by the Australian Taxation Office (ATO), and the revenue collected is distributed to state and territory governments through the Commonwealth Grants Commission. This arrangement means that while the federal government collects the tax, it funds essential state-level services such as hospitals, schools, and public transport infrastructure across the country.

Virtually all businesses with an annual turnover of $75,000 or more are required to register for GST, charge it on their taxable sales, and remit the collected amount to the ATO. The system operates on a credit mechanism: businesses can claim back the GST they have paid on their own business purchases (known as input tax credits), so the tax does not cascade through the supply chain. For a more detailed look at how GST fits into the Australian business landscape, read our Complete Small Business GST Guide.

2. What is the current GST rate in Australia?

The current GST rate in Australia is a flat 10%. This uniform rate applies to all taxable goods and services without exception. Unlike many other countries -- such as the United Kingdom, Germany, or New Zealand -- which operate tiered VAT or GST systems with standard, reduced, and super-reduced rates, Australia has maintained a single rate since the tax was first introduced on 1 July 2000.

The simplicity of a single rate reduces administrative complexity for businesses and makes compliance more straightforward. Rather than applying different rates to different product categories, Australia addresses affordability concerns by exempting certain essential items entirely (classifying them as GST-free). This means items like basic food, healthcare, and education do not attract GST at all, while everything else is taxed at the flat 10%. The rate has never been changed since its introduction, although periodic political discussions about potential changes do arise.

To quickly calculate 10% GST on any amount, try our free Australian GST Calculator.

3. Who pays GST?

GST is ultimately borne by the end consumer, but it is collected and remitted by businesses at each stage of the production and distribution chain. When a GST-registered business sells a product or service, it adds 10% GST to the sale price and collects the total amount from the buyer. The business then reports and pays the collected GST to the ATO through its Business Activity Statement (BAS).

However, the system includes a credit mechanism that prevents the tax from compounding at every stage. Businesses can claim input tax credits for the GST included in the price of goods and services they purchase for business use. This means each business in the supply chain effectively remits only the GST on the value it has added, and the full 10% tax burden falls on the final consumer, who cannot claim any credits. For instance, if a manufacturer buys $1,000 of raw materials (paying $100 GST) and sells the finished product for $2,000 (charging $200 GST), the manufacturer remits only $100 to the ATO -- the difference between the $200 collected and the $100 credit claimed.

Non-registered businesses and individuals cannot claim input tax credits, which is why the GST they pay on purchases is a genuine cost. For further reading on the GST credit system, see our Complete Guide to GST Calculations in Australia.

4. What is the difference between GST-inclusive and GST-exclusive pricing?

These terms describe whether the quoted price already contains the 10% GST or not. GST-exclusive pricing shows the base price before any GST is added. To find the GST-inclusive total, you multiply the base amount by 1.1. For example, a product priced at $100 GST-exclusive will cost $110 once GST is included, with $10 being the GST component. GST-inclusive pricing shows the total price with GST already built in. To extract the GST amount, you divide the total by 11. So a $110 GST-inclusive item contains $10 of GST and a $100 base price.

In Australia, the Competition and Consumer Act 2010 generally requires that prices displayed to consumers in retail settings be GST-inclusive. This ensures transparency -- what you see on the shelf is what you pay at the register. Business-to-business (B2B) transactions, however, commonly quote GST-exclusive prices, with GST added as a separate line item on invoices. This approach is preferred in B2B contexts because both parties are typically GST-registered and can claim input tax credits, so the GST component is effectively a wash.

Understanding the difference is essential for correct invoicing, pricing strategies, and BAS preparation. Our detailed article on GST Inclusive vs Exclusive Pricing covers real-world examples and common pitfalls.

5. How do I calculate GST?

There are two fundamental GST calculations, depending on your starting point. To add GST (when you have a GST-exclusive base price), multiply the amount by 0.1 to find the GST component, or multiply by 1.1 to get the GST-inclusive total directly. For example, if your base price is $500: GST = $500 x 0.10 = $50, and the total = $500 x 1.10 = $550.

To extract GST (when you have a GST-inclusive total), divide the amount by 11 to find the GST component, or multiply by 10/11 to find the GST-exclusive base price. For example, if the total price is $550: GST = $550 / 11 = $50, and the base price = $550 x 10/11 = $500. These are the official formulas endorsed by the Australian Taxation Office.

While these formulas are simple, errors can creep in when handling large volumes of transactions or complex invoices with mixed taxable and GST-free items. For instant, error-free calculations, use our free Australian GST Calculator. You can also learn how to build your own spreadsheet-based calculator in our guide to Excel GST Calculator Templates.

6. When must I register for GST?

You are required to register for GST if your business has a current or projected annual GST turnover of $75,000 or more. For non-profit organisations, the threshold is higher at $150,000 or more. GST turnover is your gross business income (excluding any GST), not your profit. You must register within 21 days of becoming aware that your turnover has reached, or is likely to reach, the relevant threshold.

There are also situations where registration is mandatory regardless of turnover. If you provide taxi travel or ride-sharing services (such as through Uber, DiDi, or Ola), you must register for GST from the first dollar you earn. Similarly, if you want to claim fuel tax credits, you must be registered for GST. Businesses that are part of a GST group also have specific registration requirements.

It is important to monitor your turnover proactively. The ATO considers your turnover on a rolling 12-month basis, so a few strong months could push you over the threshold even if your annual figures historically fell below it. For a thorough explanation of thresholds, exemptions, and the registration process, read our GST Registration Requirements Guide.

7. Can I register for GST voluntarily?

Yes, you can choose to register for GST voluntarily even if your annual turnover is below the $75,000 threshold. Many businesses opt for voluntary registration for several compelling reasons. First, it allows you to claim GST credits (input tax credits) on all business-related purchases, effectively reducing your costs by the 10% GST component. This is particularly beneficial if you have significant start-up expenses or ongoing business costs.

Second, being GST-registered can project a more professional and established image to clients and suppliers. Some larger businesses prefer or even require their suppliers to be GST-registered. Third, if your turnover is approaching the $75,000 threshold, registering early avoids a sudden transition and the risk of accidentally exceeding the threshold without being registered, which would result in penalties.

However, voluntary registration comes with obligations. Once registered, you must charge GST on all your taxable sales, lodge regular BAS returns (usually quarterly), maintain proper tax invoices and records, and comply with all GST rules. You should weigh the benefits of claiming input tax credits against the administrative burden, especially if most of your customers are end consumers who bear the cost of the GST you charge. Our Small Business GST Guide discusses this decision in detail.

8. What happens if I don't register for GST when required?

Failing to register for GST when your turnover exceeds the threshold can lead to serious financial and legal consequences. The ATO has the power to backdate your registration to the date you were originally required to register. This means you will owe GST on all taxable sales made since that date -- even though you did not collect it from your customers. Effectively, you would have to pay the GST out of your own pocket, reducing your revenue by approximately 9.09% (since GST is 1/11th of the inclusive amount).

On top of the backdated liability, the ATO may impose administrative penalties for failing to register on time. These penalties are calculated using penalty units and can escalate depending on how long the non-compliance continues and whether it is deemed intentional or reckless. The ATO may also charge the General Interest Charge (GIC) on any unpaid GST amounts, which compounds daily at a rate significantly above commercial lending rates.

Beyond financial penalties, operating without GST registration when required can damage your business reputation and relationships with suppliers and clients who rely on valid tax invoices for their own GST credit claims. If you think you may have exceeded the threshold, it is always better to contact the ATO proactively or speak with a registered tax agent. For more on the consequences of non-compliance, see our article on Late GST Payments, Interest, and Penalties.

9. How do I register for GST?

The most common and convenient way to register for GST is online through the ATO Business Portal or the Australian Business Register (ABR) website. Before you begin, you will need an Australian Business Number (ABN) -- if you do not have one, you can apply for an ABN and register for GST at the same time. You will also need a myGovID (the Australian Government's digital identity) linked to your business through Relationship Authorisation Manager (RAM).

During the registration process, you will be asked to choose your GST accounting method (cash or accruals), your reporting period (monthly, quarterly, or annually), and provide details about your business structure and activities. If you prefer not to register online, you can also register by phoning the ATO business line on 13 28 66, or you can have a registered tax agent or BAS agent handle the registration on your behalf.

Once registered, the ATO will confirm your GST registration date, and you must begin charging GST on taxable sales from that date. You will receive notification of your BAS reporting obligations, including due dates and lodgement methods. Our step-by-step GST Registration Requirements Guide walks you through the entire process with screenshots and tips.

10. Can I cancel my GST registration?

Yes, you can cancel (or "deregister" from) GST if your GST turnover has fallen below the $75,000 threshold (or $150,000 for non-profits) and you do not expect it to reach the threshold again in the foreseeable future. Cancellation can be done online through the ATO Business Portal, by phoning the ATO, or through your registered tax or BAS agent.

Before cancelling, there are several important considerations. Once deregistered, you will no longer be able to claim GST credits on your business purchases, which increases your costs. You may also be required to make a final GST adjustment on certain assets you acquired while registered and still hold -- this is sometimes referred to as "paying back" the GST credits previously claimed on those assets. You must lodge a final BAS covering the period up to your cancellation date.

It is also worth noting that if your turnover fluctuates near the threshold, cancelling and re-registering repeatedly can create administrative headaches. In some cases, it may be simpler to remain registered even if your turnover dips temporarily. Consider discussing the decision with your accountant or BAS agent to understand the full financial implications for your specific situation.

11. What is a Business Activity Statement (BAS)?

A Business Activity Statement (BAS) is the form that all GST-registered businesses in Australia must submit to the ATO to report and pay their tax obligations. The BAS covers several tax categories, but for most small businesses, the primary focus is on GST. On the form, you report the total GST you collected on your sales (output tax), the total GST credits you are claiming on your business purchases (input tax credits), and the net amount you owe to the ATO or are owed as a refund.

In addition to GST, the BAS may also include sections for Pay As You Go (PAYG) instalments (income tax prepayments), PAYG withholding (tax withheld from employees' wages), Fringe Benefits Tax (FBT) instalments, and other tax obligations depending on your business circumstances. The ATO sends pre-filled BAS forms to registered businesses, and you can lodge them online through the Business Portal, via accounting software, or through your BAS agent.

Accurate BAS preparation is crucial because errors can trigger ATO audits and lead to penalties. For a comprehensive walkthrough of how to complete and lodge your BAS, read our BAS Lodgement Guide: Complete Step-by-Step Instructions.

12. How often do I need to lodge a BAS?

The frequency of BAS lodgement depends on your business size and your registration choices. Quarterly reporting is the most common frequency for small to medium businesses and is the default period assigned by the ATO. You report and pay GST every three months, aligned with standard financial quarters (July-September, October-December, January-March, April-June).

Monthly reporting is mandatory for businesses with a GST turnover of $20 million or more. However, any business can choose to report monthly voluntarily -- this can be beneficial for businesses that regularly receive GST refunds (for example, exporters), as it means faster refund processing. Annual reporting is available in limited circumstances, generally for businesses with a GST turnover under $75,000 that have voluntarily registered and are also eligible to report PAYG instalments annually.

Your reporting frequency is established when you first register for GST, but you can request a change through the ATO if your circumstances evolve. Regardless of your lodgement frequency, maintaining accurate and up-to-date records throughout the period will make BAS preparation significantly easier. Our BAS Lodgement Guide covers the differences between each reporting period in detail.

13. What are the BAS due dates?

For businesses reporting quarterly, the standard BAS due dates are:

• Quarter 1 (July - September): Due 28 October
• Quarter 2 (October - December): Due 28 February
• Quarter 3 (January - March): Due 28 April
• Quarter 4 (April - June): Due 28 July

Notice that the Quarter 2 due date is 28 February rather than 28 January. This built-in extension provides additional time over the busy Christmas and New Year period. For businesses reporting monthly, the BAS is due on the 21st of the following month (for example, the July BAS is due 21 August). If any due date falls on a weekend or public holiday, the deadline automatically moves to the next business day.

Lodging through a registered tax agent or BAS agent may provide you with additional time beyond the standard due dates, as agents often have negotiated lodgement programs with the ATO. However, these extended deadlines typically only apply if the agent has been appointed before the original due date. Always check the ATO website or your agent's advice for the exact due dates applicable to your situation each quarter. For tips on staying on track, see our BAS Lodgement Guide.

14. What accounting method should I use for GST?

There are two GST accounting methods available in Australia: the cash basis and the accruals basis. Under the cash basis, you account for GST in the period when you actually receive payment from customers or make payment to suppliers. Under the accruals basis, you account for GST when you issue or receive an invoice, regardless of when the money actually changes hands.

The cash basis is generally simpler and more favourable for cash flow management. You only report GST when money comes in, so you are never paying GST to the ATO on amounts your customers have not yet paid. This makes it particularly popular with small businesses, sole traders, and service-based businesses where payment terms can vary. You are eligible to use the cash basis if your annual GST turnover is less than $10 million.

The accruals basis is mandatory for businesses with a GST turnover of $10 million or more, but any business can choose to use it. It provides a more accurate picture of your GST position at any point in time and aligns well with accrual-based accounting systems. Businesses with consistent payment cycles or those that want their GST reporting to match their financial reporting often prefer this method. You select your accounting method when you register for GST, but you can apply to the ATO to change it later if your circumstances change.

15. What happens if I lodge or pay my BAS late?

Late lodgement and late payment of BAS carry separate but often concurrent penalties. For late lodgement, the ATO can impose a Failure to Lodge (FTL) penalty. This penalty is calculated at one penalty unit for each 28-day period (or part thereof) that the BAS remains overdue, up to a maximum of five penalty units. As of the 2024-25 financial year, one penalty unit is $330 for individuals and $1,650 for entities (companies, trusts, etc.). So a company that is four months late could face a penalty of up to $4,950.

For late payment, the ATO charges the General Interest Charge (GIC) on any outstanding amounts. The GIC rate is updated quarterly and is calculated as the 90-day bank accepted bill rate plus a 7% uplift. This rate compounds daily, which means the interest accumulates quickly on unpaid balances. As of recent quarters, the GIC has been approximately 11-12% per annum, making it significantly more expensive than most commercial borrowing rates.

An important tip: if you cannot pay the full amount owed, still lodge your BAS on time. This avoids the FTL penalty and demonstrates good faith to the ATO. You can then contact the ATO to arrange a payment plan for the outstanding amount. The ATO is generally accommodating when businesses communicate proactively about payment difficulties. For more information, read our article on Late GST Payments, Interest, and Penalties.

16. What items are GST-free in Australia?

A significant number of goods and services in Australia are classified as GST-free, meaning no GST is charged on them. The major categories include: most basic food (fresh fruit, vegetables, meat, bread, dairy, eggs); medical and health services provided by registered practitioners; educational courses from approved providers (including primary, secondary, and most tertiary education); childcare services; exports and supplies to overseas customers; certain religious and charitable activities; water and sewerage services provided by government; international transport; and sales of going concerns (entire businesses sold as operating entities).

It is critical to understand that GST-free does not mean the item is outside the GST system. GST-free supplies are still part of the GST framework -- they are simply taxed at an effective rate of 0%. This distinction matters because businesses that make GST-free sales can still claim full GST credits on their related business purchases. This is a significant advantage compared to input-taxed supplies, where no credits can be claimed.

The classification of specific items can sometimes be surprisingly nuanced. For example, a plain bread roll is GST-free, but a bread roll with a sweet filling may not be. When in doubt, the ATO provides detailed rulings and guidelines to help businesses classify their supplies correctly. Understanding which of your products or services are GST-free is essential for accurate invoicing and BAS reporting.

17. What is the difference between GST-free and input-taxed supplies?

This is one of the most important distinctions in the Australian GST system, and it is frequently misunderstood. Both GST-free and input-taxed supplies share one thing in common: no GST is charged on the sale to the customer. However, they differ fundamentally in how they treat the seller's ability to claim input tax credits.

For GST-free supplies (such as basic food, health services, and education), the business does not charge GST on the sale but can claim full GST credits on all related business purchases. This means the business recovers the GST it pays on inputs, and the supply chain is effectively tax-free from end to end. For input-taxed supplies (the main examples being financial supplies such as bank interest and fees, and residential rent), the business does not charge GST on the sale and cannot claim GST credits on related purchases. This means the GST paid on the business's inputs becomes an embedded cost that is either absorbed by the business or passed on to the customer through higher prices.

The practical impact of this distinction is significant. A business making mostly input-taxed supplies faces higher effective costs because it cannot recover the GST on its expenses. This is why, for example, residential rental property investors cannot claim GST on property management fees, repairs, or other expenses related to the rental property. Understanding this difference is essential for correct BAS reporting and for making informed business decisions about pricing and structure.

18. Is fresh food GST-free in Australia?

Yes, most basic, unprocessed food is GST-free in Australia. This includes staples such as fresh fruit and vegetables, fresh meat and seafood, bread and bread rolls, milk, eggs, cheese, butter and margarine, cooking oils, flour, sugar, rice, pasta, tea, coffee, and bottled water. Baby food and infant formula are also GST-free. The intention behind these exemptions is to keep the cost of essential nutrition affordable for all Australians.

However, many food and beverage items do attract the full 10% GST. These include: prepared and hot takeaway meals (such as restaurant food, fast food, and hot deli items); confectionery (chocolate bars, lollies, ice cream); savoury snacks (chips, pretzels, crackers marketed as snacks); biscuits, cakes, and pastries (with some exceptions for plain biscuits); soft drinks, energy drinks, and flavoured milk; and all alcoholic beverages. Food sold in restaurants or cafes for consumption on the premises is also taxable, even if the same food item would be GST-free when purchased from a supermarket.

The boundary between GST-free and taxable food can be remarkably specific. For instance, a plain bread roll from a bakery is GST-free, but a gourmet sandwich made from that bread is taxable. Plain milk is GST-free, but a flavoured milk drink is taxable. The ATO has extensive rulings and a detailed food classification guide (GSTR 2001/8) to help businesses navigate these distinctions. When pricing food products, it is essential to classify each item correctly to avoid under-collecting or over-collecting GST.

19. Are medical services GST-free in Australia?

Most medical and health services provided by recognised health practitioners are GST-free in Australia. This covers services provided by general practitioners (GPs), medical specialists, dentists, optometrists, chiropractors, osteopaths, physiotherapists, psychologists, podiatrists, occupational therapists, speech pathologists, and other practitioners registered under the Health Practitioner Regulation National Law. The GST-free treatment also extends to services provided at public and private hospitals, community health centres, and approved pathology and diagnostic imaging services.

However, not all health-related services and products are GST-free. Services and products that do attract GST include: cosmetic surgery that is not clinically necessary; over-the-counter health products, vitamins, and dietary supplements; gym memberships, personal training, and fitness services; certain alternative and complementary therapies provided by practitioners who are not registered under the national registration scheme; and non-clinical services such as medical reports prepared for insurance or legal purposes (unless they are part of a treatment).

Pharmaceutical products have their own rules: prescription medicines listed on the Pharmaceutical Benefits Scheme (PBS) are GST-free, while over-the-counter medications and non-PBS items generally attract GST. If you operate a health or medical business, it is important to correctly classify each service and product to ensure accurate GST treatment on your invoices and BAS.

20. Is residential rent subject to GST?

No, residential rent is not subject to GST. Tenants do not pay GST on their rent, and landlords do not charge it. However -- and this is a crucial distinction -- residential rent is classified as input-taxed, not GST-free. While the practical effect for the tenant is the same (no GST on the rent), the classification has significant implications for the landlord.

Because residential rent is input-taxed, the landlord cannot claim GST credits on expenses related to the residential property. This includes property management fees, repairs and maintenance, insurance, strata levies, and other costs that include a GST component. The GST paid on these expenses is effectively absorbed by the landlord, increasing the real cost of owning and operating the property. This is one reason why residential property investment is often viewed differently from commercial property investment in tax planning.

By contrast, commercial rent is subject to GST. Commercial landlords charge 10% GST on rent, and they can claim full GST credits on their related property expenses. This creates a very different tax dynamic. If you are purchasing property for investment, understanding whether it will be used for residential or commercial purposes -- and how this affects your GST position -- is an important part of the financial analysis. For more on how GST interacts with different types of business supplies, visit our Understanding GST vs Tax in Australia article.

21. How do I use the GST calculator?

Using our Australian GST Calculator takes just a few seconds. Step 1: Navigate to the calculator page and enter the dollar amount you want to calculate in the "Amount (A$)" input field. You can enter any positive number, including cents. Step 2: Select the GST rate. The default is 10% (the standard Australian GST rate), but you can also select 0% if you are working with GST-free items and simply need to confirm the breakdown.

Step 3: Choose your calculation type. Select "GST Exclusive (Add GST)" if you have a base price and need to determine the total including GST -- this is common when preparing invoices or setting retail prices. Select "GST Inclusive (Remove GST)" if you have a total amount and need to find out how much GST is included -- this is useful when reviewing receipts, checking supplier invoices, or reconciling figures for your BAS.

Step 4: Click the "Calculate GST" button. Your results will appear instantly, showing the original amount, the GST amount, and the total. You will also see a detailed breakdown section with the net amount excluding GST. The calculator performs all calculations using the official ATO formulas (multiply by 1.1 to add GST; divide by 11 to extract GST), ensuring accuracy to the cent.

22. Is the GST calculator free to use?

Yes, our Australian GST Calculator is completely free with no restrictions whatsoever. There is no registration required, no account creation, no email sign-up, and no hidden fees or premium tiers. You can perform unlimited calculations, as many times as you need, without any cost.

The calculator runs entirely within your web browser using client-side JavaScript, which means no data is sent to or stored on any server. Your financial figures remain completely private on your own device. There are no cookies tracking your calculations, and nothing is logged or recorded. The tool works on all modern devices and browsers, including desktop computers, laptops, tablets, and smartphones, so you can calculate GST wherever you are -- at your desk, on a job site, or in a meeting with a client.

We believe that essential financial tools should be freely accessible to everyone. Whether you are a sole trader preparing your first invoice, a seasoned accountant verifying a figure, or simply a curious consumer, our calculator is here to help you get accurate GST calculations instantly.

23. Can I use this calculator for business purposes?

Absolutely. Our GST calculator is designed to be suitable for a wide range of business applications. Common business uses include: preparing and verifying invoices to ensure the correct GST amount is charged; checking supplier quotes and bills to confirm that GST has been calculated correctly; calculating GST components for BAS preparation when you need to verify individual transactions; setting GST-inclusive retail prices from a base cost-plus-margin figure; and general financial planning such as budgeting for projects where you need to account for GST.

While our calculator provides results that are accurate and based on the official ATO formulas, we recommend using it as a supplementary verification tool alongside your dedicated accounting or bookkeeping software (such as Xero, MYOB, or QuickBooks) for formal record-keeping and BAS lodgement. Accounting software maintains a complete audit trail and integrates with your bank feeds, which is essential for compliance.

For official BAS lodgement and complex tax situations involving mixed supplies (taxable, GST-free, and input-taxed), we always recommend consulting with a registered BAS agent or qualified accountant. Our calculator handles individual calculations perfectly, but professional advice is invaluable for your overall tax strategy and compliance posture. For guidance on using calculator tools effectively in your business workflow, see our article on Accurate GST Tax Calculations in Australia.