Sole traders in Australia are required to register for and pay Goods and Services Tax (GST) on their taxable supplies if they have annual business turnover of $75,000 or more. If you hit that amount, you have to register for GST.
This means youโll add an extra 10% to your prices and send that money to the Australian Taxation Office (ATO). But, if you’re below that $75,000 mark, registering for GST is optional.
Sole traders can also claim GST credits for the GST included in the price of the goods and services they purchase for their business.
Learn more about sole traders: business.gov.au.
Do you have to register for GST if you’re a sole trader?
Yes, if you’re running a business and your annual turnover is $75,000 or more, you must register for an Australian Business Number (ABN) and for GST. A business turnover isnโt your profit, itโs the total income from all your business activities. Even if you’re a new business and you think youโll hit that threshold in the first year, you should register.
What are the benefits of having a GST registration?
The biggest benefit of registering for GST is being able to claim GST credits. When you buy things for your business, like new equipment or supplies, and the price includes GST, you can claim that amount back from the ATO. This can be a smart move, especially if you have a lot of business expenses, even if your turnover is below the $75,000 threshold. It can help you save money on your purchases.
What if my turnover falls below the GST threshold?
If your turnover drops below $75,000 after youโve already registered for GST, you still have to keep charging and paying GST. You can’t just stop. You’ll need to formally cancel your GST registration with the ATO.
The ATO can also cancel your GST registration if they decide youโre no longer running an active business or if you haven’t been meeting your GST obligations. That’s why keeping accurate records of all your income and expenses is essential. It’s a bit of a juggling act, but it helps you stay on top of your reporting and get any GST credits you’re owed.
Find out more about paying for GST: ato.gov.au.