This article is for informational purposes only and does not constitute legal, personal, or tax advice. The information contained herein is subject to change and may vary from time to time. For specific advice applicable to your business, please contact a professional.

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There’s nothing quite like that feeling when you make your first sale – it’s exhilarating running your business and knowing someone likes what you do. And while naturally your focus is on selling, you must also manage your taxes correctly, so you don’t land yourself in hot water with the tax office down the line.

Goods and Services Tax is a country-wide tax you collect on behalf of the Australian government and pay directly to them. Our short guide tells you all you need to know about GST registration – how you register, when you register and what the process is.

When to register for GST

Not all businesses need to be GST-registered: there are certain conditions you must meet first.

The tax only applies to businesses which exceed certain thresholds, though in practice it’s set very low, so unless you’re operating a microbusiness, you need to think about GST registration sooner rather than later.

The conditions are:

• Your business has a GST turnover of more than $75,000

• Your business is a non-profit organisation with a GST turnover of more than $150,000

• You intend to claim fuel tax credits (GST applies regardless of turnover)

• You provide limousine or taxi travel (GST applies regardless of turnover)

• Overseas retailers who have an Australian sales turnover of $75,000 or more

Failure to register when you’ve met one of the above conditions can lead to financial penalties. Keep a close eye on your monthly income if you’re getting near the threshold, and register within 21 days of exceeding it.

If you don’t register within the time required, you may have to pay tax on sales from the time you were required to register, even if you didn’t include the GST amount on those sales, meaning you could end up out of pocket.

If you meet one of the conditions above, you’re legally obliged to register for GST with the ATO. You can still register if you’re below the threshold, but it’s not a legal requirement.

GST-free sales

Certain items are considered GST-free, meaning you don’t add the usual 10% to the price and your customers won’t have to pay it. The main exempt items include:

• Most basic food

• Some education materials or courses

• Some medicines

• Some medical and healthcare services

• Some childcare services

• Some menstrual products

You can find a comprehensive list of all exemptions here.

How to register for GST

Follow these steps to complete your GST registration:

Before you register for GST you need to have an Australian Business Number (ABN). Apply for this through the Australian Business Register. If you already have an ABN skip to step two.

Once you have your ABN you can register for GST

There are several ways you can register:

• Through the ATO online service

• By phone on 13 28 66

• Through a registered tax agent or your BAS agent

• Using an Add New Business Account Form (N2954). Order it here

Registration takes a few minutes and you only need to do it once, even if you have more than one business.

You’ll receive written confirmation from the ATO containing the date your registration is effective as well as your ABN number if you haven’t already received this.

Now you’re registered you must also do the following:

• Add GST to all your prices

• Provide customers with tax invoices

• Pay any GST you owe

• Submit Business Activity Statements to the ATO

• Keep receipts and invoices to claim GST credits

• Use business accounting software to keep track of your credits and liabilities (optional but makes accounting easier)

Business activity statements

When you register for GST and an ABN, you automatically receive a Business Activity Statement (BAS) which tells you when it’s time to lodge your tax return. Your tax return details how much the business earned, how much tax was collected and how much you paid on goods and services used for your business. Depending on the size and nature of your business you’ll pay monthly, quarterly or annually.

You should keep your GST separate from your main accounts, making it easier when it’s time to pay your BAS.

Claiming GST Credits

You can claim back tax you paid on business expenses, also called credits.

For purchases of more than $82.50, to claim a credit you must:

• Be GST-registered

• Have a valid tax invoice for your business purchase

For purchases of $82.50 or less, you must:

• Be a GST-registered business

• Keep receipts, dockets and invoices to support your claims

While it’s important to be registered, it shouldn’t be complicated or stress-inducing. Getting it done as soon as you reach the threshold is essential not only to make sure you stay compliant, but also so you can manage your cash flow and meet all your obligations.

Useful resources to help you with registration and beyond

1. Square’s community blog gives you more advice on GST here

2. Find out more about what a tax invoice should include, plus reporting GST collected via electronic payments through Square here

3. Learn how to add and manage tax with your Square dashboard

4. Find out if you have to pay any goods and services tax on imported goods. In general, if you run a service-based business supplying businesses or individuals outside of Australia and that service will be used outside of Australia, then it’s GST-free