The Goods and Services Tax (GST for short) is a flat-rate 10% consumption tax added to most goods and services we consume. We don’t mean consume as in eating and drinking, btw – certain food and drink is actually exempt from GST in Australia. It’s more about things we use up.
Now, you might be thinking, “great, another tax making my coffee 10% more expensive”, but this little contribution made to the government helps our states fund schools, roads, hospitals and much more, helping us Aussies appreciate the country we call home (except maybe the potholes).
And don’t you worry, everyone pays this flat-rate tax. Flat rate simply means that the tax rate doesn’t change, no matter how much you earn, what you buy, or how much it costs. This is unlike income tax, which is a progressive tax, meaning that how much you pay depends on how much you earn.
What is GST free?
While GST is applicable to most goods and services, the Australian government recognises that basic needs and services shouldn’t be more expensive than they have to be. Selected basic foods, education, and medical services are some goods and services exempt from this tax.
(But that fancy champagne you bought for New Year’s is not. Bummer, right?)
📖 Curious on what goods and services are GST exempt? Here’s the definite list for all things free from GST.
Do I need to charge GST?
As a sole trader, you must register and collect GST if you estimate you’ll make GST turnover of $75,000 or more in any given 12-month period. If you’re an Uber, taxi or limousine driver here, you must also register regardless of your GST turnover. It’s a common misconception that registering as a sole trader, or lodging a self-employed tax return, or applying for an ABN automatically registers you for GST. This isn’t the case.
Once registered, you’ll have to add an extra 10% GST charge to your products and services, which you collect and pay to the government when you lodge your Business Activity Statement (BAS).
As a bonus (we’re kidding, it’s not), once you’re GST registered, you may need to change the information available on your invoices. Read all about invoicing like a pro to see how to invoice if you’re GST registered. If your business falls short of the $75,000 threshold, registering for GST is completely optional. As becoming GST registered is a bit of a process, you may want to postpone it until it becomes mandatory for your business.📖 For more info on the ins and outs of GST, including how to claim back GST credits if you’re registered, check out our monster guide to GST.
Hnry sorts it for you
As you can probably tell, us folks at Hnry are mad about all things tax.If all these government forms, processes, invoicing changes sound like a lot, Hnry can do all of this for you, and much much more. Our expert team also claim back GST for our users when we lodge their BAS. And just quietly, Hnry users save 5 hours a week on financial and tax admin and get invoices paid up to 8 days faster. For just 1% + GST of your self-employed income, capped at $1,500 a year, Hnry will calculate and pay all your taxes, levies and whatnot for you, including:
We’ll also handle your financial admin, like:
- claiming expenses
- sending quotes and invoices
- chasing up late-paying customers (politely of course!)
Sign up in under 2 minutes and cut down 260 hours of time spent on tax admin each year with Hnry!
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