Plenty of small businesses grow past the GST threshold without noticing. The rules are simple, but the deadline is short, so it pays to track your turnover before it becomes a problem.
The $75,000 rule
You must register for GST when your GST turnover is $75,000 or more. GST turnover is your gross business income, excluding GST, from all your businesses. The ATO tests it two ways:
- Current turnover. Your turnover for the current month and the previous 11 months totals $75,000 or more.
- Projected turnover. Your turnover for the current month and the next 11 months is likely to be $75,000 or more.
If either test is met, you have 21 days to register.
Why it matters
If you were required to register and did not, you may have to pay GST on sales made since the date you should have registered. That applies even if you never added GST to your prices, which means the cost can come straight out of your margin. Penalties and interest may apply as well.
What to do
- Check monthly. Add a rolling 12 month turnover figure to your regular bookkeeping review so you see the threshold coming.
- Look ahead. If you have just won a large contract or expect a busy year, test your projected turnover now.
- Plan your pricing. If you are about to register, decide whether to add GST on top of your prices and tell customers early.
- Keep records. Once registered, issue proper tax invoices and keep records to support the GST you claim.
You can also choose to register below the threshold, though the rules for ride sourcing and some other businesses differ. If you are unsure whether you are over the line, ask your accountant or check with the ATO.