GST and BAS basics for small business owners

GST and BAS are two of the more persistent sources of confusion for people starting a small business in Australia, largely because the two things are related but not identical — GST is the tax itself, while the BAS is the form used to report it, alongside a few other obligations, to the ATO on a regular schedule.

Registration is the first threshold most small business owners run into. GST registration becomes compulsory once a business's GST turnover reaches $75,000 in any 12-month period, or $150,000 for non-profit organisations. This is a rolling test based on turnover over any 12 months, not just the financial year, so it is worth watching on an ongoing basis rather than checking once a year. Once you know your turnover will exceed the relevant threshold, you generally have 21 days to register — leaving it later than that risks the ATO registering the business retrospectively and backdating GST liability to when the threshold was crossed, even on sales where GST was never actually collected from customers.

Once registered, the standard GST rate applied to most taxable sales is 10%, and that amount collected on sales, less GST paid on eligible business purchases, is what gets reported and reconciled through the BAS. How often a BAS is due depends mainly on turnover: quarterly lodgment is the most common arrangement for small businesses, generally due by the 28th of the month following the end of each quarter, while businesses with turnover above $20 million generally lodge monthly instead. Some smaller businesses may be eligible for annual GST reporting under specific conditions, which is worth raising directly with a registered practitioner if your turnover sits well under the registration threshold.

A point that surprises a lot of new business owners: registering for GST voluntarily below the $75,000 threshold is allowed, and some businesses choose to do it anyway, commonly because it lets them claim GST credits on business purchases, or because clients or suppliers expect a business of a certain size to be registered. There is no single right answer here — it depends on the nature of the business and its cash flow, and it is a reasonable thing to talk through with an accountant or bookkeeper before deciding either way.

Who is actually allowed to prepare and lodge a BAS for a fee is worth understanding too, since it is not the same registration as a tax agent. Charging a fee to prepare or lodge a BAS, or to give advice on GST or PAYG matters, requires registration as a BAS agent with the Tax Practitioners Board — a bookkeeper without that specific registration can still record and reconcile your day-to-day transactions, but should not be charging a fee to lodge your BAS or advise on GST treatment. Our article on the difference between accountants, tax agents and bookkeepers covers this distinction in more detail, and it is worth confirming directly with anyone you are paying for BAS work.

Getting GST and BAS obligations right from the start generally saves a lot of after-the-fact cleanup — retrospective registration, backdated liabilities and reconstructing records for periods that were not tracked properly at the time are all considerably more work than staying on top of the reporting cycle as you go.

This article is general information about how GST and BAS obligations commonly work in Australia, not financial or tax advice for your specific business. Registration thresholds and rules can be subject to change, so checking directly with the ATO or a registered BAS or tax agent is the reliable way to confirm your own obligations. Our directory lists Australian accountants, tax agents and bookkeepers by area if you are ready to find one.

Frequently asked questions