GST Threshold: When a Client Must Register

The GST threshold is $75,000 for a business and $150,000 for a not-for-profit body, measured using GST turnover. Your client can become liable before sales reach that amount if projected turnover meets the test. Registration is due within 21 days of becoming required.

When Registration Becomes Compulsory

A client carrying on an enterprise must register when its GST turnover meets the applicable registration threshold. These figures exclude GST. They measure business sales, not profit or the client’s take-home income.

The ATO’s registering for GST guidance sets the business threshold at $75,000 and the not-for-profit threshold at $150,000. Reaching the figure is enough. You do not wait for turnover to exceed it or for the financial year to end.

The 21-day period starts when registration becomes required. Discovering the problem while preparing a return does not restart that period. Establish when the client first met the test from the records available at that time.

Taxi and limousine passenger travel, including ride-sourcing, requires GST registration regardless of turnover. The ATO applies that rule to casual drivers too. Food delivery alone does not become taxi travel because the driver uses a ride-sourcing company’s service.

A client who wants to claim business fuel tax credits must also register for GST. Ask about licensed activities and inspect any licence conditions separately. A licence is a prompt to check another obligation, not evidence that every licensed business has a different GST threshold. The ATO’s business tax obligations distinguish the turnover, passenger-travel and fuel-tax-credit triggers.

How GST Turnover is Worked Out

GST turnover uses rolling 12-month periods, so calculate both current and projected turnover for the entity.

Current GST turnover covers the current month and the previous 11 months. For projected GST turnover, use the current month and the next 11 months. Include supplies already made and supplies likely to be made within the relevant period.

Projected turnover at or above the threshold requires registration. The current-turnover test applies at or above the threshold unless the Commissioner is satisfied that projected turnover is below it. Keep evidence for that exception. The ATO’s GST turnover ruling explains the relationship between these tests.

Start with enterprise sales before deducting expenses. GST-free sales generally count. Leave out these amounts under the ATO’s turnover rules:

• GST included in sales.
• Sales to associates that are not for payment and are not taxable.
• Sales not connected with an enterprise the client runs.
• Input-taxed sales.
• Sales not connected with Australia.

Projected turnover has further exclusions. Disregard transfers of capital assets and sales solely caused by ceasing an enterprise or substantially and permanently reducing its size or scale. A capital asset sale is not automatically excluded from current turnover. Nor is trading stock a capital asset merely because its sale is large.

An Invented Sole Trader Example

An unnamed sole trader sells taxable services. Each row is a successive monthly review after trading starts. All amounts are invented, with no GST included. The forecasts include the review month and the following 11 months.

Review point	Sales in review month	Current GST turnover	Projected GST turnover	Decision
First month	$4,000	$4,000	$48,000	Below both tests
One month later	$4,500	$8,500	$54,000	Below both tests
Two months later	$5,000	$13,500	$60,000	Below both tests
Three months later	$5,500	$19,000	$66,000	Below both tests
Four months later	$6,500	$25,500	$78,000	Projected test met

In the final review period, a new contract supports sales of $6,500 a month throughout the projected period. That produces $78,000: $6,500 multiplied by 12. The client becomes required when that expectation is supported, even though current turnover is only $25,500.

Record the contract event that changed the forecast. If it happened during the review month, establish the actual day from the contract and correspondence. The table’s monthly labels do not postpone liability until month-end.

Multiple Activities and a New Entity

Combine activities carried on by the same sole trader under one ABN. Invented annual forecasts of $45,000 from consulting and $35,000 from another taxable business produce $80,000 of projected turnover. Testing each activity separately would miss the registration obligation.

Registration belongs to the entity. If a sole trader transfers a business to a company, assess the company’s expected supplies from commencement. Do not transfer the sole trader’s GST registration or blindly add the old entity’s historical sales to the new entity’s current turnover. The ATO’s registration practice statement confirms that the entity is registered. Check separate GST grouping or branch rules where those arrangements exist.

Checking Whether a Client is Already Registered

Check GST registration against the correct ABN, then confirm the effective date against the client’s ATO records.

1. Search the exact ABN in ABN Lookup. Confirm the legal entity and entity type before using the result.
2. Read the field headed Goods and Services Tax (GST). Record the registration status and its displayed effective date. Look at historical details if an earlier period is relevant.
3. Once you have authority and the client is linked to your practice, select the client in Online services for agents. Open Profile and the tax registrations area. Inspect the GST registration and retain its effective date.
4. Compare that information with the client’s registration notice and earlier activity statements.

The ABR’s public-information guidance confirms that GST status and dates of effect and cancellation are public. The ATO’s Profile guide identifies the tax registrations area for agents.

Keep the effective date on the client file. It identifies the periods requiring activity statements, subject to the reporting cycle and any later cancellation. An active ABN alone does not establish GST registration.

If the client disputes the lookup, confirm the ABN and compare the ATO notice with the agent record. Ask the ATO to resolve an incorrect status or effective date before relying on it. Keep the discrepancy and the response. For wider identity and register checks, use the ABN and TFN checking guide.

When a Client Crossed the Threshold Months Ago

A late discovery can leave your client owing GST on taxable sales made from the date registration was required, even when customers were never charged extra. Establish that date before calculating the debt.

Rebuild the monthly tests from sales records and the forecasts supported at each point. A later sales surge does not prove that the client could reasonably expect those sales months earlier. Preserve the contracts, order book and correspondence that establish the first compulsory-registration event.

Then prepare a catch-up schedule for each affected reporting period:

1. Separate taxable sales from GST-free and input-taxed sales. Identify refunds and adjustments.
2. Calculate GST on taxable sales using the agreed consideration. Where a fixed total price contains GST, the GST component is one-eleventh of that price.
3. Identify eligible purchase credits, with evidence of GST charged and the business-use proportion. Exclude private use and purchases without a credit entitlement.
4. Deduct eligible credits from GST on sales to estimate the net position. Keep penalties and interest separate.

For an invented period, $22,000 of wholly taxable, fixed-price sales contains $2,000 GST. Eligible purchases with $660 of GST credits leave $1,340 payable before adjustments, penalties or interest. The ATO’s GST credit guidance explains purchase evidence and credit eligibility.

Previously Issued Invoices

Check the contract before telling the client they can recover another 10% from a customer. A fixed agreed price may leave the supplier bearing the GST. Where the terms permit an additional GST amount, agree the correction and issue the appropriate corrected tax invoice.

A GST-registered customer needs evidence for any credit it claims. Explain the corrected GST treatment and provide a valid tax invoice once registration and its effective date are settled. The customer’s registration alone does not guarantee a credit for every purchase.

Lodge the GST registration once the liability and effective date are established. Confirm that the ATO has made all affected activity statements available. Reconcile the catch-up periods separately and use the BAS preparation checklist for their preparation.

Penalties, Interest and Disclosure

Failure to apply for required GST registration has its own penalty. Late activity statements and tax shortfalls can create separate consequences. The ATO’s registration-penalty practice statement explains remission, including voluntary compliance before ATO contact. Do not promise that all penalties disappear.

General interest charge applies to unpaid amounts and compounds daily. Use the relevant periods and actual ATO account entries when advising on the total debt. The ATO’s unpaid-debt guidance explains interest and remission.

Raise voluntary disclosure promptly when the reconstruction identifies omitted GST or an incorrect statement. Explain whether the ATO has already notified an examination. Timing affects reductions in some shortfall penalties, as the ATO’s voluntary-disclosure guidance explains. Registration-penalty remission and shortfall-penalty reductions have different rules.

Keep the client’s instructions and your written advice on file. Record the liability calculation, disclosure decision, amounts still unresolved and any request for remission. Confirm the penalty and interest position before giving the client a final payment figure.

Registrations That Do Not Follow the Turnover Test

Some GST arrangements change how a client registers or pays, while the ordinary turnover test remains relevant.

Simplified GST registration is designed for eligible non-resident businesses supplying Australian consumers, including imported services and digital products. It is not the ordinary domestic sole trader’s registration route. The ATO’s imported-services guidance distinguishes the simplified and standard systems.

Deferred GST is a separate approval scheme for taxable imports. Approved importers pay import GST through monthly activity statements instead of at importation. Eligibility includes GST registration, an ABN and monthly reporting, with electronic dealings and other conditions. It does not increase the compulsory-registration threshold. See the ATO’s importation ruling.

A fall below the threshold does not automatically end GST registration. Continue treating the entity as registered until its registration is cancelled with an effective date. Voluntary registration generally has a minimum 12-month period. For the separate eligibility and cancellation task, use cancelling GST registration.

What to Collect and Check When the Client Comes on Board

Collect enough sales history and forward evidence to answer the GST question before your practice’s first lodgement for the client.

Ask for monthly sales for the last 12 months, including sales from every activity carried on by that entity. Request signed contracts and forward orders. Ask about unusual trading periods, asset disposals, planned closure and permanent reductions in activity.

Compare the client’s answer about GST registration with ABN Lookup and the ATO record. Resolve differences in status or effective date before the first lodgement. Keep records separate where the business has moved between entities.

For a client just below the threshold, assign a monthly turnover review and flag the file for the next quarterly review. A quarterly reminder alone can miss the 21-day registration period. Bring the review forward when the client signs a large contract or changes its expected trading activity.

Keep a decision note with the entity and ABN, the threshold applied and both turnover calculations. State which supplies you excluded and why. Record the decision date, the evidence supporting the forecast and the event that starts compulsory registration. Give the client a clear instruction to report any change that could bring projected turnover to the threshold.