Quick answer
GST, or goods and services tax, is a 10% tax on most goods, services and other items sold or consumed in Australia. Businesses with GST turnover of $75,000 or more (or $150,000 for non-profits) must register, add GST to their prices and pass it to the ATO, usually through the business activity statement (BAS). They can claim back GST paid on business purchases as GST credits.
Key points
- Charged at 10% on most taxable sales; some items are GST-free or input-taxed
- Registration is required within 21 days of reaching the $75,000 turnover threshold
- Reported and paid through the BAS, monthly or quarterly for most small businesses
- Interest and most loan fees don't carry GST, but GST on equipment can usually be claimed back
Every registered business in Australia is, in effect, a part-time tax collector. GST is a 10% tax added to most sales, collected by the business from its customers and paid to the ATO, with credits for the GST it pays on its own purchases.
Who has to register?
Under ATO guidance, a business has to sign up for GST when its GST turnover is $75,000 or higher, measured either over the current month and the previous 11 months or projected over the current month and the next 11. Non-profit organisations have a $150,000 threshold. Anyone providing taxi or ride-sourcing services must register regardless of turnover. You need an ABN first, and the clock gives you 21 days after crossing that line.
Below the threshold, registration is optional. Some small businesses register anyway so they can claim GST credits on start-up purchases.
How GST flows through a business
- You add 10% to taxable sales and issue a tax invoice.
- You pay GST on most things you buy for the business.
- On each BAS, you report the GST you collected and the GST credits you’re claiming.
- You pay the difference to the ATO, or receive a refund if credits are larger.
Not every sale attracts GST. Basic food, most health and education services and some exports are GST-free. Residential rent and financial supplies, including lending, are input-taxed, which means no GST is charged but related credits generally can’t be claimed.
Why GST matters when you borrow
It isn’t your money, even while it’s in your account. A quarterly BAS filer might hold three months of collected GST before paying it. Spending that balance on wages or stock is one of the most common ways small businesses end up with an ATO debt. Lenders know this, and they’ll check your ATO portal or ask about any overdue BAS.
BAS is evidence of turnover. Low-doc lenders often accept recent BAS statements in place of full financials, because the sales figure (label G1) is reported to the ATO. Make sure what you’ve lodged matches what you tell the lender.
GST on equipment can usually be claimed. When a GST-registered business buys a $66,000 truck on a chattel mortgage, the price includes $6,000 GST. That $6,000 can generally be claimed as a credit on the next BAS, even though the truck is financed. Some owners use the refund to reduce the loan or rebuild working capital. How each structure (chattel mortgage, hire purchase, lease) is treated for GST is covered in ATO guidance listed in the sources.
Loan costs are mostly GST-free. Interest and most lender fees have no GST in them, so there’s no credit to claim on repayments.
Behind on a BAS or holding a GST debt? Start an enquiry and we’ll explain which lenders will look at it.
Quick reference
| Situation | GST outcome |
|---|---|
| $1,100 sale including GST | $100 to the ATO, $1,000 is your revenue |
| Business turnover of $60k, not registered | No GST charged, no credits claimed |
| Interest on a business loan | No GST |
| Equipment bought by a registered business | GST credit usually claimable |
Our GST calculator adds or removes GST from any amount in seconds.
Related terms
Turnover, annual turnover, financial year and payment plan often come up alongside GST in a loan application.
When a BAS bill and cash flow don’t line up
A big quarterly GST payment can land at exactly the wrong time. If you’d like to explore finance to cover it, or to clear an existing balance with the ATO, let us know. The form needs only a minute, and simply asking won’t leave a credit enquiry on your file. Your enquiry isn’t shopped to a dozen lenders; one person reviews it and phones you. Put down the real figures, including any amount owing to the ATO, which lets us steer you towards a suitable lender from the outset.
Frequently asked questions
How do I work out the GST in a price that already includes it?
Divide the GST-inclusive price by 11. A $5,500 invoice that includes GST contains $500 of GST and $5,000 for the goods or services. To add GST to a price, multiply by 1.1.
Do I pay GST on loan interest and fees?
Generally not. Lending money is an input-taxed financial supply, so interest isn't subject to GST. Some fees charged by third parties, such as a valuer or a broker, may include GST, so check each invoice.
Can I get a business loan if I'm not registered for GST?
Yes. Being under the threshold is common for newer and smaller businesses. Lenders just use other evidence of income, such as bank statements and tax returns, instead of BAS.
Can a business loan be used to pay a GST debt?
Yes, it's a common use. Some lenders specialise in funding ATO debts, including overdue GST, though they'll want to understand why the debt built up and how future BAS payments will be met.
What happens if I should have registered but didn't?
The ATO can backdate your registration, and you may owe GST on past sales even though you didn't charge it. Speak to your accountant quickly, because the amount grows the longer it's left.