GST and Small Business: 2025 Survival Guide

Published: Sept 2025 Gotax Publishing

Running a small business? If you’ve got an ABN, you’ve probably already tripped over three little letters: GST.
That’s Goods and Services Tax — the 10% sting on most sales in Australia. And whether you’re a tradie, a café owner, an Uber driver, or running an online side hustle, the GST rules matter. Get it wrong, and the ATO will slap you harder than a magpie in spring.

This Gotax guide is your all-in-one, plain-English cheat sheet on GST — what it is, who needs to register, what you can claim back, and the traps that trip up thousands of small businesses every year.

What is GST?

GST (Goods and Services Tax) is a 10% tax on most goods and services sold in Australia.

If you’re registered, you:

• Charge GST on your sales (output tax)

• Claim back GST on your business purchases (input tax credits)

• Send the difference to the ATO in your Business Activity Statement (BAS).

Do I Need to Register for GST?

You must register if:

• Your business has (or is expected to have) turnover of $75,000+ per year (before GST).

• You’re a taxi or rideshare driver — no matter your turnover.

• You want to voluntarily register to claim GST credits.

You don’t need to register if you:

• Earn less than $75,000 a year in ABN income,

• Are only doing hobby income, or

• Just want to keep things simple.

Example:

• Freelance designer earning $50k? GST optional.

• Uber driver earning $15k? Must register.

• Tradie earning $90k? Must register.

How Does GST Work in Practice?

Say you’re a tradie charging $1,100 for a job (that’s $1,000 + $100 GST).

• You collect $100 for the ATO.

• You buy tools worth $550 (that’s $500 + $50 GST).

• You claim back the $50 as an input tax credit.

• End of the quarter, you lodge your BAS and send the ATO the net $50.

What If I Don’t Register But Should?

If you go over the $75,000 threshold and don’t register, the ATO can:

• Force you to register back to the date you went over,

• Make you pay the GST out of your pocket (ouch), and

• Slap penalties and interest on top.

What Can You Claim Back as GST Credits?

You can claim the GST portion of expenses that are directly related to running your business.

Examples:

• Tools, stock, and equipment

• Office supplies (paper, ink, stationery)

• Fuel, rego, and repairs for business cars

• Phone and internet bills (business portion)

• Rent for business premises

• Marketing and advertising

• Professional fees (accounting, legal, tax agent)

You can’t claim:

• Private expenses (your Netflix subscription doesn’t count)

• GST-free purchases (like fresh food, bank fees, residential rent)

• Anything without a valid tax invoice

BAS (Business Activity Statement) Explained

This is where you report your GST. Most small businesses lodge quarterly.
You report:

• GST collected on sales

• GST paid on purchases

• PAYG instalments (if applicable)

• Any other obligations

Then you pay (or sometimes get a refund).

Pro tip: Lodge on time, even if you can’t pay. Late lodgers get slapped twice — fines and interest. Get easy software that can handle your BAS.

Common GST Mistakes Small Businesses Make

• Forgetting to register after hitting $75,000.

• Claiming GST on items that don’t have GST (like bank charges, overseas purchases).

• Double-claiming GST and the full expense.

• Claiming personal expenses (ATO sees through “business Netflix”).

• Missing deadlines — the ATO loves a late penalty.

Gotax Online FAQ: Real Questions, Real Fast

Do I charge GST on all sales?

Mostly, yes. Exceptions include GST-free items like basic food, medical services, education.

Do overseas clients pay GST?

No. If your customer is outside Australia, generally no GST.

Can I claim GST on overseas purchases?

No — if there’s no GST in the price, you can’t claim it back.

What if I earn $74,999 — do I need GST?

Not unless you’re a rideshare driver or taxi.

How do I know if I’ve gone over $75k?

Check your rolling 12-month turnover, not just financial years.

Do I need a separate bank account for GST?

Highly recommended. Stick 10% aside so you’re not broke at BAS time.

Can I claim GST on a car?

Yes, but only business portion. And luxury cars have limits.

Do I charge GST on tips?

Tips are voluntary — no GST.

What if my client doesn’t have an ABN?

Withhold 47% tax unless they supply one.

Can I deregister if I drop below $75k?

Yes, but you may have to adjust for assets you’ve claimed GST on.

Record-Keeping for GST

• Keep valid tax invoices (over $82.50 needs a proper tax invoice).

• Record all sales and purchases.

• Keep everything for five years.

• Use Deduction Grabber or eCashBooks to make life easy.

Quick Tips for Surviving GST

• Put aside 10% of every sale.

• Don’t claim GST where there isn’t any.

• Lodge BAS on time — no excuses.

• Use bookkeeping tools to avoid ATO migraines.

• Get advice if you’re unsure — Derek’s cheaper than an audit.

The Bottom Line

GST isn’t optional if you’re a small business above the threshold. But with the right setup, it’s not scary. Collect, claim, lodge, repeat. Keep good records, stay honest, and you’ll stay out of the ATO’s firing line.

And if you want GST (and your whole tax return) made simple, easy, fun, and audit-proof — let Gotax handle it.

Start here:

• Small Business Tax Returns: https://www.gotax.com.au/self-employed-tax-return

• ABN Tax Returns: https://www.gotax.com.au/abn-tax-return

More great Learning at the Gotax Online Library