Most tradies know GST exists. Far fewer understand exactly when registration becomes compulsory, what happens in the months before you hit the threshold, and what the real financial consequences are of getting the timing wrong. This guide answers all of those questions in plain English.

What Is GST and Who Has to Charge It?

The Goods and Services Tax is a 10% tax on most goods and services sold in Australia. When you're GST-registered, you add 10% to your invoices, collect it from clients, and pass it to the ATO via your BAS lodgement.

In exchange, you can claim back the GST you've paid on business purchases — tools, materials, vehicle expenses, software, accounting fees.

If you're not registered, you don't charge GST and you can't claim it back either.

The Compulsory Registration Threshold: $75,000

You must register for GST once your GST turnover reaches or exceeds $75,000 in any 12-month period.

This is not your profit — it's your gross revenue (everything you invoice, before deducting any expenses).

The Current vs Projected Test

The ATO applies the threshold test in two ways:

1. Looking back (current GST turnover): If your GST turnover in the past 12 months has been $75,000 or more, you must register now.

2. Looking forward (projected GST turnover): If you have reasonable grounds to believe your GST turnover will be $75,000 or more in the next 12 months, you must register now — even if you haven't hit it yet.

This projected test catches many tradies off guard. If you win a large contract in March that'll take your full-year revenue over $75,000, you should register immediately — not wait until you actually invoice $75,000.

The Penalty for Late Registration

Failing to register when required can result in the ATO assessing you for GST on all sales made while you were unregistered. You'll owe the GST component (1/11th of your sales) out of your own pocket — because you didn't collect it from clients.

Example: A plumber works unregistered for 6 months after crossing the threshold, invoicing $90,000 in that period. The ATO assesses $90,000 ÷ 11 = $8,182 in GST owed — which the plumber pays personally with no ability to recover from clients.

Voluntary Registration Under $75,000

You can choose to register for GST even if your turnover is below $75,000 — and for many tradies, this makes sense.

Why Register Early?

1. Claim GST on inputs: If you're spending significant money on tools, materials, and equipment, you pay 10% GST on all of it. If you're not registered, that GST is simply a cost. Registered tradies claim it back on their BAS.

Example: A carpenter earning $60,000 spends $20,000 on materials annually. The GST on those materials = $1,818. If registered, they claim this back. Unregistered, it's an additional $1,818 cost.

2. Professional image: Clients — especially commercial clients, builders, and property managers — expect GST-registered suppliers. An invoice without GST looks like you're very small or new.

3. Easier transition: Registering early means the admin habit is established before you hit the threshold. No scramble to change all your invoicing templates and processes mid-year.

Why You Might Not Register Early

Price competitiveness on residential work: If your clients are private individuals (homeowners) who cannot claim GST back themselves, being unregistered means you're 10% cheaper. The moment you register and add GST, that competitive advantage disappears.

For a tradie doing exclusively residential work under $75,000, staying unregistered until required is a legitimate choice.

How GST Turnover Is Calculated

GST turnover is not quite the same as accounting revenue. It's your total sales subject to GST, excluding:

  • Input-taxed supplies (rare in trade work — mainly financial supplies and residential rent)
  • GST-free supplies (some exported services)
  • Supplies not connected with Australia

For the vast majority of tradies doing domestic work, GST turnover equals gross revenue. Every invoice you issue counts.

What Counts Toward the Threshold

  • Labour charges (your time on the tools)
  • Materials supplied as part of jobs
  • Call-out fees
  • Project management fees
  • Any goods you sell
  • Subcontract amounts you invoice clients (not the subcontractor's invoice to you)

What Does NOT Count Toward the Threshold

  • Input-taxed supplies (as above — rare for tradies)
  • Sale of personal assets not used in business
  • Income from employment (wages from a second job)

Registering for GST: The Process

Step 1: Get an ABN (if you don't already have one)

You must have an ABN before you can register for GST. If you're a sole trader and don't have an ABN, register at abr.gov.au first.

Step 2: Register for GST

You can register for GST through:

  • The Australian Business Register at abr.gov.au
  • The ATO's Business Portal or Online Services for Business
  • Through your tax agent or accountant

Registration takes minutes online. Once registered, you receive confirmation and your GST registration start date.

Step 3: Choose Your Accounting Method

This is a critical decision that affects your cash flow:

Cash basis: You report GST when you actually receive payment and when you actually pay expenses. Simpler for most small tradies — you only owe GST to the ATO when you've been paid.

Accruals basis: You report GST when you issue invoices and when you receive supplier invoices, regardless of when payment occurs. Required if your turnover exceeds $2 million; optional below that.

Most sole trader tradies under $10 million should use cash basis — it's simpler and better for cash flow.

Step 4: Choose Your BAS Lodgement Frequency

Most small tradies lodge BAS quarterly:

  • Quarter 1: July–September (due 28 October)
  • Quarter 2: October–December (due 28 February)
  • Quarter 3: January–March (due 28 April)
  • Quarter 4: April–June (due 28 July)

Monthly lodgement is available (and sometimes required for higher-turnover businesses). Annual lodgement is available for businesses under $75,000 turnover — but if you're that small, you may not need to be registered at all.

Your First BAS After Registering

Your first BAS covers the period from your GST registration date to the end of that quarter. In it, you report:

G1 — Total sales: All revenue including GST (the total on your invoices)

G2 — Export sales: Unlikely for most tradies

G3 — Other GST-free sales: Rare for trade work

G10 — Capital purchases: Equipment and assets you've bought that include GST

G11 — Non-capital purchases: Materials, tools, expenses — the GST on these is your input tax credit

1A — GST on sales: G1 divided by 11

1B — GST credits: Your total input tax credits (GST paid on business purchases)

Net amount due: 1A minus 1B. If positive, you pay the ATO. If negative (you bought more than you sold in GST terms), the ATO refunds you.

The Cash Flow Impact of GST Registration

Many tradies underestimate the cash flow adjustment when they register. Here's what changes:

Before registration: You invoice $1,100 for a job. Client pays $1,100. You keep $1,100.

After registration: You invoice $1,100 (which is $1,000 + $100 GST). Client pays $1,100. You keep $1,000 and owe $100 to the ATO. The $100 was never yours — it's the ATO's money sitting in your account until BAS lodgement.

The discipline required: treat GST collected as not yours. Many tradies get into trouble by spending all money received, then scrambling to pay the BAS. A separate "GST account" — even just a savings account — where you park 1/11th of each payment received, prevents this cash flow shock.

GST and Your Pricing: The 10% Conversation

When you register and start charging GST, you have two options for how you handle pricing:

Option A: Add GST on top of existing prices

  • Old price: $800 for a job
  • New price: $880 ($800 + $80 GST)
  • Your revenue stays at $800; ATO gets $80
  • Client pays 10% more

Option B: Absorb GST into existing prices

  • Old price: $800 for a job
  • New price: $800 (GST-inclusive) = $727 + $73 GST
  • Your revenue drops to $727; ATO gets $73
  • Client pays the same

For residential clients who can't claim GST back, Option B protects your price competitiveness at the cost of your own margin. For commercial clients who can claim GST back, Option A is clearly better — the GST is neutral to them.

Most tradies going above the threshold use Option A (add 10% to prices) and explain to clients it's due to GST registration. Commercial clients don't care. Some residential clients push back — but the cost is simply a fact of business scale.

GST on Common Tradie Purchases

Knowing what has GST and what doesn't matters for your input tax credits:

  • Building materials, tools — Yes (10%) — Claim on BAS
  • Subcontractor invoices (GST-registered) — Yes (10%) — Claim on BAS
  • Subcontractor invoices (unregistered) — No — No credit to claim
  • Fuel — Yes (10%) — Claim on BAS
  • Vehicle purchase — Yes (10%) — Claim via chattel mortgage setup
  • Insurance premiums — Yes (10%) — Claimable on BAS
  • Bank fees — No — Financial supply — no GST
  • Wages to employees — No — Not a supply — no GST
  • Superannuation payments — No — No GST
  • Residential rent — No — Input-taxed

GST and Cash-in-Hand Jobs: A Compliance Warning

Accepting cash for jobs and not declaring the revenue for GST purposes is tax evasion. The ATO's data-matching now includes information from:

  • Supplier purchases (Bunnings, electrical wholesalers, plumbing merchants) — they report large purchases
  • Building permit data — council permits reveal jobs that should generate GST-registered income
  • AUSTRAC (bank transaction reporting)
  • Industry benchmarking — if your materials costs suggest $200,000 in work but you only declare $120,000 in sales, the gap is flagged

The short-term gain from cash jobs is vastly outweighed by the risk: back-assessed GST, penalties up to 75% of the tax shortfall, interest, and potential criminal prosecution for deliberate evasion.

Cancelling GST Registration

If your turnover falls below $75,000 and stays there, you can apply to cancel your GST registration. However:

  • You must remain registered for at least 12 months from the date you first registered
  • Cancellation is voluntary if under the threshold; you can stay registered
  • Many tradies stay registered even when revenue dips, to avoid re-registering later

To cancel: apply through the ATO's Business Portal or ask your tax agent.

Comparison: Registered vs Unregistered Under $75,000

  • Charge clients — No GST — +10% GST
  • Claim back GST on purchases — No — Yes
  • BAS lodgement — No — Quarterly (usually)
  • Admin complexity — Lower — Moderate
  • Looks professional to commercial clients — Less so — Yes
  • Competitive price for residential clients — Lower prices — 10% higher
  • Required above $75,000 — N/A — Compulsory

Frequently Asked Questions

Q: What happens if I forgot to register and have been over $75,000 for a year?
Register immediately. Then notify your tax agent. The ATO can back-assess you for GST on all income during the unregistered period — calculated as 1/11th of sales. Voluntary disclosure before the ATO finds you typically results in significantly reduced penalties.

Q: Do I charge GST to overseas clients?
Services exported to overseas clients may be GST-free ("zero-rated"). For tradies, this is rare — if you're doing physical construction work in Australia, GST applies even if the client is overseas. Get advice for any unusual cross-border arrangements.

Q: My turnover includes subcontractor costs I pass through — does that count?
If you invoice the client for the full job amount (including subcontractor work), the full invoice amount counts toward your GST turnover. If you act purely as an agent and only invoice your own fee, only the fee counts. Most tradies invoice the full job — so yes, full turnover counts.

Q: Do I need to issue tax invoices?
Yes, if you're registered for GST. A valid tax invoice must include: your ABN, the date, a description of what was supplied, the GST amount, and the total amount. For invoices under $1,000, you don't need to separately state GST — "total including GST" with the ABN is sufficient.