GST for Sole Traders in Australia
You’ve probably seen GST listed on receipts or invoices before, but what does it really mean?
GST stands for Goods and Services Tax. It’s a 10% tax that applies to most products and services sold in Australia. The money doesn’t stay with the business instead, businesses collect it on behalf of the Australian Taxation Office (ATO) and then remit it. You can easily calculate GST using our GST CALCULATOR.
Think of GST as a way for the government to collect tax from everyday transactions. You charge it to your customers, but you also get to claim back the GST you’ve paid on your business expenses (called input tax credits).
For sole traders, this means that GST isn’t really “your” money, you’re simply the middle person collecting it on behalf of the ATO.
What’s GST For Sole Traders?
The good news is that the GST for sole traders in Australia is nice and simple. It’s a flat 10%. So if you sell a service for $100 (excluding GST), you’ll add $10 GST, and your customer pays $110 in total.
But not everything attracts GST. Certain items are GST-free, including basic groceries, selected health services, and education. Others are what the ATO calls input-taxed, such as residential rent and financial services. That’s why it’s important to know whether the work you do as a sole trader falls under taxable, GST-free, or input taxed supplies.
Do Sole Traders Need to Register for GST?
Here’s the simple rule: if your GST turnover (that’s your total business income before expenses) is $75,000 or more in 12 months, the Australian Taxation Office (ATO) requires you to register for GST. From that point on, you’ll need to:
- Add 10% GST to your invoices for taxable sales.
- Report and pay GST to the ATO through a Business Activity Statement (BAS).
- Claim GST credits for purchases that include GST (like laptops, software, or tools you use for work).
You’ll need an Australian Business Number (ABN) to complete the registration. Once registered, you’ll charge GST on your invoices and report it in your Business Activity Statement (BAS).
Sole Traders as Ride-Sourcing and Taxi Services
Not every sole trader gets to wait until they hit $75,000.
If you’re a ride-sourcing driver (for example, working with Uber, Ola, or DiDi) or driving a taxi, you must register for GST from your very first dollar earned.
That means:
- Every fare you collect must include GST.
- You’ll need to regularly lodge a BAS with the ATO to report and pay GST.
This rule applies regardless of the size of your turnover, as the ATO treats all taxi and ride-sourcing services as taxable supplies.
Voluntary GST Registration and Benefits
If your annual turnover is under $75,000, registration is optional, but you may still want to consider it.
Why register voluntarily?
- Claim GST credits on business purchases like laptops, software, or tools.
- To appear professional, many clients expect GST-registered invoices.
- Stay ahead if you’re close to the threshold, as it prevents a last-minute scramble.
Keep in mind: once you register, you must charge GST and lodge BAS even if you stay below $75,000 in future years.
How Sole Traders Calculate and Charge GST?
When you’re a sole trader, you’ll often deal with two types of prices on an invoice:
GST-inclusive price: The final price that includes GST.
Example: A client pays you $1,100, which already includes $100 GST.
Formula:
BasePrice=InclusivePrice1.10Base Price = \frac{Inclusive Price}{1.10}BasePrice=1.10InclusivePrice GSTAmount=InclusivePrice−BasePriceGST Amount = Inclusive Price − Base PriceGSTAmount=InclusivePrice−BasePrice.
GST-exclusive price: The price before GST is added.
Example: A service fee of $500 (exclusive of GST) becomes $550 once GST is added.
Formula:
FinalPrice=ExclusivePrice×(1+10%)Final Price = Exclusive Price × (1 + 10\%)FinalPrice=ExclusivePrice×(1+10%)
Why it matters:
- On your invoices, you must clearly show whether your prices are GST-inclusive or GST-exclusive.
- Businesses use this information to track output tax (what you collect) and input tax credits (what they can claim back).
GST Calculators for Sole Traders
While formulas are effective, errors can occur easily when juggling multiple invoices or preparing your Business Activity Statement (BAS). That’s why many sole traders rely on an Australian GST Calculator.
- Converts between GST-inclusive and GST-exclusive prices instantly
- Shows the exact GST amount to record on invoices
- Helps with accurate BAS reporting to the ATO
- Saves time and reduces mistakes
- Calculate turnover when you reach the threshold
Even if you know the formulas, always double-check large invoices with a GST calculator. It keeps your records clean and ensures you stay compliant with the ATO. As a sole trader, calculating GST comes down to simple 10% math, but making sure your invoices and BAS are accurate is what really counts. A GST calculator makes this quick, reliable, and ATO-compliant.
GST Calculators for Sole Traders
When you’re registered for GST, you don’t always lose money on the GST you pay for business purchases. Instead, you can claim it back through what’s called an input tax credit. GST doesn’t actually cost you, it just passes through your business.
Which Expenses Can You Claim (and What About Private Use)?
Not every expense qualifies, but lots of everyday business costs do. To claim a GST credit, you’ll need a valid tax invoice from the supplier that shows the GST amount.
Here are some common examples for sole traders:
- A new laptop or office computer
- Office furniture, printer paper, and stationery
- Business software like Xero, Canva, or Adobe
- Fuel and car expenses (for the portion used for business)
If you use something for both business and personal use, you can only claim the business part.
For example, if you buy a $1,100 laptop (which includes a $100 GST) but only use it 70% for work, you can only claim back $70.
This is called apportionment, and it ensures fairness (and ATO compliance).
How Long Do You Have to Claim GST Credits?
The ATO gives you plenty of time, up to 4 years, to claim an input tax credit. The clock starts from the date you lodge the Business Activity Statement (BAS) that covers the period when you purchased the item.
Example: If you bought office furniture in July 2024, you have until July 2028 to claim the GST on it.
Of course, this only works if you keep your records in order. Save copies of tax invoices, receipts, and digital files so you can prove your claim if the ATO ever asks.
GST Reporting for Sole Traders
Once you’re registered for GST, you’ll need to report it to the Australian Taxation Office (ATO). This is done through a form called the Business Activity Statement (BAS). In the BAS, you show the GST you’ve collected from your customers, known as output tax and the GST you’ve paid on your own business purchases, known as input tax credits. The difference determines whether you owe the ATO.
money or get a refund.
Sole traders report GST through the Business Activity Statement (BAS), showing both GST collected and credits claimed. You can lodge your BAS online via ATO myGov or through accounting software like Xero, MYOB, or QuickBooks for faster, error-free compliance.
Frequently Asked Questions
Final Words
At first, GST can feel like a headache for sole traders, but once you understand the basics, it’s not as overwhelming as it seems. If your GST turnover reaches $75,000 or more, the Australian Taxation Office (ATO) requires you to register and report through a Business Activity Statement (BAS). If you’re earning under that amount, registration is optional, although many sole traders still choose to register so they can claim GST credits. If you drive for Uber, DiDi, or taxis, registration is compulsory from day one, no matter how much you earn.
One of the easiest ways to take the stress out of GST is to use a simple GST calculator. It helps you check whether your invoices are correct, see the difference between GST-inclusive and GST-exclusive amounts, and stay on track when it’s time to lodge your BAS. The ATO has clear guidelines to follow, and if you’re ever unsure, it’s always a good idea to check in with a registered tax agent.