Understanding GST for Hospitality Businesses
Hospitality businesses—including restaurants, cafes, bars, hotels, catering companies, and food trucks—face unique GST challenges. From mixed food and beverage sales to tipping, takeaway vs dine-in, and accommodation pricing, hospitality operators must navigate complex tax rules while managing high-volume, low-margin operations.
This comprehensive guide covers everything hospitality business owners need to know about GST compliance, including registration thresholds, POS system configuration, food vs alcohol GST treatment, staff meals, tipping, and maximizing GST credits on restaurant expenses.
Quick GST Facts for Hospitality
- Registration Threshold: $75,000 annual turnover (Australia), $60,000 (New Zealand)
- Food GST: 10% (Australia), 15% (New Zealand) on all prepared food and beverages
- Pricing: Must display GST-inclusive prices on menus (consumer-facing)
- Tax Invoices: Not required for individual meals (most sales < $82.50), but needed for catering invoices
- Accommodation: 10% (AUS) / 15% (NZ) GST on short-term accommodation (hotels, motels, Airbnb)
1. When Hospitality Businesses Must Register for GST
Calculating Turnover for Restaurants and Cafes
For hospitality businesses, turnover includes all revenue from:
- Food sales (dine-in, takeaway, delivery)
- Beverage sales (coffee, soft drinks, alcohol)
- Catering services
- Functions and events
- Accommodation (if applicable)
- Service charges and booking fees
- Delivery fees charged to customers
What NOT to Include in Turnover
- GST itself (calculate turnover GST-exclusive)
- Tips/gratuities (if passed directly to staff with no markup)
- Refunds and cancelled orders
- Staff meals consumed by employees (not sales)
Fast-Tracking to $75k Threshold
Hospitality businesses often reach the GST threshold quickly:
Example: Small Cafe Turnover Calculation Average daily sales: $400 Trading days: 6 days/week × 52 weeks = 312 days/year Annual turnover: $400 × 312 = $124,800 Result: MUST register for GST ($124,800 > $75,000 threshold) Note: Many cafe owners underestimate turnover and miss registration deadline
Voluntary Registration for New Hospitality Businesses
Even if starting below the threshold, new hospitality businesses should consider immediate registration:
| Benefit | How It Helps Hospitality |
|---|---|
| Claim GST on Fit-Out | Reclaim 10% GST on major startup costs: kitchen equipment ($50k fit-out = $5k GST credit), furniture, POS systems, signage |
| Claim GST on Inventory | Recover GST on food/beverage purchases from suppliers (typically 30-35% of revenue) |
| Cash Flow Advantage | In early months (low sales, high expenses), often receive GST refunds instead of paying GST |
| Wholesale Suppliers | Some wholesale food suppliers require ABN and GST registration |
| Professional Image | ABN on invoices for catering/events signals credibility |
Startup Cafe GST Example
Month 1 (Low Sales, High Setup Costs): Sales: $8,000 (GST collected: $800) Expenses: $60,000 (fit-out, equipment, stock) (GST paid: $6,000) BAS Result: $800 - $6,000 = $5,200 GST REFUNDBy registering early, you recover $5,200 from the ATO to reinvest in the business.
2. GST on Food and Beverages
What Food Items Attract GST?
In Australia, most food sold by restaurants and cafes is subject to 10% GST:
| Category | GST Treatment | Examples |
|---|---|---|
| Prepared Meals (Ready-to-Eat) | 10% GST | Restaurant meals, cafe sandwiches, takeaway pizza, sushi, salads, hot chips |
| Hot Food & Beverages | 10% GST | Coffee, tea, hot meals, pies, sausage rolls, soup |
| Alcohol | 10% GST | Beer, wine, spirits, cocktails (note: also subject to alcohol excise tax) |
| Soft Drinks & Juices | 10% GST | Coke, lemonade, orange juice, smoothies, milkshakes |
| Bakery Items (Takeaway) | 10% GST | Cakes, pastries, muffins, cookies sold ready-to-eat |
| Confectionery | 10% GST | Chocolate bars, lollies, ice cream |
| Basic Groceries (Unprepared) | GST-Free (0%) | Raw meat, fresh fruit/vegetables, bread, milk, eggs, cheese (sold unprepared) |
Important: "Prepared Food" Rule
The key distinction is preparation:
- Prepared/processed food (ready-to-eat) = 10% GST
- Basic groceries (unprepared, raw ingredients) = GST-free (0%)
Example: A whole raw chicken (unprepared) = GST-free. A cooked rotisserie chicken (prepared) = 10% GST.
Takeaway vs Dine-In: GST Treatment
In Australia, there is no difference in GST treatment between takeaway and dine-in:
- Dine-in meal: 10% GST
- Takeaway meal: 10% GST
- Delivery meal: 10% GST
Note: This is different from some countries (e.g., UK) where takeaway has different VAT treatment.
Alcohol and GST
Alcohol sales have dual taxation:
- Alcohol Excise Tax - Paid by manufacturers/importers (included in wholesale price you pay)
- GST (10%) - Applied to the retail price including excise
Example: Beer Pricing Wholesale Price (incl. excise): $40.00 per case Your Markup: 100% Retail Price (GST-exclusive): $80.00 GST (10%): $8.00 Customer Pays: $88.00 Menu Price: "$8.00 per beer" (GST-inclusive, shown to customers)
3. Pricing and Menu Display Requirements
GST-Inclusive Pricing Requirement
Australian law requires hospitality businesses to display GST-inclusive priceson menus, blackboards, and advertising:
Menu Pricing Rules
- ✅ Correct: "Flat White $4.50" (GST included in $4.50)
- ✅ Correct: "Steak Dinner $35.00 (incl. GST)" (optional GST note)
- ❌ Incorrect: "Burger $18.00 + GST" (not allowed for consumer pricing)
- ❌ Incorrect: "Prices exclude GST" (violates ACCC regulations)
Receipts and Tax Invoices
Standard Receipts (Under $82.50)
For most individual meals (under $82.50), a simple receipt is sufficient:
RECEIPTJoe's Cafe ABN: 12 345 678 901 123 Main St, Sydney NSW 2000 Date: 23 January 2026 Receipt #: 001234 2× Flat White $9.00 1× Avocado Toast $16.00 ------- Total: $25.00 (Includes GST of $2.27) Payment: Visa ****1234 Thank you!
Tax Invoices (Over $82.50)
For catering events, large tables, or corporate lunches over $82.50, issue a tax invoice:
TAX INVOICEThe Italian Restaurant Pty Ltd ABN: 98 765 432 109 456 Food St, Melbourne VIC 3000 Invoice Date: 23 January 2026 Invoice #: INV-2026-0123Bill To:ABC Corporation Pty Ltd ABN: 11 222 333 444 Corporate Function - 15 January 2026 Catering Package (20 guests) $1,800.00 Wine Package (premium) $400.00 Service Charge $200.00 ---------- Subtotal: $2,400.00 GST (10%): $240.00TOTAL DUE: $2,640.00Payment Terms: Net 14 daysThis is a tax invoice for GST purposes.
4. POS Systems and GST Configuration
Configuring Your POS for GST
Modern hospitality POS systems (Square, Lightspeed, Toast, Kounta) support GST calculation:
Step-by-Step POS GST Setup
- Enter ABN/Business Details - In POS settings, add your ABN and business name
- Set Default Tax Rate - Configure 10% (AUS) or 15% (NZ) as default for all items
- Enable "Tax Inclusive" Mode - Ensure menu prices include GST (not added at checkout)
- Configure Receipt Templates - Show "Total (incl. GST of $X)" on receipts
- Set Up Tax Invoice Template - For catering/large orders over $82.50
- Enable GST Reports - Daily/monthly reports showing GST collected and sales breakdown
Recommended POS Systems for Hospitality
| POS System | Pricing | Best For | GST Features |
|---|---|---|---|
| Square for Restaurants | 2.2% per transaction + hardware | Small cafes, food trucks | Auto GST calculation, tax-inclusive pricing, daily GST reports, integrates with Xero |
| Lightspeed Restaurant | From $179/month | Full-service restaurants, bars | Multi-location GST tracking, BAS-ready reports, table management, inventory GST |
| Toast POS | From $165/month | Mid-large restaurants | Advanced GST reports, menu engineering, payroll integration, online ordering |
| Kounta (by Lightspeed) | From $99/month | Australian hospitality (local support) | Australian-specific GST compliance, ATO-ready reports, multi-venue |
| Clover | From $14.95/month + hardware | Quick-service cafes | Tax-inclusive menus, customer receipts, basic GST tracking |
Daily GST Reconciliation
At end-of-day (EOD), run a GST sales report from your POS:
Daily Sales Report - 23 January 2026 Gross Sales (incl. GST): $1,320.00 GST Component: $120.00 Net Sales (excl. GST): $1,200.00 Breakdown: - Food Sales: $800.00 (GST: $72.73) - Beverage Sales: $400.00 (GST: $36.36) - Alcohol Sales: $120.00 (GST: $10.91) Cash: $500.00 Card: $820.00
5. Accommodation and Short-Term Rentals
Hotel and Motel GST
Short-term accommodation (hotels, motels, serviced apartments, Airbnb) is subject to 10% GST:
What Qualifies as "Short-Term Accommodation"?
- Hotel/motel rooms - Nightly or weekly bookings
- Serviced apartments - Short stays with hotel-like services
- Airbnb/holiday rentals - Bookings under 28 days (typically)
- Bed & Breakfasts
- Hostels
Long-Term Rentals (GST-Free)
- Residential leases (6+ months) = Input-taxed (no GST)
- Commercial property leases = 10% GST
Airbnb and GST
If you operate an Airbnb as a business and earn over the GST threshold:
Scenario 1: Full-Time Airbnb Host (Must Register)
Annual Airbnb Revenue: $90,000 Threshold: $75,000 Requirement: MUST register for GSTGST Treatment: - Charge guests: $90,000 + $9,000 GST = $99,000 total - Airbnb fees (3%): $2,970 (claim $270 GST credit) - Cleaning, linen, maintenance: ~$15,000 (claim $1,500 GST credit) Net GST: $9,000 - $1,770 = $7,230/year payable
Scenario 2: Occasional Airbnb (Below Threshold)
Annual Airbnb Revenue: $40,000 (e.g., renting out room on weekends) Threshold: $75,000 Requirement: Not required to register (but can voluntarily) If not registered: - Don't charge GST to guests - Can't claim GST on expenses - Simpler tax compliance
6. Claiming GST on Hospitality Business Expenses
Major Claimable Expenses
| Expense Category | Examples | GST Claimable? |
|---|---|---|
| Food & Beverage Supplies | Ingredients from wholesalers (meat, vegetables, dairy, dry goods), beverages, alcohol | ✅ Yes - Claim full 10% GST on all stock purchased from GST-registered suppliers |
| Kitchen Equipment | Ovens, fridges, freezers, dishwashers, coffee machines, blenders, microwaves | ✅ Yes - Major fit-out expense, claim 10% GST on purchase |
| Furniture & Fit-Out | Tables, chairs, bar stools, signage, decor, lighting, flooring | ✅ Yes - Significant GST credits on startup fit-out ($50k fit-out = $5k GST credit) |
| POS & Technology | POS system (Square, Lightspeed), payment terminals, printers, kitchen display screens | ✅ Yes - Hardware and monthly software subscriptions |
| Utilities | Electricity, gas, water, internet, phone | ✅ Yes - Business portion claimable (100% if dedicated commercial premises) |
| Rent (Commercial) | Restaurant/cafe lease, storage space | ✅ Yes - Commercial rent includes 10% GST (claim as input tax credit) |
| Cleaning & Supplies | Cleaning products, dishwashing liquid, garbage bags, paper towels, napkins | ✅ Yes |
| Marketing & Advertising | Social media ads, Google Ads, flyers, website, menu printing | ✅ Yes |
| Delivery Services | Uber Eats commission (35%), Menulog, DoorDash fees | ✅ Yes - Delivery platform fees include GST (claim proportion) |
| Staff Uniforms | Chef jackets, aprons, hats, non-slip shoes | ✅ Yes - If employer provides and remains property of business |
| Staff Wages | Salaries, wages, superannuation | ❌ No - Wages are not subject to GST (separate PAYG withholding) |
| Bank Fees | Merchant fees (1.5-2%), account fees | ⚠️ Partial - Merchant fees like Square/Stripe include GST claimable; basic bank fees often input-taxed |
Delivery Platform GST (Uber Eats, Menulog, DoorDash)
Delivery platforms charge high commissions (30-35%) which include GST:
Example: Uber Eats Order Customer Order Total (incl. GST): $55.00 Your Food Revenue (GST-exclusive): $50.00 GST Collected from Customer: $5.00 Uber Eats Commission (35%): $19.25 - Commission (excl. GST): $17.50 - GST on Commission: $1.75 Your Net Revenue: $55.00 - $19.25 = $35.75 On Your BAS: - GST on Sales (Label 1A): + $5.00 - GST on Purchases (Label 1B): - $1.75 (claim Uber Eats fee GST) - Net GST: $3.25 per order
7. Tips, Gratuities, and Service Charges
GST Treatment of Tips
Voluntary Tips (Customer Choice)
- Passed directly to staff (no business markup) = No GST
- Example: Customer adds $10 tip on card, you pay full $10 to waitstaff
- Not included in your BAS (not business income)
Mandatory Service Charges (Added by Restaurant)
- Part of the sale price = Subject to GST
- Example: "15% service charge for groups of 8+" = Included in GST calculation
- Must be included in BAS as part of sales revenue
Example: Large Group Booking Food & Beverage Subtotal: $500.00 Mandatory Service Charge (15%): $75.00 Total (excl. GST): $575.00 GST (10%): $57.50 Customer Pays: $632.50 On BAS: - GST-exclusive sales (G1): $575.00 - GST collected (1A): $57.50 (includes GST on service charge)
Credit Card Surcharges
If you charge credit card surcharges (e.g., 1.5% for Visa/Mastercard):
- Surcharges are part of the consideration = Subject to GST
- Must be included in GST calculation
8. Common Hospitality GST Mistakes
The Problem: Busy cafes/restaurants often exceed $75k threshold in first year but don't register for GST.
The Fix:
- Calculate weekly sales × 52 to project annual turnover
- Register for GST within 21 days of reaching $75k
- Use accounting software to auto-track cumulative turnover
Penalty: Backdated GST liability + fines up to $11,000
The Problem: Showing "$20 + GST" on menus violates ACCC consumer law.
The Fix:
- Always display final GST-inclusive prices: "$22.00" (or "$22.00 incl. GST")
- Update all menus, blackboards, online ordering, social media pricing
- Configure POS to show tax-inclusive prices
Penalty: ACCC fines up to $1.1 million for misleading pricing
The Problem: Missing major GST credits on kitchen equipment, furniture, and renovations ($50k fit-out = $5k lost credits).
The Fix:
- Register for GST before purchasing equipment (or within time limit to claim retrospectively)
- Collect tax invoices from all suppliers (builders, electricians, equipment vendors)
- Claim fit-out GST in first BAS
Opportunity Cost: $5,000+ in unclaimed GST for typical cafe fit-out
The Problem: Uber Eats, Menulog, DoorDash fees (30-35%) include GST, but many restaurants don't claim it.
The Fix:
- Download monthly platform statements showing fee breakdowns
- Calculate GST component: (Total Fee ÷ 11) for Australia
- Include in BAS Label 1B (GST on purchases)
Example: $10k monthly Uber Eats fees = $909 claimable GST/month = $10,908/year
The Problem: Charging GST on staff meals or incorrectly treating as sales.
The Fix:
- Staff meals (free or heavily discounted) are not sales = No GST output
- You cannot claim input tax credits on ingredients used for staff meals (personal consumption)
- Track staff meals separately in POS (different category)
Rule: Only charge GST on meals sold to paying customers
9. Hospitality GST Checklist
Daily Hospitality GST Tasks
- ☐ Run end-of-day (EOD) GST sales report from POS
- ☐ Verify cash and card sales match POS totals
- ☐ Reconcile delivery platform orders (Uber Eats, Menulog)
- ☐ File receipts for all stock purchases (organize by date)
Weekly Tasks
- ☐ Calculate running turnover to monitor $75k threshold
- ☐ Review and code expenses in accounting software
- ☐ Download delivery platform statements (for GST on fees)
Monthly Tasks
- ☐ Reconcile bank statements with POS sales
- ☐ Collect tax invoices for major purchases (equipment, supplies)
- ☐ Review food cost percentages (should include GST credits on stock)
- ☐ Back up POS data and accounting records
Quarterly BAS Tasks
- ☐ Export GST summary from POS (total sales, GST collected)
- ☐ Calculate GST-exclusive sales (Label G1)
- ☐ Calculate GST on sales (Label 1A = G1 ÷ 11)
- ☐ Sum all claimable GST on purchases (stock, equipment, rent, utilities) - Label 1B
- ☐ Lodge BAS by 28th of month following quarter-end
- ☐ Pay GST liability or receive refund
10. Resources and Support
Hospitality Accounting Software
- Xero + POS Integration: Auto-sync sales, expenses, GST tracking
- MYOB: Australian hospitality focus, BAS preparation
- QuickBooks Online: Budget-friendly, GST reports
Industry Associations
- Restaurant & Catering Australia (R&CA): Industry support, tax advice
- AHA (Australian Hotels Association): For pubs and hotels
- Hospitality NZ: New Zealand hospitality support