GST Essentials for Retail Businesses
Retail businesses face unique GST challenges: managing inventory with different GST statuses, point-of-sale compliance, GST-inclusive pricing requirements, and high transaction volumes. This guide covers registration thresholds, pricing rules, inventory management, and common retail GST scenarios in Australia and New Zealand.
GST Registration for Retail
🇦🇺 Australia
- Threshold: $75,000 turnover/year
- Mandatory: Once you reach threshold
- Voluntary: Available below threshold
Retail consideration: Most retail businesses should register voluntarily to claim GST on stock purchases, even if below threshold.
🇳🇿 New Zealand
- Threshold: $60,000 turnover/year
- Mandatory: When threshold reached
- Voluntary: Below threshold (2-year commitment)
NZ difference: GST applies to ALL food including groceries (unlike Australia where basic food is GST-free).
Retail Pricing Rules
⚠️ LEGAL REQUIREMENT: GST-Inclusive Pricing
Retail businesses MUST display GST-inclusive prices to consumers.
- Price tags must show final price (including GST)
- Shelf labels, catalogues, websites - all must be GST-inclusive
- You can show "inc. GST" but total must be prominent
- Penalties for misleading pricing (up to $1.1 million companies, $220k individuals)
Correct Price Display Examples:
✅ Correct:
- $19.95 (implies GST-inclusive)
- $19.95 inc. GST
- $19.95 (includes $1.81 GST)
- $18.14 + $1.81 GST = $19.95
❌ Illegal for Retail:
- $18.14 + GST (can't hide final price)
- $18.14 (excl. GST) (not allowed for consumers)
- Small print "GST extra" (deceptive)
- Checkout surprises (price ≠ shelf price)
Inventory & GST Management
Claiming GST on Stock Purchases
When you buy stock for resale:
- Supplier charges you GST (e.g., $1,000 + $100 GST = $1,100)
- You claim $100 GST credit on BAS/GST return
- You sell for $2,000 + $200 GST = $2,200
- You remit $200 - $100 = $100 net GST to ATO/IRD
Result: You only pay GST on the value you added ($1,000 → $2,000 markup).
GST-Free Stock (Australia Only)
In Australia, certain items are GST-free (0% GST):
- Basic food items (bread, milk, meat, vegetables, fruit)
- Some medical and health products
- Books, newspapers, magazines
- Exports
💡 NZ Retailers Note:
Unlike Australia, all food in NZ is taxable at 15%. There are no GST-free food items (except exports). This simplifies inventory management but increases prices compared to Australia.
Point of Sale (POS) Compliance
Receipt Requirements
| Receipt Element | Required For | Example |
|---|---|---|
| Business name | All receipts | "ABC Retail Store" |
| ABN/IRD number | Sales >$82.50 (AUS) / >$50 (NZ) | "ABN 12 345 678 901" |
| Date | All receipts | "23/01/2026" |
| Items purchased | Tax invoices | "T-Shirt x2, Jeans x1" |
| GST amount | Tax invoices | "GST: $9.09" or "Includes $9.09 GST" |
| Total | All receipts | "Total: $109.09" |
POS System Setup
Ensure your POS system:
- ✅ Auto-calculates GST on all taxable items
- ✅ Separates GST-free items (Australia only)
- ✅ Prints ABN/IRD on receipts >threshold
- ✅ Shows GST total on each receipt
- ✅ Exports daily sales with GST breakdown
- ✅ Integrates with accounting software (Xero, MYOB)
Common Retail GST Scenarios
Scenario 1: Returns and Refunds
Customer returns $110 item (inc. $10 GST):
- Issue credit note or refund
- Reduce your GST liability by $10 on next BAS
- If original sale in previous quarter, adjust via credit note
Record keeping: Keep copy of credit note for 5-7 years.
Scenario 2: Discounts and Sales
50% off sale - original price $110 (inc. GST):
- Sale price: $55 (inc. GST)
- GST component: $55 ÷ 1.10 = $50 base, $5 GST
- You charge GST on discounted price, not original
Rule: GST is always based on actual price paid by customer.
Scenario 3: Layby/Deposits
Layby GST rules (Australia & NZ):
- Cash accounting: GST payable when final payment received
- Accrual accounting: GST payable when goods supplied (i.e., customer takes possession)
Deposits: Partial payments don't trigger GST until supply occurs (customer receives goods).
Scenario 4: Gift Cards
GST treatment of gift cards:
- When sold: No GST payable (it's not a supply yet)
- When redeemed: GST payable on goods purchased with gift card
Example:
- Sell $100 gift card → no GST
- Customer buys $110 item (inc. $10 GST) using gift card → $10 GST payable
Retail-Specific GST Mistakes
❌ Common Errors:
- Not including GST in advertised prices (illegal for consumer-facing retail)
- Incorrect GST on discounted items (must calculate on sale price, not original)
- Forgetting to claim GST on stock purchases (major missed credit)
- Not tracking gift card liabilities (GST owed when redeemed, not sold)
- Mixing GST-free and taxable items incorrectly (Australia: ensure POS categorizes correctly)
- Poor POS-to-accounting reconciliation (daily sales not matching BAS)
Best Practices for Retail GST
✅ Retail GST Checklist:
- Daily: Reconcile POS sales totals with GST breakdown
- Weekly: Review stock purchases, claim GST credits
- Monthly: Check pricing remains GST-inclusive, audit POS system
- Quarterly: Prepare BAS with POS export, verify totals
- Use software: POS integrated with Xero/MYOB for auto GST tracking
- Train staff: Ensure all staff understand GST-inclusive pricing requirement
- Separate accounts: Business bank account for clear GST tracking
Recommended Retail Software
| Software | POS Integration | GST Features | Best For |
|---|---|---|---|
| Xero + Vend | ✅ Full sync | Auto GST calc, BAS direct lodgment | Fashion, homewares, general retail |
| MYOB + POS | ✅ Full sync | Inventory GST tracking | Multi-location retail |
| Shopify + Xero | ✅ Via integration | E-commerce + in-store GST | Omnichannel retail (online + physical) |