A sole trader must register for GST once GST turnover reaches $75,000 a year, or when you expect to reach it in your first year of trading. You then have 21 days to register. Once registered you add 10% to your prices, and that 10% is never your money: you hold it for the ATO.
When registration becomes compulsory
The ATO requires you to register for GST when any of these apply:
- your business has a GST turnover of $75,000 or more
- you are starting a new business and expect turnover to reach $75,000 or more in the first year
- you are a non-profit organisation with turnover of $150,000 or more
- you provide taxi, limousine or ride-sourcing services for a fare, regardless of turnover
That last one catches a lot of people. Rideshare drivers must register from the first dollar, whether they earn $5,000 or $80,000.
Once you cross the threshold you have 21 days to register. The ATO's guidance is to check each month whether you have reached it or are likely to. Registering late means you may still owe GST on sales made after you should have registered, which comes out of money you have already been paid and spent.
Source: ATO, registering for GST. Checked 21 August 2026.
GST turnover is not profit
The threshold is measured on gross income from your business, before expenses, not on what you take home. A freelancer invoicing $90,000 and spending $30,000 on costs has a GST turnover of $90,000 and must register, even though the profit is $60,000.
It is also a rolling test rather than a financial year one: both the current month plus the previous eleven, and the current month plus the next eleven.
What actually changes when you register
| Before registration | After registration |
|---|---|
| You invoice $1,000 and keep $1,000 | You invoice $1,100 and keep $1,000, remitting $100 |
| You cannot claim GST credits on purchases | You claim back the GST in your business purchases |
| No business activity statement | A BAS to lodge, usually quarterly |
| Invoices are ordinary invoices | Invoices must be tax invoices showing your ABN and the GST |
Whether registration costs you anything depends entirely on who your customers are. If you sell to GST-registered businesses, they claim the GST back, so adding 10% costs them nothing and registration is close to neutral. If you sell to consumers, your prices effectively rise 10% or your margin drops 10%, and that is a real commercial hit.
The money you collect is not yours
This is the point where sole traders most often come unstuck. The 10% you add is held on behalf of the ATO from the moment you receive it. It sits in your bank account looking like revenue, and a quarterly BAS means it can sit there for three months.
The habit that prevents the problem is mechanical: move the GST portion into a separate account the day each payment arrives. On a $1,100 invoice, $100 goes across immediately. You will also be paying income tax on the profit, which is a separate and usually larger obligation, so a common approach is to set aside the GST plus a percentage for income tax at the same time.
Should you register voluntarily?
You can register below the threshold. The case for it is that you can claim GST credits on business purchases, which matters if you are buying equipment or have significant supplier costs, and that some business clients treat registration as a signal of an established operation. The case against is the compliance work of quarterly BAS lodgment and the 10% price effect if you sell to consumers.
A practical middle path for someone approaching the threshold is to register a little early so the transition is planned rather than triggered by a good month you did not see coming.
Working out the GST in a price
Two bits of arithmetic worth committing to memory. To add GST, multiply by 1.1. To remove GST from a GST-inclusive price, divide by 11 to get the GST component, or divide by 1.1 to get the price excluding GST. Dividing by 10 is the classic error: on a $110 inclusive price the GST is $10, not $11. Use the GST calculator if you would rather not do it in your head.
Frequently Asked Questions
When do I have to register for GST as a sole trader?
When your GST turnover reaches $75,000 a year, or when you expect it to in your first year of business. You then have 21 days to register. Ride-sourcing and taxi drivers must register regardless of turnover.
Is the $75,000 GST threshold based on profit or revenue?
Revenue. GST turnover is your gross business income before expenses, so a freelancer invoicing $90,000 with $30,000 of costs is over the threshold even though the profit is $60,000.
What happens if I register for GST late?
You may be liable for the GST on sales made from the date you were required to register, whether or not you charged it to your customers. That comes out of your own pocket, and penalties and interest can apply.
Can I register for GST voluntarily below the threshold?
Yes. The benefit is claiming GST credits on business purchases. The cost is quarterly BAS lodgment and, if you sell to consumers, either a 10% price rise or a 10% margin reduction.
How do I calculate GST on a price?
To add GST, multiply the price by 1.1. To find the GST inside a GST-inclusive price, divide by 11. Dividing an inclusive price by 10 overstates the GST.
A note on what this is
This guide is general information built from the ATO's published material. It is not tax or financial advice, and it cannot take your circumstances into account. Clearway Apps is not a registered tax agent. Where a decision matters, check it against the ATO page linked in each section or talk to a registered tax agent.