Australia saw a 2.4% increase in sole proprietors from 2024 to 2025. Sole traders in Australia should know about the goods and services tax (GST) system and the rules that apply once their revenue starts climbing.

We’ll explain how sole trader GST works, when you need to register, how to handle invoicing, and what the Australian Taxation Office (ATO) expects from you.

What’s in this article?

• How does sole trader GST work in Australia?
  
• How do you register for GST as a sole trader?
  
• How does GST work for sole traders when invoicing customers?
  
• What are common GST mistakes made by sole traders?
  
• How can sole traders automate GST calculation and invoicing?
  
• How Stripe Tax can help
  

How does sole trader GST work in Australia?

If you're a sole trader in Australia, the threshold for the GST is 75,000 Australian dollars (AUD) in annual turnover.

Turnover is your business income, minus:

• Any GST that’s included in sales to your customers

• Sales to associates that aren't for payment and aren't taxable

• Sales that aren’t connected with an enterprise you run

• Input-taxed sales you make

• Sales not connected with Australia

Turnover is calculated over any rolling 12-month period (even if it doesn’t coincide with the financial year), and you must track it yourself. If you meet or exceed the 75,000 AUD threshold within a 12-month period, you must register for GST within 21 days.

In a few cases, GST registration is required even if you’re under the 75,000 AUD threshold.

This is true if:

• You provide taxi, limousine, or rideshare service: If you’re a taxi, rideshare, or limousine driver, there is no threshold. GST applies when you start earning.

• You want to claim fuel tax credits: Sole traders in certain industries, such as transport or trades, might be eligible for fuel tax credits. If you claim those, you need to be registered for GST, regardless of turnover.

• You expect to pass 75,000 AUD in turnover soon: If you expect to cross the threshold—maybe based on upcoming contracts or revenue increases—you should register now. The ATO can backdate registration and ask you to pay GST retroactively, even if you never collected it. There can also be penalties.

If you’re below the threshold and don’t fall into one of those categories, GST registration is optional. Some sole traders choose to register voluntarily in order to reclaim input tax credits or signal maturity to customers.

Once you've registered, you’re expected to charge, collect, and report GST.

How do you register for GST as a sole trader?

GST registration is free. First, you’ll need an Australian Business Number (ABN). Those who don’t have one can apply for an ABN.

Once you have an ABN, you can register:

• Online, via the ATO’s online services for business portal (using myID)

• By phone, at 13 28 66

• Through your registered tax or business activity statement (BAS) agent

The ATO will confirm the date your registration is effective. From that date, you’re expected to charge 10% GST on taxable sales, issue proper tax invoices, and file BAS paperwork as needed.

How does GST work for sole traders when invoicing customers?

Once you're GST-registered, you collect GST on behalf of the ATO. Your taxable sales must include 10% GST, and the amount must be reflected on your invoices. You must issue tax invoices for any taxable sale over 82.50 AUD (including GST).

These invoices must include:

• The invoice date

• The words “Tax Invoice”

• Your name or trading name

• Your ABN

• A description of the goods or services

• The GST amount

• The extent to which each sale is taxable

• The buyer’s identity or ABN (for invoices of 1,000 AUD or more)

If you’re not GST-registered, your invoices should not be labeled “Tax Invoice.” Instead, just call them “invoices” and omit any GST line.

What are common GST mistakes made by sole traders?

GST is straightforward, but it’s still possible to make mistakes, especially when you don’t have help to manage it. Here are some mistakes that sole traders sometimes make and how to avoid them.

Missing the registration window

You’re required to register within 21 days of passing 75,000 AUD of GST turnover. Many traders notice this threshold only after they’ve already passed it. If that happens, the ATO can backdate your registration and make you pay GST on earlier sales, even if you didn’t collect it.

Track your turnover on a rolling 12-month total basis and set alerts around 70,000 AUD. It’s better to register a little early than to incur penalties and retroactive payments.

Charging GST without being registered

Don’t add GST unless you're officially registered. If a client asks you for a tax invoice and you're not registered, explain that GST doesn’t apply to their purchase.

Failing to add GST after registering

Some sole traders register on time but don’t change their pricing and invoices. Make those updates immediately and put GST on every invoice. Otherwise, that 10% comes from your margin.

Poor recordkeeping

If your receipts are scattered or missing, you might erroneously report GST or miss credits. Use software or other systems to track your income and expenses, keep all tax invoices, and reconcile the numbers before you file BAS.

Spending GST money

The GST you collect belongs to the ATO. Keep it in a separate account so that you have it ready at BAS time.

How can sole traders automate GST calculation and invoicing?

Remaining GST-compliant requires extra steps. With the right tools, sole traders can automate some of them, such as calculating tax.

Here’s how:

• Use invoicing or accounting software: Many software platforms are made for Australian businesses. They let you toggle GST on or off, apply the right rate, and format compliant tax invoices automatically. They also track GST on expenses, so you don’t have to manually add them up when filing BAS.

• Use Stripe for automation during invoicing: If you sell online, Stripe Tax can automatically calculate the correct GST based on a customer’s location and alert you when you’re approaching registration thresholds. Stripe Invoicing can support GST-compliant invoices and help with payment collection.

• Scan receipts and sync expenses: Use apps that feed receipts into your accounting system with GST amounts already tagged. This leads to less manual data entry and fewer missed credits.

• Include GST on invoice templates: Save time and avoid mistakes by using templates with prefilled GST settings.

• Keep GST funds separate: Some software shows you GST collected vs. GST paid in real time, which is helpful for reserving the right amount before your BAS is due.

How Stripe Tax can help

Stripe Tax reduces the complexity of tax compliance so you can focus on growing your business. Stripe Tax helps you monitor your obligations and alerts you when you exceed a sales tax registration threshold based on your Stripe transactions. In addition, it automatically calculates and collects sales tax, VAT, and GST on both physical and digital goods and services—in all US states and in more than 100 countries.

Start collecting taxes globally by adding a single line of code to your existing integration, clicking a button in the Dashboard, or using our powerful API.

Stripe Tax can help you:

• Understand where to register and collect taxes: See where you need to collect taxes based on your Stripe transactions. After you register, switch on tax collection in a new state or country in seconds. You can start collecting taxes by adding one line of code to your existing Stripe integration or add tax collection with the click of a button in the Stripe Dashboard.

• Register to pay tax: Let Stripe manage your global tax registrations and benefit from a simplified process that prefills application details—saving you time and simplifying compliance with local regulations.

• Automatically collect tax: Stripe Tax calculates and collects the right amount of tax owed, no matter what or where you sell. It supports hundreds of products and services and is up-to-date on tax rules and rate changes.

• Simplify filing: Stripe Tax seamlessly integrates with filing partners, so your global filings are accurate and timely. Let our partners manage your filings so you can focus on growing your business.

Learn more about Stripe Tax, or get started today.