In the 2023–2024 financial year, Australia’s goods and services tax (GST) totaled nearly $85.58 billion Australian dollars (AUD). GST affects pricing, cash flow, and compliance across your business: some goods and services are included, but some are exempt—or GST-free—and registration is mandatory at specific thresholds.

Understanding the Australian GST rate and whether you need to pay it is important for conducting business in Australia. Below, we’ll explain how the Australia GST rate works and who must register.

What’s in this article?

• What is the Australia GST rate?
  
• How does GST work in Australia?
  
• Which goods and services are subject to GST in Australia?
  
• Which sales are GST-free in Australia?
  
• Which businesses must register for GST in Australia?
  
• What is the GST registration threshold for businesses?
  
• How Stripe Tax can help
  

What is the Australia GST rate?

Australia’s GST, essentially a type of value-added tax (VAT), is 10% and applies to most goods and services sold or consumed in Australia. The tax was introduced in 2000.

GST is usually shown to customers: prices are commonly displayed as “GST included,” with the tax amount shown on invoices and receipts. Some categories of goods and services are exempt from GST, including most basic foods, some healthcare, some childcare, and exports, as long as they leave Australia within 60 days of the supplier receiving payment or issuing an invoice for the goods.

GST is not counted as revenue for the business; it’s tax collected on behalf of the Australian Taxation Office (ATO).

How does GST work in Australia?

Once you comprehend the flow, Australia’s GST is easy to understand.

Here’s how GST works:

• GST is charged at each stage of sale: Registered businesses add 10% GST to taxable goods and services and collect it from customers at the point of sale.

• Businesses claim GST credits on expenses: When a business pays GST on eligible business purchases, it can claim those amounts as tax credits.

• A business activity statement (BAS) helps you report and pay GST: Depending on circumstances, businesses might choose to report and pay monthly, quarterly, or annually. You have different GST reporting requirements if your business has a GST turnover of $20 million AUD or more.

• The net amount is paid to the ATO: Businesses calculate the difference between GST collected and GST paid. If collected GST is higher, the business pays the balance; if expenses exceed collections, the business receives a refund.

To claim GST credits, businesses must hold valid tax invoices for purchases that cost more than $82.50 AUD (including GST). Complete invoicing is key.

Which goods and services are subject to GST in Australia?

Most goods and services in Australia are taxable at 10%, with a few exceptions. If a good or service is not classified as GST-free or input-taxed under Australian law, it is treated as taxable. This means GST applies to the majority of sales.

Here are the broad categories of taxable items:

• Most physical goods sold in Australia: Everyday retail items such as clothing, electronics, furniture, appliances, and household goods are subject to GST. The tax applies to goods sold in-store or online.

• Most services provided to Australian customers: Professional services are usually subject to GST. This includes consulting, legal advice, accounting, design, engineering, marketing, hospitality, accommodation, transport, and personal services.

• Digital products and online services: Software subscriptions, streaming services, digital downloads of media, and other services are subject to GST when sold to Australian customers even when the seller is based overseas.

• Commercial property and B2B transactions: Sales and leases of commercial real estate usually include GST, as do many B2B transactions. Some special rules can apply, including for property development and large asset sales.

• Low-value imported goods sold to Australian customers: Goods imported by a nonresident business into Australia with a customs value of $1,000 AUD or less are typically subject to GST.

Which sales are GST-free in Australia?

Australia has classified specific categories of goods and services as GST-free, often referred to as exempt from GST. GST-free removes the tax without preventing businesses from claiming GST credits.

Most basic food items are GST-free, as are some healthcare services, some medicines, and some education courses. Approved childcare services, some charitable activities, and specific religious services also are in this category.

Exported goods are GST-free, as are services provided to nonresidents for use outside Australia.

GST-free sales are different from input-taxed sales, which are exempt from the GST system and not eligible for GST credits.

Which businesses must register for GST in Australia?

GST registration is required based on a business’s revenue, industry rules, and where customers are. These rules apply to Australian and nonresident businesses alike.

These are the categories of businesses that must register for Australian GST:

• Businesses surpassing the turnover threshold: If your business’s GST turnover meets or exceeds the registration threshold, you’re required to register within 21 days.

• Transportation businesses: Taxi, rideshare, and limousine services are required to register for GST regardless of turnover. Businesses claiming fuel tax credits also must register.

• Overseas businesses: If you sell digital products, services, or low-value goods to Australian customers and exceed the turnover threshold, GST registration is required even without a physical presence in Australia.

• Voluntary registration: Businesses under the threshold can register. Once registered, you typically must stay registered for at least 12 months.

Once registered, you must charge GST on taxable sales, issue compliant tax invoices, lodge BAS statements, and keep good records.

What is the GST registration threshold for businesses?

Registering for GST in Australia is a requirement once your business crosses the GST threshold.

Remember these factors:

• The standard threshold: Typically, businesses must register for GST when their GST turnover (gross income from all businesses minus GST) reaches or exceeds $75,000 AUD. Turnover is measured on a rolling basis, not by financial year.

• The nonprofit threshold: Nonprofits are required to register once their annual GST turnover reaches $150,000 AUD.

• Transportation businesses are liable from the start: Taxi, rideshare, and limousine services must register for GST regardless of revenue. The same applies to businesses that want to claim fuel tax credits.

Certain supplies, such as GST-free exports, are typically excluded from the calculation. If you reasonably expect your turnover to exceed the threshold in the coming 12 months, registration is required even if you haven’t crossed it yet.

Businesses must register within 21 days of exceeding or expecting to exceed the threshold. Missing that window can create retroactive GST obligations as well as possible penalties and interest.

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 application programming interface (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.