Do I Need to Charge GST as a Sole Trader? (2025-26 Rules & Thresholds)

If you’re a sole trader, understanding when you need to charge GST can save you from unexpected tax bills and keep your cash flow on track.

The good news? The rules are clear once you know the thresholds, exceptions, and registration steps and following them can also unlock GST credits on your business expenses.

In this article, we’ll cover:

• Why GST matters
• Step-by-step instructions to register for GST in 2025–26
• Tips to manage invoicing, cash flow, and BAS lodgements after registering

Sole traders must register for GST and start charging it when your current or projected GST turnover reaches $75,000 (excl. GST) across any 12-month period (current + previous 11 months or current + next 11 months). If you provide ride-sourcing or taxi travel, you must register from the day you start, regardless of turnover. Once required, you must register within 21 days. You can also register early to claim GST credits on business purchases.

Why GST matters

Goods and Services Tax (GST) is a 10% levy on most Australian sales. Collecting it late doesn’t remove the liability - the ATO can still seek the tax plus penalties and interest. Registering on time safeguards cash flow and unlocks GST credits on your expenses.

When do you actually register?

For most sole traders, the $75,000 GST-turnover test is the main reason. Two main exceptions apply:

• Ride-sourcing/taxis: register from day one, no threshold.
• Voluntary registration: consider it early if credits on your purchases will save you money.

Mandatory registration

• Turnover ≥ $75,000 (ex GST). Check your 12-month total monthly (use current + previous 11 or current + next 11).
• Ride-sourcing or taxi services. GST applies from the first dollar.
• Timing. Once required, register within 21 days.

Voluntary registration

• Turnover below $75,000 and you want to claim GST tax credits (e.g., on equipment, software, fuel).
• GST turnover is your gross business income excluding GST.

Should you register early?

Advantages

• Claim GST credits on fuel, software, equipment and other eligible purchases.
• Present a “GST-registered” profile to larger clients and marketplaces.

Considerations

• Quarterly (or monthly) BAS lodgements.
• Extra record-keeping and invoicing requirements.

Five-minute GST registration (ATO Online)

1. Choose your channel:
   
   1. ATO online services via myGov (for individuals/sole traders), or
   2. Online services for business, or
   3. Ask your registered tax/BAS agent to handle it.
2. Add GST: Go to Registrations → Add → Goods and Services Tax (GST).
3. Start date: Choose your GST start date. The ATO can backdate up to 4 years in some cases; penalties/interest may apply if you registered late.
4. Accounting basis: Choose cash or accrual.
5. Review & submit.

Need an ABN first? Apply online in five minutes and return to this step.

What to do after registering for GST

Once the ATO confirms your GST registration, you should review three key areas: invoicing, cash flow, and Business Activity Statement (BAS) lodgements.

• Invoices - Add "Tax invoice", show GST clearly, and include your ABN (see our invoice guide).
• Cash flow - Move 10% of every payment into a GST savings account so the BAS bill never surprises you.
• BAS lodgement - Most sole traders lodge quarterly. Businesses with $20m+ GST turnover must report monthly; others may choose monthly if it suits cash flow. For voluntary registrations, you can also lodge annually (unless the ATO requires otherwise).

Note: You must keep complete GST records - covering all sales, purchases, tax invoices, adjustments, calculations, and relevant documents - for at least five years from the later of when they were created or when the transaction occurred. Accurate records are essential to support BAS reporting and GST credit claims, and inadequate documentation may result in the ATO adjusting or denying claims.

Stay ahead of GST

Watch your monthly turnover, register the moment you cross (or expect to cross) the line, and set aside 10% so the BAS never shocks you. Staying ahead of GST keeps the ATO happy and your cash flow smooth - freeing you up to focus on clients rather than compliance.