What is GST?
GST (Goods and Services Tax) is a 10% tax applied to most goods, services, and other items sold or consumed in Australia. It is a value-added tax (VAT) that businesses add to the price of goods and services at each stage of production or distribution.
When was GST introduced to Australia?
GST was finalised by the Australian government toward the end of 1999, and commenced on 1 July, 2000. It was an ambitious replacement to the previous wholesale sales tax system, and also included the phasing out of various state government taxes and duties, along with bank taxes and stamp duty.
Will GST ever increase or decrease in Australia?
It is unlikely that GST will ever decrease in Australia, however there have been attempts in recent years to increase GST — by 5 per cent to 15% in 2015, and by 2.5 percent to 12.5% as recently as October, 2019.
How the GST calculator works and how to calculate GST
The easiest way to calculate GST on a net price (exclusive of GST) is to multiply the amount by 1.1. To calculate the amount of GST on GST-inclusive goods and services, you’ll need to divide the amount by 11. The main mistake most people can make in calculating the net price of goods is to simply minus 10% from the total price.
Let’s see the calculation in practice. Let’s say we have a product that is $100 GST inclusive. To calculate the GST on the product, we will first calculate the amount of GST included, then multiply that figure by 10% (The GST rate).
- 100 divided by 11 = 9.09
- The GST amount on the product is $9.09
- 9.09 multiplied by 10 (GST rate of 10%) = 90.91
- The GST-exclusive price of the product is $90.91
IMPORTANT: If we were to simply subtract 10% from the GST-inclusive amount, the result would for $90. This is incorrect, as if we were to multiply $90 by 1.1, the result would be $99 instead of $100. Although this may seem like only a minor difference in the example above, when applied to millions of dollars and thousands of individual sales across Australia, it’s clear that calculating GST correctly is vital to maintaining accurate financial records.
Example of GST on goods and services
| Price including GST | GST amount (10%) | Price excluding GST |
|---|---|---|
$100 | $9.09 | $90.91 |
$200 | $18.18 | $181.82 |
$300 | $27.27 | $272.73 |
$400 | $36.36 | $363.64 |
$500 | $45.45 | $454.55 |
$1,000 | $90.91 | $909.09 |
Claiming GST as an international traveller
If you are travelling through Australia and purchasing goods which have GST attached to their sale price, you can claim back the amount of GST on your purchases through Australia’s Tourist Refund Scheme (TRS). You can claim a refund if you personally purchased the goods, and:
1
Your purchase was made within 60 days before leaving Australia
2
Your purchases are from a single business with the same Australian Business Number (ABN) and total AU$300 (GST inclusive) or more. Even on separate invoices, as long as your total goods are from the same business and equal $300 or more, you could reclaim the GST on the purchases.
3
You have the original tax invoice for the goods, and can present a physical copy of this invoice with you at the time of making the claim. If you do not have an eligible tax invoice you cannot make a claim.
Want to see how much GST you’ll claim back when departing Australia? You can quickly calculate the GST you can claim through the TRS by using our online GST calculator.
GST for businesses
If they include GST in the price they charge for the goods or services sold by the business; or
When they wish to claim tax credits on the GST of goods purchased for their business
In Australia, you must register for GST when your business or enterprise has a GST turnover (gross income minus GST) of A$75,000 or more. You will also need to register your business for GST within 21 days of exceeding that turnover threshold. You can use our GST calculator to calculate the GST turnover of your business.
You are also required to register for GST if:
Your non-profit organisation has a GST turnover of A$150,000 per year or more
You provide taxi or limousine services, regardless of your GST turnover and whether you own or are leasing the vehicle for work
You want to claim fuel tax credits for your business
You will only need to register for GST once, even if you operate more than one business, and can register online, over the phone, or through a registered agent when you first register your business.
GST turnover thresholds requiring GST registration
| Types of business/organisation | GST turnover requiring GST registration |
|---|---|
Sole trader | $75,000+ |
Business | $75,000+ |
Non-profit organisation | $150,000+ |
Taxi or limousine drivers | Must register for GST regardless of turnover |
GST in the sharing economy
The advancements of technology and creation of a largely accessible digital marketplace allow Australians to both provide and access goods and services in a way unforeseen when GST was initially introduced.
To compensate for this change, the Australian government introduced GST registration for the ‘Sharing Economy’, which encompasses any type of economic activity conducted by an individual through a digital platform — such as a website or app.
If you provide services or assets through a platform for a fee, you will need to consider how income tax and GST applies to your earnings. You will need to ensure that you account for all income and provide this information to Australian Tax Office on your tax return, and register for GST if you meet any of the standard GST registration requirements for businesses or sole traders.
Some of the most common sharing economy activities include:
- Provide ride-share services such as Uber
- Provide personal services, including creative services and delivery or assembly services, on a platform such as OneFlare
- Share assets, including cars, caravans or storage spaces, through platforms such as Camplify or Spacer
- Rent out a room or house on a short-term basis, such as Airbnb
When is GST to be included or not included?
You are only required to charge GST on the sale of low-value imported goods if it is a taxable sale. A sale is taxable if:
- It is connected with Australia
- You are registered or required to be registered for GST
- It is made for payment and is part of conducting your business
- The goods sold are not GST-free or input taxed
From 1 July 2018, a sale is connected with Australia if the:
- Goods are ‘low-value goods’ sold to a consumer — i.e. not another business
- Seller, or e-commerce distributor or re-deliverer (e.g. drop delivery) imports the goods into Australia
- Customs exception for multiple goods that total over A$1,000 does not apply
What are GST-free sales and GST exemptions?
Goods and services exported from Australia are generally exempt from GST charges if they are exported from Australia within 60 days of:
1
The supplier receiving any payment for the goods; or
2
The supplier issuing an invoice for the goods; or
3
The final payment or invoice being made for goods paid for by instalments
Main GST-free products and services
Most basic foods, some education courses and some medical, health and care products and services are exempt from GST — a full list of products and services are listed below.
GST-free products and services list
Products
- Most basic food
- Some medical aids and appliances
- Some medicines
- Some menstrual products (from 1 January 2019)
- Precious metals
- Supplies of accommodation and meals to residents of retirement villages by certain operators
- Cars for disabled people to use, as long as certain requirements are met
- Some telecommunications supplies
- Sales through duty-free shops
Services
- Some education courses, course materials and related excursions or field trips
- Some religious services and charitable activities
- Grants of land by government
- Farmland
- International mail
- Exports
- Sales of businesses as going concerns
- Eligible emissions units
- Some medical, health and care services (e.g. health insurance)
- Water, sewerage and drainage
- International transport and related matters
- Some childcare services
GST-free sale of a business as a going concern
When a business is sold complete with all the required equipment and structure in place for the business to operate as normal — i.e. continue without halt to operation, this is referred to as a ‘going concern’. The sale of a business as a going concern is GST-free if all of the following apply:
- Everything necessary for the business's continued operation is supplied to the buyer
- The seller carries on the business until the day it is sold
- The buyer is registered — or required to be registered — for GST
- Payment is made for the sale
- Before the sale, the buyer and seller agree in writing that the sale is of a going concern
GST on imported goods for businesses and individuals
If you are importing goods into Australia, the GST you pay — if any — will depend on the type of goods you are importing and whether you are acquiring them for personal use or for resale through your business. The GST is 10% of the value of the imported product, while the value of the goods consist of:
- The customs value of the goods
- Any customs duty payable on the goods
- The amount payable to transport the goods to its delivery destination in Australia
- Payment is made for the sale
- The insurance cost for that transport
Individuals
If you are an individual purchasing goods from an overseas supplier, you won’t pay GST on any 'low-value goods'. These are classified as any goods on which customs duty and taxes is A$50 or less and have a customs value of less than A$1,000.
Businesses
If you are purchasing goods for resale through a business in Australia, however, it’s highly likely that the value of the imported goods will be greater than A$1,000 — in which case you will also wish to claim GST credits on the goods you import. We’ve illustrated how this works in the example below:
John is the owner of ‘John’s Hardware’ — a hardware and DIY store registered for GST. John imports $20,000 worth of tools into Australia for sale through his business.
- The customs value of the tools is $20,000
- Customs duty payable for the tools is $1,000
- Additionally, transport and insurance costs equal $1,500
- The total value of the imported goods is $22,500 (Customs Value + Duty + Transport and Insurance)
- The GST payable for the imported goods is $2,250 (10% of total import value)
