GST Guide for Australian Business Owners

Running a business in Australia means dealing with GST every quarter. If that’s ever felt confusing, you’re not alone. Once you understand how GST fits into your cash flow, it becomes much easier to manage and plan for.

What is GST?

GST (Goods and Services Tax) is a 10% tax on most goods and services sold or consumed in Australia. If you’re registered, you collect GST on behalf of the ATO.

Sales: add 10% GST to your price.
Purchases: pay GST to suppliers (it appears on their tax invoices).

At BAS time, the formula is simple: GST to pay = GST collected − GST paid on business expenses.

GST flows through your business: you collect 10% on sales, claim credits on expenses, and pay the difference to the ATO in your BAS.

Official overview: ATO – GST overview.

Claiming GST credits

You can usually claim input tax credits (GST you’ve paid) for genuine business purchases such as:

Inventory, raw materials and supplier bills
Office supplies and software subscriptions
Rent, property costs, utilities and cleaning
Work vehicles, fuel and servicing
Computers, phones and business tools
Fit-outs and small renovations

Keep valid tax invoices with the supplier’s ABN and GST clearly shown. Details: ATO – Claiming GST credits.

Need help setting up coding and receipts? See our Bookkeeping Services.

Common misunderstandings

It can feel like GST eats your profit, but the GST you collect isn’t income — it belongs to the ATO. When reviewing profit and loss, exclude GST from both income and expenses to see your true performance.

Why some businesses receive refunds

Refunds happen when credits exceed the GST you’ve collected. Common reasons include:

GST-free sales (e.g., certain fresh foods or health services under ATO rules).
Exports — overseas sales are generally GST-free, but local costs still include GST, so credits can outweigh collections.

Good habits for BAS & compliance

Keep records tidy: Xero or QuickBooks help code GST correctly.
Segregate GST cash: move collected GST to a sub-account to avoid surprises at BAS time.
Check invoices: keep valid tax invoices for every claimable expense.
Timing: large purchases before BAS lodgment can bring credits forward.
Get support: a BAS agent/accountant keeps coding and lodgments accurate — try our BAS Lodgment Help.

BAS rules and dates: ATO – Business Activity Statements.

Quick cash-flow example

Sell $110,000 (GST-inclusive) → $100,000 sales + $10,000 GST collected.
Spend $55,000 (GST-inclusive) → $50,000 costs + $5,000 GST paid.
BAS outcome: $10,000 − $5,000 = $5,000 payable.

A simple GST cash-flow example — you collect $10,000 on sales, claim $5,000 on purchases, and pay the $5,000 difference in your BAS.

Need a hand? We can review your GST setup, BAS coding and records, then give you a simple action plan for your industry.
👉 Contact our team

Quick FAQs

How do I calculate GST in a tax-inclusive price?

Divide by 11. Example: $220 inc. GST → $220 ÷ 11 = $20 GST and $200 net.

What records do I need for GST credits?

Valid tax invoices showing supplier details (ABN), date, description, price and GST amount. Keep records for at least five years.

General information only — not tax advice. Please seek advice for your circumstances.