GST and Invoicing for Sole Traders

Do I need to register for GST?

You must register for GST if:

• Your business has a GST turnover of $75,000 or more per year
• You are a non-profit with a turnover of $150,000 or more
• You provide taxi or rideshare services (regardless of turnover)
• You want to claim fuel tax credits

GST turnover means your gross business income (before expenses), not your profit. If you expect to cross the $75,000 threshold in the next 12 months, you should register before you hit it.

You can also voluntarily register if your turnover is below $75,000. This can be beneficial if most of your customers are GST-registered businesses, as they can claim input tax credits on your invoices.

How GST works on invoices

GST is a 10% tax on most goods and services sold in Australia. When you are GST-registered:

• You add 10% GST on top of your prices (or include it in the price and show it separately)
• You issue tax invoices (not just regular invoices)
• You collect the GST from your customers and pay it to the ATO via your BAS
• You can claim back GST you have paid on business purchases (input tax credits)

Example

You complete a $1,000 consulting job:

• If GST-registered: Invoice for $1,000 + $100 GST = $1,100 total. You keep $1,000 and remit $100 to the ATO.
• If not GST-registered: Invoice for $1,000 total. No GST shown.

GST-free and input-taxed supplies

Not everything has GST. Some common GST-free items:

• Most basic food (fresh fruit, vegetables, bread, meat)
• Some health services
• Some education courses
• Exports (goods and services sold to overseas buyers)
• Water and sewerage

If you sell a mix of GST-applicable and GST-free items, you only charge GST on the applicable items.

Lodging your BAS

Once registered for GST, you must lodge a Business Activity Statement (BAS). Most sole traders lodge quarterly:

• Q1: July - September (due 28 October)
• Q2: October - December (due 28 February)
• Q3: January - March (due 28 April)
• Q4: April - June (due 28 July)

If your turnover is $20 million or more, you must lodge monthly.

What to report on your BAS

• 1A: Total sales (including GST-free sales)
• 1B: GST on sales
• 1C: Total purchases (including GST-free)
• 1D: GST on purchases (input tax credits)

The difference between 1B and 1D is what you owe (or what the ATO refunds you).

Invoicing tips for sole traders

• Number invoices sequentially - INV-001, INV-002, etc. The ATO expects a consistent numbering system.
• Issue promptly - send invoices as soon as the work is done. It helps cash flow and keeps your records clean.
• Set clear payment terms - "Net 14" or "Net 30" tells the client exactly when payment is due.
• Include bank details - make it easy for clients to pay you. Include BSB, account number, and account name.
• Keep copies - store all invoices for at least 5 years. Digital copies are fine.
• Use consistent descriptions - "Web development - homepage redesign" is better than "services".

ABN and invoicing

You should always include your ABN on invoices. If you do not quote your ABN, the buyer may be required to withhold 47% of the payment under the PAYG withholding rules and remit it to the ATO on your behalf.

If you do not have an ABN, you can apply for one free at abr.gov.au. Most sole traders can get one in minutes.

Record keeping requirements

The ATO requires you to keep records of all business transactions for 5 years. This includes:

• All invoices you issue
• All invoices you receive for business purchases
• Bank statements
• Receipts for business expenses
• BAS lodgement records

Digital records are acceptable. Store PDFs of your invoices in a cloud drive or accounting software.