GST & BAS Demystified
BAS time doesn't have to be scary. Learn how GST actually works, when to register, and how to complete your BAS with confidence.
GST rate
Registration threshold
Quarterly BAS
What Even Is GST?
GST (Goods and Services Tax) is a 10% tax added to most things you buy in Australia. But here's the key: businesses are just the middleman. They collect it from customers and pass it to the ATO.
How GST Flows Through the Economy
Customer
Pays $110
$110 (inc. $10 GST)
Your Business
Keeps $100
$10 GST
ATO
Receives $10
Customer
Pays $110
$110 (inc. $10 GST)
Your Business
Collects & passes on GST
$10 GST via BAS
ATO
Receives $10
GST-Free
No GST is charged. The full price goes to the seller.
- 🍎Basic food
- 🏥Medical services
- 📚Education
- ✈️Exports
Input-Taxed
No GST charged, but seller can't claim credits on related purchases.
- 🏦Financial services
- 🏠Residential rent
Taxable
10% GST is added. Most goods and services fall here.
- 💼Professional services
- 🛒Retail goods
- 🍕Prepared food
- 🏢Commercial rent
Is This GST-Free?
Test your knowledge of GST categories
0/0
Score
Is this item GST-free?
Fresh vegetables
The Key Insight
GST replaced 11 different taxes when it was introduced in 2000. As a business owner, you're essentially a tax collector for the government. The GST you charge on sales minus the GST you pay on purchases is what you send to the ATO. That's your BAS in a nutshell.
Do You Need to Register for GST?
The magic number is $75,000 in annual GST turnover. But “turnover” isn't profit — it's your total business income before expenses.
GST Registration Threshold Zones
Under $67.5k
Registration optional
$67.5k - $75k
Approaching threshold
Over $75k
Must register in 21 days
GST Registration Assessment
Find out if you need to register for GST
Total business income (not profit) for the year
Registration is optional. Consider if you'd benefit from claiming GST credits on business purchases.
If registered, estimated annual GST collected:
~$545
(This is what you'd owe the ATO, minus any GST credits you claim)
You MUST Register If...
- Your GST turnover exceeds $75,000 (or $150,000 for non-profits)
- You operate a taxi or rideshare service
- You want to claim fuel tax credits
Consider Voluntary Registration If...
- Claim GST credits on business purchases
- Appear more professional to B2B customers
- Your customers are mostly GST-registered businesses
Special Cases
Taxi & Rideshare
Must register regardless of turnover. Uber, Ola, DiDi drivers must be registered from day one.
Non-Profits
Higher threshold of $150,000 applies to registered charities and not-for-profits.
Approaching Threshold
You must register within 21 days of when you first exceed or expect to exceed the threshold.
The Key Insight
GST turnover is not the same as your profit or taxable income. It's your gross business income — all the money coming in before you pay any expenses. A business making $80,000 turnover with $60,000 expenses still needs to register, even though profit is only $20,000.
The GST Math
Three calculations you'll use every day. Master these and GST becomes second nature.
Add GST
Price × 1.1
Multiply by 1.1 to add 10% GST to any GST-exclusive price.
Example: $100 × 1.1 = $110
Extract GST
Total ÷ 11
Divide by 11 (not 10!) to find the GST amount from a GST-inclusive price.
Example: $110 ÷ 11 = $10 GST
Find Base
Total ÷ 1.1
Divide by 1.1 to find the GST-exclusive price from a GST-inclusive total.
Example: $110 ÷ 1.1 = $100
Try It Yourself
GST Amount
$10.00
Total (inc. GST)
$110.00
The Most Common Mistake
Many people divide by 10 to find the GST in a price. This is wrong!
$110 ÷ 10 = $11 GST
This is 10% of the total, not the GST amount
$110 ÷ 11 = $10 GST
The GST is 1/11th of the GST-inclusive price
Why Divide by 11?
When GST is added to a price, it becomes 10/110 (or 1/11) of the total. Think of it this way: a $100 item with $10 GST = $110 total. The $10 GST is 1/11th of $110, not 1/10th. This is because the GST was calculated on the original $100, not on the final $110.
What Is a BAS, Really?
BAS stands for Business Activity Statement. It's not a new tax — it's just a form that bundles your regular tax reporting into one place.
The 4 Parts of a BAS
GST
Goods and Services Tax
PAYG Withholding
Tax withheld from employees
PAYG Instalment
Your own income tax prepayment
Other Taxes
FBT, LCT, WET, Fuel credits
How Often Do You Lodge?
Monthly
Due 21st of following month
Required if GST turnover > $20 million, or by choice
Quarterly
Due 28th after quarter ends
Most common for small-medium businesses
Annual
Due 28 February
Only for businesses with < $75k turnover using Annual GST
Quarterly BAS Due Dates
July - September
Q1
Due: 28 October
October - December
Q2
Due: 28 February
January - March
Q3
Due: 28 April
April - June
Q4
Due: 28 July
Why Does BAS Feel So Scary?
The BAS form looks intimidating with its dozens of labels and boxes. But here's the secret: most small businesses only fill in a few fields. If you're a typical sole trader, you might only use:
- 1AGST on sales
- 1BGST on purchases
- T1PAYG instalment (if applicable)
The Key Insight
The BAS is just a summary of numbers you should already be tracking. If you use accounting software like Xero or MYOB, it calculates your BAS automatically from your transactions. The “hard part” is just keeping your records up to date throughout the quarter.
GST on Sales vs Purchases
This is where the magic happens. You don't just pay GST to the ATO — you subtract what you've already paid on your business purchases. That's what GST credits (input tax credits) are all about.
The Simple Formula
GST Collected
1A
on your sales
GST Credits
1B
on your purchases
Net GST
?
pay or refund
If result is positive
You pay the ATO. You collected more GST than you paid.
If result is negative
The ATO refunds you. You paid more GST than you collected.
You CAN Claim GST Credits On
- 📎Office supplies (paper, pens, etc.)
- 💻Business equipment (computers, furniture)
- 👔Professional services (accountant, lawyer)
- ⛽Business vehicle fuel
- 📱Work-related subscriptions
- ✈️Business travel expenses
You CANNOT Claim GST Credits On
- 🏠Private purchases
Not for business use
- 🏦Bank fees and interest
Input-taxed (no GST included)
- 🔑Residential rent
Input-taxed (no GST included)
- 📋Most insurance premiums
Often input-taxed or exempt
- 🧾Purchases without tax invoices
No proof of GST paid
- 💰Employee wages
No GST on wages
Net GST Position Calculator
Calculate what you owe (or get back) on your BAS
Total GST you charged customers this period
Total GST you paid on business purchases (GST credits)
GST Collected vs GST Credits
GST Payment
$3,000
5,000 - 2,000 = $3,000
Net GST = GST on Sales (1A) minus GST on Purchases (1B). If the result is positive, you pay the ATO. If negative, the ATO owes you a refund.
The Key Insight
The GST system is designed so tax only applies once to the final consumer. Businesses are essentially just passing GST through. By claiming credits on your business purchases, you avoid “double-dipping” — the GST only sticks on the final sale to the end customer.
The BAS in Action
Let's walk through a real BAS step by step. This is what it actually looks like when you lodge — and it's not as scary as you think.
BAS Walkthrough
Step 1 of 4GST on Sales (Label 1A)
Report all GST you collected from customers
Total sales
All sales including GST-free
$110,000
GST on sales
GST component only
$10,000
This is the GST you charged customers
How to calculate:
If all sales are taxable: $110,000 ÷ 11 = $10,000 GST
Common BAS Mistakes to Avoid
Forgetting GST-free sales
Fix: Include them in G1 (Total sales) but not in GST calculations
Claiming GST on input-taxed purchases
Fix: Bank fees, residential rent, insurance often don't include GST
Missing PAYG obligations
Fix: If you have employees, W1 and W2 are usually required
Rounding errors
Fix: Use your accounting software totals, not manual calculations
The Key Insight
Most small businesses only use 4-5 fields on their BAS: G1, 1A, 1B, and maybe W1/W2. The form looks scary because it covers every possible scenario, but you only fill in what applies to you. If you use accounting software, it pre-fills most of this automatically.
Record Keeping That Won't Kill You
Good records make BAS time painless. Bad records mean scrambling, stress, and potentially losing GST credits you're entitled to.
The 5-Year Rule
You must keep most business records for 5 years from when you prepared or obtained them, or when the relevant transaction occurred. This applies to:
Tax invoices
For all purchases where you claim GST credits
Sales records
Copies of invoices you issued to customers
Bank statements
All business account transactions
BAS lodgement records
Copies of lodged BAS and payment receipts
Employee records
Pay slips, tax declarations, super payments
Tax Invoice Validator
Check if your invoice meets ATO requirements for claiming GST credits
Invoice Amount:
Without all required fields, you may not be able to claim GST credits
Digital Record Keeping Tools
Xero
Popular cloud accounting, auto BAS
- Automatic bank feeds
- GST tracking
- BAS prefill
MYOB
Long-standing Australian solution
- Full accounting
- Payroll
- BAS ready
QuickBooks
Simple interface for small business
- Easy invoicing
- GST reports
- Mobile app
Receipt Bank / Dext
Receipt capture and storage
- Phone camera scan
- Auto categorization
- Cloud storage
Cash vs Accrual Accounting
Cash basis: Report GST when money changes hands. Most small businesses use this — it's simpler and better for cash flow.
Accrual basis: Report GST when you invoice (even if not yet paid). Required for businesses with turnover over $10 million.
If your turnover is under $10 million, you can choose cash basis — and you probably should.
The Key Insight
The best time to organize your records is when they happen. Snap a photo of receipts with a receipt capture app. Reconcile your bank feed weekly instead of quarterly. 15 minutes a week beats a stressful weekend every quarter trying to piece together 3 months of transactions.
Your GST/BAS Action Plan
You've made it through the essentials. Here's your game plan for conquering BAS time without the stress.
Quick Recap
GST
10% tax on most goods and services
BAS
The form you use to report GST and PAYG to the ATO
GST Credits
GST you paid on business purchases that you can claim back
Net GST
GST collected minus GST credits = what you pay or get refunded
Threshold
$75,000 annual turnover (or $150k for non-profits)
Due Dates
Usually 28th of month after quarter ends
Your Next Steps
Check if you need to register
If your GST turnover is approaching $75,000, start planning now
Use calculatorSet up digital record keeping
Use accounting software like Xero or MYOB to track everything
Know your due dates
Mark quarterly BAS dates in your calendar with reminders
Set aside GST weekly
Don't let BAS catch you off guard - save a little each week
BAS Due Date Calculator
Track your next BAS deadline and plan your cash flow
Your typical net GST obligation for this period
Recommended weekly set-aside:
$231/week
Put this aside each week to avoid a cash flow crunch at BAS time
Next BAS Due:
Tue 28 April 2026
Days Until Due
92
For Period
January - March
Full Year Calendar
When to Get Professional Help
DIY is great for simple situations, but consider getting a tax professional if:
- You're unsure if you should register for GST
- You have complex business structures (trusts, companies)
- You've received an ATO notice or audit letter
- You're behind on BAS lodgements
- You have employees and payroll obligations
- You want to review your current setup
Need Help With Your GST & BAS?
We help Australian small businesses stay compliant and stress-free. From GST registration to ongoing BAS lodgement, we've got you covered.
Congratulations!
You now understand more about GST and BAS than most Australian business owners. The key is staying organized throughout the year so BAS time is just a quick review, not a stressful scramble. Remember: you're not alone — millions of Australians lodge BAS every quarter, and you can too.