Crossing the $75,000 GST threshold: what changes as your business grows

For many small businesses, crossing $75,000 in turnover is the first real milestone of growth. It’s also the moment the tax picture changes. Registering for GST affects your prices, your paperwork and — most importantly for a growing business — your cash flow. Handle it well and it’s a formality. Get caught out and it can take a big bite out of the growth you’ve worked for.

When exactly do you have to register?

According to the ATO, you must register for GST when your business’s GST turnover is $75,000 or more ($150,000 for non-profit organisations), and you must do it within 21 days of reaching the threshold. Taxi and ride-sourcing drivers must register regardless of turnover.

GST turnover is your gross business income minus GST, and it excludes items such as input-taxed sales, sales not connected with Australia, and sales of capital assets. The ATO lets you measure it two ways:

Method	Period measured	Why it matters for growth
Current GST turnover	This month plus the previous 11 months	Catches you once you’ve already grown
Projected GST turnover	This month plus the next 11 months	Catches you as soon as growth is expected

If either reaches $75,000, you need to register.

What is the projected-turnover trap?

Owners often watch their past 12 months creep towards $75,000 and assume they’ll register when they get there. But projected turnover counts too. If you:

• sign a contract worth $60,000 over the next six months,
• open a second location,
• launch a new product with expected sales, or
• take on a big new client,

your projected turnover for the next 12 months may already exceed $75,000 — and the 21-day clock starts then. That’s why a growth plan and a GST check belong together. Our guide to funding a big contract covers the cash side of large new work.

What if you register late?

The ATO says that if you don’t register when required, you may have to pay GST on sales made since the date you should have registered — even though you didn’t charge it to customers — plus possible penalties and interest. Registration can be backdated, up to a maximum of four years.

In practice, that means the GST comes out of your margin. On $100,000 of sales, the GST component is about $9,091 (one-eleventh of a GST-inclusive price). If you didn’t charge it, you effectively pay it yourself.

Should you raise your prices or absorb the GST?

This is the decision every growing business faces at the threshold.

Your customers are mainly…	What usually happens
GST-registered businesses	Add GST on top. They claim it back as a credit, so their real cost doesn’t change.
Consumers	GST is a real price rise for them. Options: add it on, absorb some or all of it, or restructure your pricing.
A mix	Consider different approaches for different customer groups or products.

Absorbing GST cuts your margin by roughly one-eleventh of the new GST-inclusive price. A business with a 40% gross margin that absorbs GST entirely would see its margin on each sale fall to about 34%. That matters for every payback calculation you make from now on — see gross margin and growth.

What are the upsides of registering?

It’s not all cost. Once registered, you can generally claim GST credits on business purchases — equipment, vehicles, stock, rent, fit-outs, software and marketing. For a business investing in growth, that can be significant: GST on a $66,000 equipment purchase is $6,000 you can typically claim back through your BAS. See equipment for growth for more on equipment purchases.

Being registered can also make you look more established to business customers, some of whom prefer to deal only with GST-registered suppliers.

How often will you lodge a BAS?

The ATO’s reporting options are:

• Quarterly — the standard for businesses with GST turnover under $20 million.
• Monthly — required if GST turnover is $20 million or more, and available by choice.
• Annually — an option if you’re voluntarily registered with GST turnover under $75,000.

Quarterly BAS are due on 28 October, 28 February, 28 April and 28 July. Monthly BAS are due on the 21st day of the following month. Lodging online can give quarterly lodgers an extra two weeks for most quarters.

A worked example (illustrative)

A mobile coffee van operator has turnover of about $62,000 over the past 12 months and assumes GST is still a year away. In August she books a season of weekend markets and two corporate event contracts worth about $30,000 over the coming months. Her projected turnover for the next 12 months is now about $95,000 — over the threshold.

She registers within 21 days, and makes three decisions:

1. Pricing. Her customers are consumers, so she raises coffee prices by 30 cents — covering part of the GST — and absorbs the rest, accepting a slightly lower margin. Corporate clients, who are GST-registered, are simply invoiced with GST on top.
2. Credits. She’d been planning a second grinder and a generator upgrade. Registered, she can claim the GST on both.
3. Cash. She opens a separate “tax” account and moves one-eleventh of each day’s takings into it, so the October BAS is funded before it’s due.

Growing past the threshold turns out to be manageable because she saw it coming. If a growth move is pushing your own turnover up fast, you can check funding options for it in about a minute.

How do you stop GST hurting your cash flow?

• Separate it. Move the GST you collect into a separate account as you go. It was never your money.
• Forecast BAS dates. Put them in your cash-flow forecast alongside wages and rent.
• Watch growth spurts. Fast growth means bigger BAS bills, often at the same time as higher stock and wage costs — a classic ingredient of overtrading.
• Claim every credit. Keep tax invoices for business purchases.
• Talk to your accountant about cash versus accrual reporting and which suits your business.

Does GST registration affect a funding application?

In a good way, usually. Once you’re registered and lodging BAS, you have a regular, official record of your turnover that lenders can see alongside your bank statements. For unsecured growth funding, which is sized mainly on turnover and bank statements, consistent BAS lodgements help tell a clear story.

A few things help that story:

• Lodge on time, every time. Late or missing BAS is one of the most common reasons applications slow down.
• Keep GST separate from operating cash, so your statements don’t show the business dipping into tax money.
• Explain spikes. If a big contract pushed one quarter up, say so — lenders prefer context to guesswork.
• Keep any ATO arrangement current. ATO debt is considered case by case, but an arrangement that’s being met reads very differently from one that isn’t.

Is crossing the threshold a sign to plan bigger?

Often, yes. A business approaching $75,000 is usually one with real demand — and the next steps (equipment, a first hire, more marketing) come with bigger numbers. Take the growth readiness check to see what’s in place and what’s worth tightening before you push harder.

Growing past the threshold? Let’s fund what comes next

Crossing $75,000 is a milestone worth celebrating. If the next stage of growth needs funding — equipment, stock, a hire or a bigger contract — we’d like to hear about it.

A quick form starts the conversation, and asking leaves your credit report untouched. We don’t pass your details around a panel of lenders; a lending specialist reviews your plan and phones you. Give us accurate turnover and a clear picture of what you’re funding, and we can line up a sensible option first time.

See if your growth plan qualifies →