A simple guide to your GST obligations as an Australian employer
If you run a business in Australia, you’ve probably heard the term GST more times than you can count.
But understanding how it actually works — and what your obligations are as an employer — can sometimes feel like that episode in Friends where Rachel opens her first pay check and asks, “Who’s FICA? And why’s he getting all my money?”
It’s a familiar moment — that realisation that not every dollar landing in your account is truly yours. For many small business owners, that’s the day GST starts to make sense (and sting a little).
Here’s what it actually means, and who needs to register.
What is GST?
GST (Goods and Services Tax) is a 10% tax added to most goods and services sold or consumed in Australia.
If your business brings in $75,000 or more a year from sales (not counting wages or any personal income), you’ll need to register for GST.
For not-for-profit organisations, the threshold is $150,000. The ATO explains how that threshold works here.
Some businesses register voluntarily, even below the threshold, to claim GST credits on business purchases and prepare for future growth. You can read more about how GST applies to different types of sales on the ATO’s ‘How GST Works’ page.
Once you’re registered, you’ll need to:
- Add 10% GST to your taxable sales and show it clearly on invoices.
- Lodge regular Business Activity Statements (BAS) — usually quarterly — to report the GST you’ve collected and paid.
- Pay (or claim) the difference between the GST you collect from customers and the credits you can claim on eligible business expenses.
If you’re setting up a new business, business.gov.au has a helpful step-by-step guide to registration.
How GST connects with payroll and employer obligations
It’s easy to assume that GST and payroll live in separate worlds — but they often overlap in subtle ways.
Here’s how they connect:
- Superannuation and PAYG withholding don’t attract GST, but they appear in your BAS under different sections, so it’s vital your payroll data is accurate. The ATO’s overview of PAYG withholding reporting explains this link in more detail.
- If you pay contractors, check whether they’re registered for GST.
- If they are, they’ll include GST on their invoices (which you can usually claim back as a credit).
- If they’re not, no GST applies — so don’t overpay by mistake. You can verify their registration instantly using the ABN Lookup tool.
- Certain employee benefits or allowances (like cars, meals, or travel) may potentially have GST implications depending on how they’re provided or reimbursed. These fall under Fringe Benefits Tax (FBT) rules.
In short: your payroll and transaction data feed directly into your BAS. When both areas are clean and in sync, you avoid errors and stay compliant.
Common GST mistakes we see
Even the most organised business owners make the occasional GST slip-up. The ones we see most often? Mixing the GST you collect into everyday cash flow, mis-coding expenses, or claiming GST from suppliers who aren’t actually registered.
A simple habit that helps: move the GST portion of each payment you receive into a separate savings account, and check your supplier’s details on ABN Lookup before processing their invoice.
Small steps like these can save a lot of stress — and help you avoid your own little Rachel moment — when BAS time rolls around.
You can also take a look at our earlier post, The 5 Bookkeeping Mistakes Costing You Time, Money. It walks through a few everyday habits that often trip business owners up when it comes to keeping their books (and their GST) on track.
The takeaway
Staying on top of GST doesn’t have to be complicated — it just needs a bit of structure, the right systems (and we’d argue, the right people!) behind you.
When your bookkeeping, payroll, and BAS are working together, everything else runs more smoothly: your cash flow, your reporting, your peace of mind.
Still feeling unsure about whether you’re getting GST right? That’s why we’re here. Reach out, we’re always happy to provide guidance.