How to Stay Below the GST Threshold Legally: Strategies for Small Businesses in Australia (2025)

Benefits of Staying Below the GST Threshold

Many small businesses choose to stay below the GST threshold to keep things simple and reduce the need to collect GST or pay GST to the ATO. Here are some of the main benefits:

• Less paperwork: You don’t need to lodge a business activity statement (BAS) for GST purposes, which means fewer regular invoices and less time spent on compliance.

• Simpler pricing: You can advertise a total price that doesn’t include GST, which can be attractive to Australian consumers and businesses minus GST.

• Better cash flow: Without the need to collect GST or pay GST, you can keep more of your business income in your business account for day-to-day expenses.

• No need to claim GST credits: If you’re not registered for GST, you don’t need to claim GST credits or keep track of GST included in your business purchases.

However, if you do register for GST voluntarily, you can claim GST credits for the GST included in your business purchases, which can help reduce your costs.

Legal Strategies to Stay Below the GST Threshold

There are several practical ways to keep your GST turnover below the threshold and avoid the need to register for GST. These strategies are all within the rules set by the Australian Taxation Office and can help you manage your business income effectively.

Monitor Your GST Turnover

Set up a system to track your GST turnover regularly. Use accounting software or a business account that gives you a clear view of your gross income and GST turnover.

Time Your Invoices and Income

If you’re close to the GST threshold, consider the timing of your tax invoices and when you recognise business income. For example, you might delay issuing a tax invoice until the next GST period if it’s within your normal business practices. Just make sure you’re not delaying invoices beyond what’s reasonable for your industry.

Review Your Business Structure

If you run more than one genuine business or enterprise, each with its own ABN and business name, each business has its own GST threshold. However, the ATO looks closely at businesses that split their activities just to avoid registering for GST. Make sure each business is truly separate, with its own business account and services sold.

Focus on GST-Free or Input-Taxed Sales

Some goods and services, like basic food, health services, and certain exports, are GST-free or input-taxed. These sales don’t count towards your GST turnover for GST purposes. If your business can focus more on GST-free items sold, you may be able to keep your GST turnover below the threshold.

Use the Right Accounting Method

You can choose to account for GST on a cash basis or accruals basis. On a cash basis, you only count income when you receive payment, which can help you manage your GST turnover more closely. This is especially useful for small businesses with irregular income.

When Should You Register for GST

There are situations where you must register for GST, even if you’d prefer to stay below the threshold:

• If your GST turnover exceeds $75,000 in any 12-month period.

• If you provide taxi or limousine travel, including ride-sharing, you must register for GST regardless of your turnover.

• If you’re a non profit organisation with GST turnover exceeding $150,000.

• If you want to claim fuel tax credits for fuel used in your business.

• If you sell low value imported goods or imported services to Australian consumers through an electronic distribution platform.

Once you register for GST, you’ll need to collect GST on your goods and services, issue tax invoices, and lodge a business activity statement (BAS) for each GST period. You’ll also be able to claim GST credits for GST included in your business purchases.

Practical Tools for Managing GST Obligations

Staying on top of your GST obligations is easier with the right tools and support:

• Accounting software: Many programs can track your GST turnover, generate tax invoices, and help you lodge your BAS online.

• Professional advice: An accountant can help you understand when you need to register for GST, how to claim GST credits, and how to manage your GST work.

• ATO resources: The ATO website has guides on GST registration, claiming GST credits, and managing your GST period.

Common Mistakes to Avoid

When managing your GST obligations, watch out for these common pitfalls:

• Ignoring the rolling 12-month period: The GST threshold applies to any 12-month period, not just the financial year.

• Artificially splitting your business: The ATO may combine your businesses if they’re not genuinely separate, which could push your GST turnover over the threshold.

• Not keeping proper records: You need to keep tax invoices and records of all business purchases and sales for GST purposes.

• Forgetting about special rules: If you provide taxi or limousine travel, or sell through an electronic distribution platform, you may need to register for GST regardless of your turnover.

Conclusion

Staying below the GST threshold can help small businesses keep things simple, improve cash flow, and avoid extra paperwork. By monitoring your GST turnover, timing your business income, and understanding the rules for GST registration, you can make the best choice for your business.

If your business is growing or you want to claim GST credits and fuel tax credits, registering for GST may be the right move. Either way, keeping good records and seeking professional advice will help you stay compliant and make the most of your business opportunities.

Are you confident in your approach to GST? Review your business income, GST turnover, and registration status today to ensure you’re on the right track for 2025.