Suitable for: New and existing sole traders
Tax Difficulty: Easy
Airtax Experience: First-time users
Time to Read: 2-3 minutes
In order to operate a sole trader business in Australia you need to have an active ABN. However, you may also need to register for GST depending on the amount of income you earn from this business, and / or the business activities that you perform.
In this article, we’ll explain exactly when you do and don’t need to be registered for GST as a sole trader. This information is relevant for both newly established sole traders, and sole traders who may want to know if they need to maintain or cancel their existing GST registration.
A simple table to explain this
If you choose to begin operating as a sole trader, you will not be required to register for GST purposes unless you are earning more than $75,000 from this activity annually. This $75,000 threshold does not include things like salary and wages, or any other income sources that are not earned under your sole trader ABN.
However, as you can see in the below table, rideshare and taxi drivers are required to register for GST regardless as to the amount of income they anticipate earning.
You can apply for an ABN and register for GST free of charge through Airtax*. If you have any questions or get stuck along the way, feel free to drop us an email or book one of our free, 10 minute, introductory tax chats.
What does being registered for GST mean?
As a GST-registered sole trader, you will need to prepare monthly or quarterly Business Activity Statements (BAS) which track the GST you have collected from your business sales, and the GST credits you are entitled to through your business expenses, over a given reporting period.
It takes a couple of minutes to complete your BAS on Airtax, and using Airtax means you receive an extension to the normal lodgement deadlines. If you haven’t earned any income during a period, we waive the usual $49 lodgement fee.
When you sign up with Airtax, we’ll also send you reminders when your BAS is due so you can be sure you’re always up-to-date. You can find out more about how to do your BAS reporting here.
*ABN / GST registration is free where this can be completed automatically, which is almost all cases. In the event we need to contact the ABR / ATO on your behalf via a phone call, this will be charged at $49 through our ABN Assist service, or you can contact the relevant parties yourself for free. We will remind you of these options first if this situation were to ever arise.