Suitable for: Sole traders who are GST registered, but are considering changing their business activities
Tax Difficulty: Medium
Time to Read: 2-3 minutes
Tax Focus: Understanding GST options in changing your business
As a sole trader, a question worth considering is whether you need to register for GST - because not everyone needs to. Also, if you are thinking about changing your business activities, what will that mean for your GST registration?
The threshold requirements are fairly straightforward:
- If your annual business turnover is $75,000 or more, you are required by law to be registered for GST
- If you are a rideshare (Uber, Didi, Ola, Shebah) or taxi driver, you are required by law to be registered for GST, regardless of your annual business turnover. This includes ride share and other business activities under the same ABN, like delivery driving as well.
|Earning under $75k||Earning over $75k|
|Not rideshare driving||GST registration not required||Required to be GST-registered|
|Rideshare/taxi driving||Required to be GST-registered||Required to be GST-registered|
Being GST registered means that you may have further tax obligations to consider like lodging Business Activity Statements (BAS).
In the event you are considering changing the purpose of your business, this may have implications on your GST requirements. For example:
1. I am a rideshare driver but what if I decide to stop ridesharing for a while?
As a rideshare driver, you are required by law to be registered for GST. If you would like to stop ridesharing for a while, and intend to pick it up again in the future, you can keep your registration active and simply report nil a BAS (where income and expenses are reported as zero). These can be completed for free via Airtax.
Alternatively, you can cancel your GST registration and then register for GST purposes once you start rideshare driving again. However, it is important to be aware that for periods where you have earnt any rideshare income, you will still need to lodge that BAS. You will also need to remember to re-register yourself once you start driving again.
2. What if I am both a food delivery worker, and a rideshare driver?
If you are both a food delivery worker, and a rideshare driver, you would still need to be GST registered by law as a rideshare driver. As a result, your GST obligations will apply to all business activities (both food delivery and rideshare driving).
If you temporarily stop rideshare driving, and turn only to food delivery, then you have two options, (i) follow the guidance above to stop GST registration, or (ii) continue to submit your BAS including income and expenses for your food delivery business.
3. What if I want to stop rideshare driving for good?
If you plan to stop rideshare driving permanently, you can consider cancelling your GST registration, unless the annual business turnover of your sole trader ABN is $75,000 or more. If rideshare driving is your only business activity and you wish to no longer operate as a sole trader, then this is how to cancel your ABN.
4. What if I operate only as a food delivery driver / rider?
If you operate an UberEats / Menulog, or a food delivery driver from another provider, you will not need to be registered for GST, unless you earn an annual business turnover of $75,000 or more. Where you earn income as an employee as well, this is not counted for the purposes of determining your ‘business turnover’.
5. What if I want to shut down my sole trader business?
If you plan on shutting down your business as a sole trader, you may want to cancel your ABN. You can always reactivate your sole trader ABN in the future where you would like to restart your sole trader business.