GST for Sole Traders in Australia — Complete Guide for 2025–26

If you're a sole trader in Australia — whether you're a sparky, chippy, landscaper or cleaner — understanding GST is one of the most important parts of running your business. Getting it wrong can mean fines, missed deductions, or awkward conversations with clients when you have to add 10% they weren't expecting.

This guide covers everything Australian sole traders need to know about GST for the 2025–26 financial year. Use our free GST Calculator to check your numbers at any time.

What is GST?

GST stands for Goods and Services Tax. It's a 10% tax on most goods and services sold in Australia. As a sole trader, if you're registered for GST, you need to add 10% to your prices and send that extra money to the ATO when you lodge your Business Activity Statement (BAS).

The good news? You also get to claim back any GST you've paid on business expenses — tools, materials, vehicle costs, software subscriptions, and more.

When Do You Need to Register for GST?

You are required by law to register for GST if:

• Your annual GST turnover (total business income) is $75,000 or more
• You're a non-profit organisation with turnover of $150,000 or more
• You provide taxi or rideshare services (no threshold — you must register regardless of income)

Even if your turnover is under $75,000, you can voluntarily register for GST. Many tradies choose to do this because it lets them claim GST credits on tools, equipment and vehicles — which can save thousands of dollars a year.

How to Register for GST

Registering for GST is straightforward. You can do it through the ATO website via myGov or the Business Portal. You'll need your ABN handy. Registration is free and you'll usually get your GST registration within a few days.

Once registered, you must:

• Include GST in your prices (or show it separately on quotes and invoices)
• Provide tax invoices for any sale over $82.50 (including GST)
• Lodge BAS statements — usually quarterly
• Keep records of all income and expenses for at least 5 years

How GST Works on Quotes and Invoices

When you quote a job as a GST-registered sole trader, you have two options:

1. Quote GST-inclusive — "Total: $1,100.00" (which includes $100 GST)
2. Quote plus GST — "Subtotal: $1,000.00 + GST $100.00 = $1,100.00"

Most tradies quote GST-inclusive for jobs under a few thousand dollars, and show the breakdown for larger jobs. Either way is fine as long as the total is clear.

Here's a quick example using our free GST Calculator:

Claiming GST Credits (Input Tax Credits)

One of the biggest benefits of being GST-registered is claiming back the GST you pay on business purchases. This includes:

• Tools and equipment (power tools, hand tools, PPE)
• Building materials (timber, concrete, hardware)
• Vehicle expenses (fuel, maintenance, lease payments)
• Insurance premiums for your business
• Accounting and bookkeeping fees
• Phone and internet costs (business portion)
• Software subscriptions (accounting, project management, design tools)

You can only claim GST credits if you have a valid tax invoice from the supplier for purchases over $82.50 (including GST). Keep all your receipts — digital copies are fine.

Lodging Your BAS

Your Business Activity Statement (BAS) is how you report and pay GST to the ATO. Most sole traders lodge quarterly:

• July–September: due 28 October
• October–December: due 28 February
• January–March: due 28 April
• April–June: due 28 July

On your BAS, you report your total sales (GST-inclusive), the GST you've collected, and the GST you've paid on purchases. The difference is what you owe or get refunded.

Common GST Mistakes Sole Traders Make

• Not showing GST on quotes — If you're registered, your quoted price must include GST. Hiding it creates legal and trust issues.
• Forgetting to claim credits — Many sole traders miss legitimate GST credits on tools, fuel and phone bills. Every dollar counts.
• Mixing personal and business expenses — You can only claim GST on the business-use portion. Keep separate accounts or use an app.
• Late BAS lodgement — Penalties apply. Set calendar reminders for BAS due dates.
• Not using accounting software — Even a simple tool like Xero or QuickBooks makes GST tracking and BAS lodgement much easier.

Should You Use the GST Calculation Method (GST Collected vs Paid)?

The ATO offers two methods:

• Calculation (GST collected – GST paid) — The standard method. Report total GST on sales minus total GST on purchases. Most tradies use this.
• Calculation (7.5% of total sales) — A simpler method where you estimate GST payable at 7.5% of GST-inclusive sales. Only available if you're a small business with under $2 million turnover, and only if the ATO approves it.

The standard method is usually better because it accounts for your actual business expenses.

Still have questions about GST as a sole trader? Reach out to us — we're not accountants, but we can point you in the right direction. And always consult a registered tax agent or the ATO for your specific situation.

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