GST for Sole Traders: How to Handle It on Invoices

GST is one of the most confusing parts of invoicing for new sole traders. Do you have to charge it? How much? And what does it change on your invoice? This guide covers the basics in plain English.

What is GST?

The Goods and Services Tax (GST) is a 10% tax on most goods and services sold in Australia. If you are registered for GST you add it to your prices, collect it from your customers and pass it on to the ATO, and you can claim back the GST included in your own business purchases.

Do I have to register for GST?

• You must register when your GST turnover is $75,000 or more in a 12-month period (or you expect it to be).
• You can choose to register if you are below the threshold, for example so you can claim GST credits on equipment and expenses.
• Some businesses must register regardless of turnover, including taxi and ride-sourcing drivers.

If you are not registered, you must not charge GST on your invoices. You also cannot claim GST credits.

How to work out GST on an invoice

The maths is simple:

• Adding GST to a price: multiply the GST-exclusive price by 0.1 and add it on.
• Finding the GST inside a total: divide the GST-inclusive total by 11.

What changes on the invoice?

When you are registered for GST, your invoice should:

• Be headed "Tax Invoice".
• Include your ABN.
• Show the GST amount separately, or state that the total includes GST.
• Include the date, a description of what you supplied and your business name.

You must give a tax invoice if the customer asks for one on a taxable sale over $82.50, and it is good practice to include the details on every invoice. If you are not registered, issue a plain "Invoice" with no GST. See How to Invoice as a Sole Trader in Australia for the full checklist.

Reporting GST

Registered businesses report GST to the ATO on a Business Activity Statement (BAS), usually quarterly. You subtract the GST credits on your purchases from the GST you collected and pay the difference. Keeping a clear record of every invoice makes that job much faster.

GST in Sole Invoice

Sole Invoice has a single GST setting. When it is on, 10% GST is applied to your invoice items (you can mark individual costs as GST exclusive) and the invoice heading changes to "Tax Invoice". When it is off, you get a standard invoice. Want to see the layout first? Try the free invoice template, which handles GST for you.

This article is general information only and is not tax or legal advice. Thresholds and rules can change, so confirm the current details on the ATO website or with a registered tax agent.