1. Introduction: Understanding GST Obligations as a Sole Trader in Australia

GST, three letters that can make or break a sole trader’s finances if misunderstood. Whether you’re a freelance designer, Uber driver, or Etsy seller, knowing when and how to register for GST is a crucial part of staying ATO-compliant.

But here’s the kicker: it’s not just about earning over $75,000. Sole traders must also consider projected income, type of services, and location of customers, and don’t even get us started on BAS deadlines and digital product rules.

This comprehensive 2025 guide is here to simplify all of that. We’ll break down:

• When GST applies and when it doesn’t
• How to register, invoice, and file BAS statements
• Special cases like Uber drivers, digital exports, subcontractors, and more

By the end, you’ll not only know if you need to pay GST, but you’ll also be able to manage it confidently without fear of ATO penalties.

2. GST Registration Threshold in 2025: What You MUST Know

Let’s get one thing straight: $75,000 per year is the magic number. If your business earns more than that, GST registration becomes mandatory.

GST Registration Rules

• Mandatory Registration: If your projected turnover exceeds $75,000 (or $150,000 for non-profits), you must register for GST.
• Voluntary Registration: If you earn less, you can still register to claim GST credits on business expenses.
• Irregular Income? Still Register.
  The ATO considers your projected income, not just the actual earnings. So if you estimate $80k but only make $70k, you still must register.

BetterPayroll Example

A freelance designer expects to earn $80,000 this year but only makes $70,000. Because they projected over $75k, they were required to register at the start of the financial year.

Ignoring this can cost you. The ATO regularly audits businesses for late GST registration, and backdating your registration can result in lump-sum tax bills.

3. Elements Often Missed: Exemptions & Special Cases

Most payroll platforms stick to generic GST info. But real life isn’t generic, and sole traders fall into unique categories. Here are the real-world cases they don’t explain:

Scenario	GST Obligation?	Why?
Uber driver earning $60,000	Yes	Ride-sourcing has no threshold exemption
Selling GST-free items (e.g., childcare)	No	ATO designates these as GST-free
Selling digital products overseas	No	These are out of scope under ATO rules
Subcontractor in construction (GST reg.)	Yes	Reverse charge may apply

BetterPayroll Tip

Take the GST Eligibility Quiz inside BetterPayroll; it takes less than 2 minutes and gives you an answer tailored to your business type and income.

4. Critical GST Compliance Steps for Sole Traders

Step 1: Register for GST

• Where: Register through ATO Online Services using your myGovID.
• Time: Takes about 10 minutes
• Effective Date: Choose the 1st of a month (e.g., July 1 for the new financial year)

Choosing a Tax Period

You can report GST:

• Monthly
• Quarterly (recommended for better cash flow)
• Annually (only available for some businesses)

Important: If you exceed the $75,000 threshold mid-year, you can backdate your registration. But you’ll need to pay GST on all sales made since the effective date.

Step 2: GST Invoicing & Calculations

You must:

• Charge 10% GST on taxable sales
• Claim GST credits on business purchases

What a GST-Compliant Invoice Needs

• The words “Tax Invoice”
• Your ABN
• Your GST registration date
• Total GST shown as a separate line item

Common Mistake

Many sole traders forget to add GST on progress payments (e.g., a 50% upfront deposit). If GST isn’t clearly outlined, you can’t legally claim credits or file BAS correctly.

BetterPayroll Fix: The invoicing tool auto-generates compliant invoices and even flags ones missing key data like GST or ABN.

Step 3: Lodging Your BAS

Lodging BAS (Business Activity Statements) is where many sole traders go wrong. Here are the key deadlines:

Quarter	Due Date
July–September	October 28
October–December	February 28
January–March	April 28
April–June	July 28

ATO Penalties: You’ll be charged $222/month for each late BAS submission. If you’re 3 months late? That’s $666 per activity statement.

BetterPayroll Hack

Sync BetterPayroll with Xero or MYOB, and the platform will auto-generate BAS drafts ready for submission. It also alerts you before due dates.

5. Advanced Scenarios You Might Ignore

Let’s talk about real-world complexity, stuff generic guides just don’t cover.

1. Multi-State Services

• Physical Services (e.g., a photoshoot): GST applies where the service is performed
• Digital Services (e.g., eBooks): GST is based on the customer’s location

Example

A copywriter in Sydney sells an eBook to a client in WA. Even though it’s digital, GST still applies at 10%, because it’s an Australian customer.

2. ATO Audit Red Flags

ATO is watching. Here’s what will trigger an audit:

• Mismatched Income: If GST income differs from bank deposits by over 10%
• Private Use: Claiming GST credits for laptops or phones used 50% for Netflix
• Missing Tax Invoices: No valid receipt for purchases over $82.50? You lose the GST credit.

BetterPayroll Defense: Every transaction is logged with time stamps, ABNs, and invoice attachments. Perfect for audit-proofing.

6. Cancelling Your GST Registration

So what happens if business slows down and you’re no longer earning above $75,000 per year? You may be eligible to cancel your GST registration, but there are a few steps to follow.

When Can You Cancel?

You can cancel your GST registration if:

• Your income drops below $75,000
• That lower income has persisted for at least 12 consecutive months

Even if you think your income will stay low, the ATO requires 12 months to prove it.

How to Cancel

• Submit Form NAT 29542
• Lodge your final BAS
• Remove GST from all pricing, quotes, and invoices within 21 days

Post-Cancellation Requirements

Many sole traders forget this critical point: Once you cancel, you can’t claim GST credits or include GST on future invoices. You must:

• Update invoice templates
• Notify customers of the pricing change
• Adjust your BAS reporting obligations

BetterPayroll Feature: The platform auto-updates all invoice templates and pricing lists once cancellation is approved, ensuring you don’t accidentally charge GST post-deactivation.

7. BetterPayroll’s Free GST Tools for Sole Traders

Navigating GST is tough, but it doesn’t have to be. BetterPayroll offers free tools tailored for sole traders in 2025:

GST Registration Calculator

Quickly determine if you need to register or cancel based on projected and actual income. Perfect for seasonal earners like artists, freelancers, and tradies.

Tax Invoice Template

Pre-formatted invoices with all ATO-required fields. Just fill in the service, amount, and your ABN. Done.

BAS Due Date Tracker

Sync with your Google Calendar or Outlook to get notified 7 days before every BAS deadline. No more $222/month late fees.

Conclusion

Being a sole trader in Australia already demands wearing too many hats: marketer, accountant, admin, and service provider. GST should not be the straw that breaks your back.

Whether you’re hitting the $75k threshold, managing BAS deadlines, or navigating complex exemptions for digital sales and subcontracting, it’s clear: GST isn’t optional. But stress doesn’t have to be part of the deal.

Using automation tools like BetterPayroll, you can stay compliant, reduce admin headaches, and focus on what grows your business.

Don’t leave it to chance. Don’t leave it to outdated info. Stay compliant, get paid right, and sleep better knowing your books are clean.

FAQs

1. I earned $80,000 last year but expect only $60,000 this year. Do I still need GST?

No, but only if your income stays below $75,000 for 12 consecutive months. Otherwise, you’re still required to remain registered.

2. Can I register for GST voluntarily even if I earn under $75k?

Absolutely. Many sole traders do this to claim GST credits on their business expenses, like equipment, software, or travel.

3. What happens if I forget to charge GST on a deposit or partial payment?

You may have to backpay GST and adjust your BAS. BetterPayroll prevents this by auto-inserting GST on progress invoice templates.

4. Do I need to register for GST if I only sell to overseas clients?

Generally, no, these are out-of-scope sales. But if you have Australian clients too, you’ll need to assess the total income and register if you exceed the threshold.

5. What if I’m late with my BAS?

The ATO charges $222/month per BAS that’s overdue. BetterPayroll sends automated alerts so you never miss a due date.