Starting a company feels like a big milestone. You have registered the company. You have your ACN. You have your ABN. Clients are coming in, and the business is finally taking shape.
Then someone asks: “Have you registered the company for GST?” For many new company directors, this is where the confusion begins. The good news is that the rules are quite straightforward. Let’s walk through them.
Does Every Company Need to Register for GST?
No. Simply incorporating a company does not mean you automatically need GST registration. For most companies, GST registration becomes compulsory when the business GST turnover reaches $75,000 or more.
It is the company’s business turnover that matters. Not the share capital. Not the director’s salary. And not the company’s profit.
The $75,000 Rule Explained
Let’s say your company provides IT services. During the year, it invoices clients: $95,000. The company’s expenses are: $55,000. Its profit is: $40,000. You might think the profit is what matters. It doesn’t.
GST registration is based on GST turnover, not profit. In this example, the company has crossed the $75,000 threshold and needs to review its GST position.
What If the Company Is Still New?
Many directors think they can ignore GST until the first year is over. That can be risky. If your new company is expected to reach $75,000 in turnover, you may need to register even before you actually reach the threshold.
For example, your company signs a contract worth $120,000 shortly after incorporation. Even though the money hasn’t arrived yet, your expected turnover may already require GST registration. Growth can happen quickly. Keep an eye on it.
Can a Company Register Voluntarily?
Yes. A company can choose to register for GST even if its turnover is below $75,000. This can make sense if the business has significant startup costs. Think about a new construction company.
It buys equipment, tools and vehicles before earning much income. If the purchases are eligible, the company may be able to claim GST credits. But voluntary registration also means extra responsibilities. You’ll need to charge GST, keep proper records and lodge BASs.
So don’t register simply because someone says it’s a good idea. Look at the numbers first.
What Happens After Registration?
Once your company is registered, GST becomes part of everyday business. You generally need to:
- Charge GST on taxable sales.
- Issue tax invoices.
- Keep GST records.
- Lodge BASs.
- Pay any net GST owing.
For example: GST collected from customers: $12,000.
Eligible GST credits: $4,500.
Your simple net GST position is: $12,000 − $4,500 = $7,500.
That amount is generally reported through your BAS.
Don’t Charge GST Before You’re Registered
This is a common mistake for new companies. You win your first client. You send an invoice. Then you decide to add 10% GST because you’re planning to register later. Don’t do that.
If the company is not registered for GST, it generally cannot charge GST on its invoices. Register first. Invoice second.
What If the Company Has Multiple Income Streams?
Many companies do more than one thing. A company might provide consulting services and also sell products online. The GST threshold is not applied separately to each activity. It is the company’s overall GST turnover that matters. So don’t assume each business division gets its own $75,000 limit.
What About a Holding Company?
Not every company actively trades. Some companies simply hold investments or own shares. GST registration depends on whether the company is carrying on an enterprise and its GST turnover.
A holding company with little or no business activity may have a very different GST position from an operating company.Every company should be assessed based on what it actually does.
Can the Company Claim GST Credits?
Yes—if the company is registered for GST and the purchase is eligible. For example, the company buys office furniture for: $5,500 including GST. GST included: $500. If the furniture is used for the business, the company may be able to claim the $500 GST credit. This is one reason many growing companies choose to register once they become eligible.
Keep the Company’s Records Clean
Companies usually have more reporting obligations than sole traders. Good bookkeeping makes everything easier. Keep:
- Sales invoices
- Tax invoices
- Purchase receipts
- Bank records
- GST calculations
- BAS records
When BAS time arrives, you’ll be glad everything is organised.
A Simple Company Example
Imagine you start Bright Horizon Pty Ltd.
The company earns: July: $8,000.
August: $10,000.
September: $12,000.
Business is growing. In October, the company signs a contract worth $60,000.
Suddenly, projected turnover is well above the GST threshold.
This is the time to review GST registration—not six months later.
The Bottom Line
Registering a company does not automatically mean registering for GST. For most companies, the key number is $75,000 GST turnover. If you’re below the threshold, GST registration may be optional.
If you’re above it, registration becomes important. The smartest company directors don’t wait until the accountant asks about GST. They monitor turnover from the beginning. Because it’s much easier to register on time than to explain to the ATO why the company’s first 20 invoices went out without GST.