VAT and Sales Tax in Australia

Australia operates a single broad-based consumption tax -- the Goods and Services Tax (GST) -- introduced on 1 July 2000 under the A New Tax System (Goods and Services Tax) Act 1999 [SC1]. The flat 10% rate applies to most supplies of goods, services, and other things connected with Australia. Unlike European VAT systems with multiple tiers, Australia uses one rate applied across three supply categories that determine both whether GST is charged and whether the supplier can recover input costs.

What rate does Australian GST use, and how do the three supply categories work?

The standard GST rate is 10% and has not changed since 1 July 2000. Every supply falls into one of three categories under the GST Act [SC1]:

• Taxable supplies: GST is charged at 10%. The supplier collects GST from the buyer, remits the net amount to the Australian Taxation Office (ATO) via the Business Activity Statement (BAS), and may claim input tax credits (ITCs) for GST paid on business purchases.
• GST-free supplies: No GST is charged to the customer, but the supplier can still claim ITCs on related business acquisitions. This category functions like a zero rate with full input recovery -- equivalent to zero-rated in UK VAT.
• Input-taxed supplies: No GST is charged, but the supplier also cannot claim ITCs on related acquisitions. The embedded GST on inputs becomes an unrecovered business cost -- equivalent to exempt in UK VAT.

The critical practical difference between GST-free and input-taxed is whether the supplier recovers the GST embedded in their own costs. A business making only GST-free supplies (such as an exporter) recovers all input GST. A residential landlord making input-taxed supplies cannot [SC2].

Which supplies are GST-free and which are input-taxed?

GST-free supplies are listed in Division 38 of the GST Act and cover [SC1][SC3]:

• Basic food: Fresh fruit, vegetables, meat, fish, bread, dairy, and unprocessed staples. Takeaway meals, hot food, confectionery, soft drinks, and alcohol are taxable.
• Health services: Consultations with registered medical practitioners, dentists, optometrists, physiotherapists, and allied health professionals where the service is recognized under Medicare-eligible categories. Prescribed medicines are also GST-free.
• Education: Tuition at pre-school, primary, secondary, and tertiary institutions; most TAFE vocational courses; course-required materials supplied as part of an accredited course.
• Childcare: Approved family assistance childcare services including long day care, family day care, and outside-school-hours care.
• Exports: Goods exported within 60 days of supply, and services physically performed or consumed outside Australia.
• Other categories: International transport, religious services, water and sewerage supplies by government authorities, and the sale of a going concern where both parties are GST-registered and agree in writing.

Input-taxed supplies under Division 40 include [SC2]:

• Financial supplies: Lending, deposit-taking, securities dealing, foreign exchange, and most insurance. Providers of financial supplies may access reduced input tax credits (RITCs) at 75% for certain acquisitions.
• Residential rent: Renting of residential premises for residential accommodation is input-taxed. The landlord charges no GST and cannot recover GST on expenses such as property management fees or repairs.
• Sale of existing residential property: Resales of previously sold residential dwellings are input-taxed. New residential property sold by a developer for the first time is taxable.

When must a business register for GST?

Registration is mandatory when annual GST turnover reaches AUD 75,000 for businesses and AUD 150,000 for non-profit organisations [SC4]. Taxi drivers and ride-sourcing operators (Uber, DiDi) must register regardless of turnover level. Businesses must register within 21 days of becoming aware that their turnover has reached or will reach the threshold.

Turnover is assessed on a rolling 12-month basis -- both backward-looking (last 12 months) and forward-looking (next 12 months). GST-free turnover counts toward the threshold; input-taxed turnover does not. A landlord earning AUD 100,000 in residential rent is not required to register because that income is input-taxed and excluded from the threshold calculation.

Voluntary registration below AUD 75,000 is permitted and is commonly chosen by businesses with significant GST input costs or by B2B operators whose GST-registered customers would otherwise receive no ITC benefit from the purchases.

How is GST reported via the BAS, and what are the lodgement deadlines?

Registered businesses report and pay GST through the Business Activity Statement (BAS) [SC4][SC5]. The BAS also captures PAYG withholding, PAYG instalments, and fringe benefits tax instalments, making it the single consolidated remittance vehicle for most ATO periodic obligations.

Lodgement frequency depends on annual GST turnover:

• Quarterly (default for turnover under AUD 20 million): Due the 28th of the month following the quarter end -- 28 October, 28 February, 28 April, and 28 July. Online self-lodgers receive an automatic two-week extension on Q1, Q3, and Q4.
• Monthly (required for turnover AUD 20 million or more; elective for others): Due the 21st of the following month.
• Annual (available for voluntarily registered businesses under AUD 75,000 turnover): Due 31 October.

Businesses with turnover below AUD 10 million use Simpler BAS, which reduces the form to three fields: total sales, GST on sales, and GST on purchases. To claim input tax credits, businesses need a valid tax invoice for any purchase exceeding AUD 82.50 (including GST) [SC5].

How does GST apply to goods imported from overseas?

The Low Value Imported Goods (LVIG) regime, effective 1 July 2018, applies GST to goods valued at AUD 1,000 or less that overseas suppliers sell to Australian consumers [SC6]. An overseas seller whose total Australian sales of low-value goods exceed AUD 75,000 per year must register for GST, charge 10% at point of sale, and remit to the ATO through the simplified GST registration process.

Electronic Distribution Platforms (EDPs) such as Amazon and eBay may be treated as the deemed supplier in place of the individual merchant, simplifying compliance for small overseas sellers. For goods valued above AUD 1,000, GST is collected by Australian Border Force at the border under the customs framework. Alcohol and tobacco have no AUD 1,000 exemption and attract customs duty and GST regardless of value.

Overseas suppliers of digital products and services -- software, streaming, e-books, online subscriptions -- have been required to charge GST to Australian consumers since 1 July 2017 under what is colloquially called the "Netflix tax" [SC6].

For the full Australian tax landscape including income tax, capital gains, and payroll obligations, see the Australia country overview. For state-level taxes such as stamp duty and payroll tax, see the Australia property tax overview. GST obligations intersect with business structure -- sole traders, companies, and trusts all register and lodge BAS individually. A registered tax agent listed in the Australia tax-pros directory can assess whether your business crosses the registration threshold, determine the correct supply category for mixed activities, and ensure BAS lodgements are accurate and on time.