Registering for GST: when a creator’s turnover reaches $75,000

Turnover is not profit

GST is a 10% tax on most goods, services and other items sold or consumed in Australia, and a registered business collects it from its customers as one-eleventh of the sale price.

business.gov.au gives a plain example: “If you sell $80,000 worth of clothes in a year, you’d have to register for GST. This is because your GST turnover is over the $75,000 threshold – even if you only make $40,000 in profit.”

The ATO describes GST turnover as total business income, not profit, minus:

• the GST in sales to customers
• sales to associates that are neither paid for nor taxable
• sales unconnected with an enterprise you run
• input-taxed sales
• sales unconnected with Australia

Two windows, checked every month

The threshold is reached if either window comes to $75,000 or more: the current GST turnover, which is this month plus the previous 11, or the projected GST turnover, this month plus the next 11, if it is likely to reach that amount. So the threshold can be reached on projection alone, before twelve months of income has arrived.

The ATO’s advice for anyone not yet registered is to check each month whether the threshold has been reached or is likely to be, and to register within 21 days of going over. In its worked example, a sole trader whose current turnover at the end of May is $31,170, under the threshold, goes on to work out his projected turnover, and keeps doing so each month; if he reaches the threshold, he has 21 days from then to register. Two things are left out of the projected figure: amounts from selling a business asset, such as a capital asset, and sales made only because the enterprise is closing or being substantially and permanently scaled down. And even when current turnover is at or above the threshold, registration isn’t needed if the ATO is satisfied the projected turnover will be under it.

Where creator income sits

The ATO’s creator guide has its own GST lines for a creator in business. Among them:

“You must charge GST on your taxable sales (including local brand deals or sponsorships)”

“Noting GST-free sales (payments from foreign advertising networks) count towards your $75,000 registration threshold”

ATO, Are you in the business of content creation?

That second line is the creator guide’s direct word on foreign advertising payments: it calls them GST-free sales and says they count towards the $75,000. The turnover list above leaves out “sales not connected with Australia”, a different term, and neither page says how the two fit together; for a particular payment, the ATO is the one to ask. The same list adds that a registered creator can claim GST credits on business expenses and must lodge business activity statements.

The registration page has its own creator example. A tap dancer’s trust earns a share of advertising revenue from a social media platform; because the platform operator is an Australian entity, the trust’s sale to it is a taxable sale, and with over $75,000 in advertising revenue the trust must register for GST and pay GST on the payments.

That page also lists, among the cases where you must register, “if you earn income through the sharing economy or digital platforms (for example, food delivery services or other platform-based work).” The creator guide puts creators’ registration in terms of the $75,000 and does not draw on this line. Where platform income might fall within it, the ATO is the one to ask.

Below the threshold

Below $75,000, and outside the other listed cases, registering is optional; a business that chooses to register generally must stay registered for at least 12 months. An unregistered business doesn’t include GST in its prices, and its invoices need to show that GST was not included. For an activity that is earning but not a business, the ATO’s creator table says ABN and GST registration don’t apply. The lanes are explained in the hobby or business guide.

Registering, and after

The ATO’s registration page sets out the three ways to register and what follows, including lodging a business activity statement.

If registration came late

The ATO says a business that registers late may have to pay the GST it should have charged, and penalties and interest.