GST for Freelancers & Sole Traders

You must register for GST if your GST turnover is $75,000 or more over a rolling 12-month period. This is your gross freelance income (excluding GST), not your profit. It includes all business income — domestic clients, overseas clients, and platform earnings.

The ATO uses two measures, and you must register if either one hits the threshold:

• Current turnover: your actual income for the current month + previous 11 months
• Projected turnover: your expected income for the current month + next 11 months. If you sign a new retainer or win a big project, your projected turnover can trigger registration even if your historical income is below $75K

Once you hit the threshold, you must register within 21 days. Your registration is backdated to the date you exceeded the threshold.

If your turnover is under $75,000, registration is optional. Whether it makes sense depends on who your clients are and how much you spend on business expenses.

If you're GST-registered, you must issue tax invoices (not just "invoices"). Your clients need valid tax invoices to claim their GST credits. If you're not registered, you must not use the words "tax invoice" — issue regular invoices instead.

You must provide a tax invoice within 28 days of a client's request, for any sale over $82.50 (inc. GST). In practice, include a tax invoice with every payment request.

When you buy something for your business that includes GST, you can claim that GST back as an input tax credit on your BAS. This is the main financial benefit of GST registration — it reduces the net amount of GST you pay to the ATO.

To claim a GST credit, all of the following must be true:

• You are registered for GST
• The purchase was for your business (not private use)
• The supplier charged you GST (they must be GST-registered)
• You have a tax invoice for purchases over $82.50 (inc. GST)

You cannot claim GST credits on:

• Purchases from suppliers not registered for GST (no GST was charged, so nothing to claim back)
• Bank fees, interest, and loan repayments (these are input-taxed financial supplies — no GST applies)
• Government fees such as ASIC or ABN registration (no GST charged)
• Wages or contractor payments to individuals (no GST on labour unless they charge it)
• Insurance premiums that are stamp-duty only (check your invoice — some policies include GST, some don't)
• Private expenses — even if paid from a business account

Most freelancers work from home at least part of the time. You can claim GST credits on the business portion of shared expenses — but you need to apportion them fairly.

How to apportion: If your dedicated office is 15% of your home's floor area and you use it for business 40 hours a week, your business-use percentage for electricity might be around 15%. For internet, it could be higher — say 70% — if most of your usage is work-related. Use a reasonable, consistent method and keep records of your calculation.

Annual private apportionment: Instead of calculating the business portion each quarter, you can claim 100% of the GST credit on each BAS and make a single adjustment at the end of the financial year. This is available to businesses with turnover under $10 million.

Services you export to overseas clients are GST-free under Division 38 of the GST Act. This means you don't charge GST on your invoices to them, but you can still claim full GST credits on your Australian business expenses.

For a service to qualify as a GST-free export, the recipient must be outside Australia when the service is performed. If an overseas client visits Australia and you provide the service to them while they're here, it's not an export — standard GST applies.

Important:

• Overseas income still counts toward your $75,000 GST turnover threshold — you must register once your total freelance income (domestic + overseas) hits $75K
• Keep evidence that the client is based overseas (their address, where the work was delivered, contract details)
• Currency conversion: use the exchange rate on the date of the transaction or an average rate for the period (be consistent)

When you register for GST, you choose how to account for it. Most freelancers use cash accounting because it's simpler and aligns with your actual bank balance.

GST plays out differently depending on your client mix, turnover level, and expense profile. Here are four common freelancer situations:

If you earn income through platforms like Upwork, Fiverr, Airtasker, or similar marketplaces, the same GST rules apply as for direct clients:

• Turnover includes gross platform earnings — your income before platform fees are deducted. If the platform deducts a 20% fee from a $1,000 job, your GST turnover includes the full $1,000
• Platform fees may include GST — check the platform's tax invoice or fee summary. If the fee includes GST, you can claim it as an input tax credit
• Overseas platform clients are GST-free — the same export rules apply. If your Upwork client is in the US, you don't charge GST on that project

1. Not registering when projected turnover hits $75K
   Many freelancers wait until their actual rolling total hits $75K. But the ATO also considers projected turnover — if you land a big contract that will push you over, you need to register immediately, not wait until the money arrives.
2. Using "tax invoice" when not GST-registered
   If you're not registered, your invoices must not include the words "tax invoice" or show a GST amount. This misleads clients into thinking they can claim a GST credit, which they can't.
3. Forgetting to claim GST on small expenses
   The $4.50 GST on a $49.50 software subscription adds up over 12 months. Keep receipts for everything — you don't need a tax invoice for purchases under $82.50 (inc. GST).
4. Claiming GST on input-taxed supplies
   Bank fees, residential rent, and some insurance products don't include GST — they're input-taxed. Claiming GST credits on these will result in an incorrect BAS and potential ATO adjustment.
5. Mixing personal and business expenses
   If you use your phone 50% for business, you can only claim 50% of the GST. Claiming 100% on a mixed-use expense is a common error that the ATO specifically looks for in sole-trader audits.
6. Charging GST to overseas clients
   Services exported to overseas clients are GST-free. If you charge them GST by mistake, you'll still need to remit it to the ATO — and your client can't claim it back because they're not in the Australian GST system.

Once registered, you lodge a Business Activity Statement (BAS) each quarter. Most freelancers use Simpler BAS reporting, which only requires three GST fields:

• G1: Total sales for the period
• 1A: GST on sales
• 1B: GST on purchases (your input tax credits)

The difference between 1A and 1B is what you pay the ATO (or what they refund you). BAS is due on the 28th of the month after each quarter ends. Lodge electronically for an extra 2 weeks on Q1, Q3, and Q4.