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Should Every ABN Be GST Registered From Day One? The $75,000 GST Threshold Debate
Discover the pros and cons of Australia's $75,000 GST threshold
And whether mandatory GST registration could simplify business.
Australia’s GST registration threshold has remained at $75,000 for nearly two decades, despite rising inflation, increasing business costs, and significant changes in the way Australians work. With more freelancers, contractors, and side hustlers operating on an ABN than ever before, many business owners are asking whether the current threshold still makes sense.
In this episode of The Account Rant, Patrick El Bitar and Michael Hirmiz from Latitude Accountants tackled one of Australia’s most debated tax topics. Should every business register for GST from day one? Should the threshold increase to reflect inflation? Or should the entire system be simplified?
While they approach the issue from different perspectives, both agree on one thingโthe current system deserves serious discussion.
Why Does Australia Have a GST Registration Threshold?
The GST registration threshold determines when a business must register for Goods and Services Tax (GST).
Currently, businesses generally need to register for GST once their annual turnover reaches $75,000.
The original purpose of the threshold was simple:
- Reduce compliance for very small businesses
- Prevent unnecessary BAS reporting
- Allow side businesses to grow before additional tax obligations begin
However, the threshold has barely changed since GST was introduced, even though Australia’s economy has changed dramatically.
Patrick El Bitar: The $75,000 Threshold Is Too Low
Patrick argues that the threshold itself is importantโbut $75,000 no longer reflects today’s economy.
After nearly twenty years of inflation, wages, and operating costs increasing, many sole traders reach the threshold much faster than they would have years ago.
Instead of removing the threshold entirely, Patrick suggests it should be adjusted to reflect inflation.
A figure closer to $150,000 would better match today’s economic environment and reduce unnecessary compliance for smaller operators.
This could particularly benefit:
- Sole traders
- Freelancers
- Contractors
- Small family businesses
- New startups
- Side hustles
Rather than paying additional accounting costs simply because they crossed an outdated threshold, smaller businesses could focus on growing first.
Michael Hirmiz: Why Every ABN Could Be GST Registered
Michael presents the opposite argument.
Instead of increasing the threshold, he believes Australia should consider making GST registration automatic from the moment someone registers for an ABN.
His reasoning is based on simplicity.
Instead of constantly asking questions like:
- Am I registered?
- Does this invoice include GST?
- Can I claim GST credits?
- Do I need quarterly or annual BAS?
every business would simply follow the same rules from day one.
From an administrative perspective, that consistency could reduce confusion for both businesses and customers.
It could also eliminate situations where businesses accidentally charge GST without actually being registered.
The Biggest Challenge: Compliance
Patrick’s biggest concern isn’t GST itself.
It’s compliance.
Many new businesses have very limited bookkeeping experience.
Introducing GST obligations immediately would also introduce:
- BAS reporting
- Record keeping requirements
- Accountant fees
- Software subscriptions
- ATO deadlines
- Potential penalties
For someone earning only a few thousand dollars through a side hustle, these obligations could outweigh the benefits of operating the business altogether.
Rather than encouraging entrepreneurship, mandatory GST registration from day one could discourage many Australians from getting started.
Could Technology Make GST Easier?
One interesting part of the discussion focused on technology.
Modern accounting software like Xero has already automated much of the GST reporting process.
Artificial intelligence is also making bookkeeping easier by helping business owners:
- Categorise expenses
- Identify GST claims
- Track invoices
- Prepare BAS information
- Reduce manual data entry
Michael believes continued improvements in accounting technology could significantly reduce compliance burdens.
Instead of requiring complex manual reporting, software could eventually automate much of the process directly through integrations with the Australian Taxation Office.
If technology continues improving, mandatory GST registration may become far less intimidating than it once was.
How Australia Compares With Other Countries
The discussion also highlighted how Australia’s GST threshold compares internationally.
Examples include:
- New Zealand has a lower GST registration threshold than Australia.
- Singapore has a significantly higher threshold, allowing many small businesses to avoid GST entirely.
- The United Kingdom also operates with a much higher threshold than Australia’s current limit.
These comparisons demonstrate that there is no universally “correct” GST threshold.
Every country balances simplicity, tax revenue, compliance costs, and business growth differently.
Australia’s challenge is determining whether its current threshold still reflects today’s economic conditions.
Has GST Really Replaced Other Taxes?
One of the most interesting discussions moved beyond GST itself.
When GST was introduced, many Australians expected it would replace several state taxes.
Instead, many businesses and households continue paying:
- Council rates
- Vehicle registration
- Stamp duty
- Tolls
- Government levies
- Various state charges
This has led many taxpayers to question whether GST simply became another layer within Australia’s already complex tax system.
Patrick and Michael discuss how governments often replace lost revenue through other taxes or charges, making genuine tax simplification far more difficult than it appears.
Why Small Business Owners Feel Taxed From Every Direction
GST is only one part of Australia’s tax system.
Business owners also face:
- Income tax
- Payroll obligations
- Superannuation requirements
- Council fees
- Insurance costs
- ATO interest charges
- Administrative penalties
For many small businesses, these combined obligations create significant financial pressure.
Rather than focusing solely on GST thresholds, broader tax reform may ultimately have a greater impact on Australia’s business community.
Inflation Has Changed What $100,000 Means
The conversation also explored a broader issue.
Many Australians once viewed a six-figure income as financial success.
Today, rising housing costs, groceries, utilities, insurance, and everyday living expenses have dramatically changed that reality.
Likewise, the GST threshold has remained largely unchanged while the cost of doing business continues increasing.
This raises an important policy question:
Should tax thresholds automatically increase alongside inflation to better reflect modern economic conditions?
Could Australia’s Tax System Be Simpler?
There are compelling arguments on both sides.
Supporters of a $0 GST threshold believe:
- Every business follows the same rules.
- GST becomes easier to understand.
- Invoicing becomes more consistent.
- Administrative confusion decreases.
Supporters of a higher GST threshold believe:
- Compliance costs remain manageable.
- New businesses have room to grow.
- Side hustles aren’t discouraged.
- Administrative burdens stay proportional to business size.
Ultimately, both perspectives aim for the same outcomeโa tax system that is simpler, fairer, and easier for Australian business owners to navigate.
Frequently Asked Questions About Australia’s GST Threshold
What is the GST registration threshold in Australia?
Most businesses must register for GST once their annual turnover reaches $75,000.
Has the GST threshold increased with inflation?
No. The threshold has remained largely unchanged for many years despite significant inflation and increasing business costs.
Should every business register for GST?
Opinions differ. Some experts believe automatic GST registration would simplify the tax system, while others believe it would create unnecessary compliance costs for smaller businesses.
Could the GST threshold increase in the future?
It’s possible, but any changes would require government legislation and tax reform.
Should new business owners speak with an accountant before registering for GST?
Yes. Every business is different, and professional advice can help determine the most appropriate registration and compliance strategy.
Need Advice About GST or Running Your Business?
Whether you’re starting a new business, operating on an ABN, or wondering whether you should register for GST, the team at Latitude Accountants can help you understand your obligations and build the right tax strategy from day one.
๐ Sydney Olympic Park | Marrickville | Melbourne | Loxton
๐ 1300 706 597
๐ง info@latitudeaccountants.com.au
With offices across Sydney Olympic Park, Marrickville, Melbourne, and Loxton, Latitude Accountants provides proactive tax, accounting, and business advisory services to more than 2,000 clients nationwide.
Disclaimer
This article is intended for general informational purposes only and is based on discussion points from The Account Rant podcast featuring Patrick El Bitar and Michael Hirmiz of Latitude Accountants. It does not constitute financial, taxation, legal, or business advice. Tax laws and personal circumstances vary. Before making financial or taxation decisions, speak with a qualified Chartered Accountant or registered tax adviser regarding your individual situation.
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