Your Turnover Is Approaching $75,000. Now What?

There’s a specific point in a growing sole trader’s life where the numbers stop being purely good news. Work is coming in, the year is going well, and somewhere in the back of your mind is the figure $75,000 and a vague sense that something happens when you get there.

Something does. And the part that catches people out isn’t the registration itself. That’s a fifteen-minute job. It’s that the test measures a period most people aren’t tracking, and the consequence of missing it is applied retrospectively.

The test isn’t the financial year

If you take one thing from this article, take this. The GST registration threshold is not assessed against your financial year. It’s assessed on a rolling twelve-month basis, and there are two separate tests. Meeting either one triggers the obligation.

Current GST turnover: your turnover for the current month plus the previous eleven months. This looks backwards.

Projected GST turnover: your turnover for the current month plus the next eleven months. This looks forwards, and it’s based on what you reasonably expect.

The practical consequence is that 1 July does not reset anything. A business that turned over $60,000 last financial year and is running at $8,000 a month from July will cross the threshold in about the following February, and it will cross it on the rolling test, not at any year boundary. Someone watching only their financial-year total won’t see it coming until well after it’s happened.

The forward-looking test is the one that surprises people most, because it can be triggered by a single event. Sign a contract in September that will pay $80,000 over the following ten months and your projected turnover has crossed the threshold in September. You don’t wait for the money to arrive.

It’s turnover, not profit

GST turnover is your gross business income, excluding the GST itself. Not your profit, and not what landed in your pocket.

This trips up businesses with high costs and thin margins. A trade business turning over $90,000 with $75,000 of materials and subcontractors is comfortably over the threshold while earning about as much as a part-time wage. The test doesn’t care.

Certain supplies are excluded from the calculation, residential rent and financial supplies among them, so the figure isn’t simply every dollar that entered your account. If a meaningful part of your income is of that kind, it’s worth having the calculation checked rather than assumed.

The 21-day clock, and why late registration hurts

Once your GST turnover exceeds the threshold, you have 21 days to register.

Here’s the part worth reading twice: your registration takes effect from the date you exceeded the threshold, not the date you applied. Register eight months late and you aren’t registered from today. You’re registered from eight months ago.

Which means you are liable for GST on every sale you made in that period: sales you invoiced without GST, to customers who have already paid, at a price everyone agreed was final. One eleventh of that revenue is now owed to the ATO, and you have three unappealing options: absorb it, or go back to customers and ask for 10% more on invoices they consider closed, or some combination.

Absorbing it is what almost everyone does. On $60,000 of sales made after the threshold was crossed, that’s roughly $5,450 out of margin that was never priced for, and it’s one of the more common reasons a business that looks profitable on paper has nothing in the bank.

There is some relief on the other side of the ledger: once registered for a backdated period, you can also claim GST credits on your business purchases in that period, provided you hold valid tax invoices. That’s a real offset, and it’s a good reason to have kept your records even when you thought you didn’t need to for GST purposes. Reconstructing a backdated period is most of what a catch-up involves.

The penalty itself

Failing to apply for GST registration when required carries a penalty of 20 penalty units. At the $364 penalty unit that applies from 1 July 2026, that’s $7,280.

In our experience the penalty is rarely the thing that hurts most. The unbilled GST usually exceeds it, and penalties can be remitted where there’s a reasonable explanation and a clean history. But it’s a real exposure, and it’s avoidable by watching a number.

Where the threshold is different

Three variations worth knowing:

• Non-profit organisations have a higher threshold of $150,000.
• Taxi, limousine and ride-sourcing drivers have no threshold at all. If you drive for a ride-sourcing platform you must be registered for GST from your first fare, whether you own, lease or rent the vehicle. This catches a lot of people treating driving as casual side income.
• Anyone wanting fuel tax credits needs to be registered, regardless of turnover.

What actually changes once you’re registered

Three things, and only the third is genuinely burdensome.

You add 10% to your prices, or you don’t, and absorb it. More on that below, because it’s the real decision.

You can claim GST credits on business purchases. Everything you buy for the business becomes about 9% cheaper in real terms, because you recover the GST component. For a business with significant inputs this can substantially offset the burden.

You start lodging activity statements. Most small businesses lodge quarterly. This is the ongoing commitment, and it’s the part that turns GST registration from a pricing decision into an admin one. It’s the work our BAS and compliance service covers. The consequences of falling behind on those lodgements are worth understanding before you’re in the middle of it rather than after.

The pricing decision nobody warns you about

This is the part where registration stops being a compliance question and becomes a business one, and it depends almost entirely on who your customers are.

If you sell mainly to GST-registered businesses, adding 10% costs your customers nothing. They claim it back on their own activity statement. You can raise your prices by 10%, your clients are indifferent, and you gain the ability to claim credits on your inputs. Registration is close to a free upgrade.

If you sell mainly to consumers, there’s no such mechanism. A $500 service either becomes $550, which is a real price rise your customers feel, or it stays $500 and about $45 of it now goes to the ATO out of your margin. Neither option is pleasant and you have to pick one deliberately, because drifting into the second by default is how businesses quietly lose a tenth of their revenue.

Being registered also changes how you look to larger clients. Some organisations are reluctant to engage unregistered suppliers, partly for the credit and partly as a rough proxy for scale. That’s not a reason to register on its own, but it’s a genuine factor if you’re pitching upmarket.

Should you register early, before you have to?

Sometimes, yes. The case for it is strongest when you sell business-to-business, when you have significant GST-inclusive costs to claim credits against, or when you’re heading for the threshold anyway and would rather build GST into your pricing from the start than raise prices mid-relationship.

The case against is that you take on activity statement obligations before you need to, and voluntary registration generally commits you to staying registered for at least twelve months. If your income is genuinely small and your customers are consumers, there’s rarely a reason to volunteer.

One thing that isn’t a good reason: registering because it feels more legitimate. The admin cost is real and permanent, and the legitimacy benefit is mostly imagined.

How to actually watch the number

The reason people miss the threshold isn’t carelessness, it’s that a rolling twelve-month total is not a number any bank app shows you. It has to be produced deliberately.

1. Check monthly, not yearly. Once a month, add up the last twelve months of income, including the month just finished. Any accounting software will produce this in a few clicks once it’s set up properly.
2. Set your own trigger below the real one. Somewhere around $65,000 on the rolling total is sensible. It gives you time to make the pricing decision calmly instead of discovering the problem and the 21-day deadline in the same afternoon.
3. Re-run the forward test when something big lands. A new retainer, a large contract or a busy season can trigger the projected test on its own, well before the backward-looking one.
4. Keep your tax invoices even while you’re under the threshold. If you ever do register with a backdated date, those invoices are what let you claim credits for the period. Without them, you owe the GST on sales and can’t recover the GST on purchases.

That last point is the cheapest insurance in this entire article, and it costs nothing but a habit.

The Lady Abacus takeaway

Crossing $75,000 is a good problem, and the businesses that handle it badly are almost never the ones that didn’t understand GST. They’re the ones who were measuring the wrong twelve months.

The asymmetry here is unusually stark. Watching a rolling total once a month costs you five minutes. Missing it can cost the better part of $10,000 in GST you never collected, plus a penalty, on revenue you’d already spent. Very few compliance tasks have that ratio, which is why this is one of the few we’d genuinely nag a client about.