Are You Charging GST Without Being Registered? Here’s What You Need to Know

Charging GST without being Registered Isn’t Just a Mistake—it’s Illegal.

It’s an easy trap to fall into, especially for small businesses and sole traders. Whether it’s due to confusion about the rules or poor advice, charging GST without being registered can lead to serious consequences, from hefty fines to lost customer trust.

If you’ve ever asked yourself, “Do I have to register for GST?”, this guide is for you. Let’s break down what you need to know to stay compliant, protect your business, and avoid costly mistakes.

What Is GST and Who Needs to Register?

GST, or Goods and Services Tax, is a 10% tax on most goods and services sold in Australia. Businesses registered for GST must collect this tax on behalf of the government and pass it on to the Australian Taxation Office (ATO).

You’re required to register for GST if:
✅ You expect your turnover to exceed $75,000 within a 12-month period
✅ You’re a rideshare driver or taxi operator
✅ Your non-profit organisation has a GST turnover of $150,000 or more
✅ You want to claim fuel tax credits for your business, regardless of your GST turnover

IMPORTANT NOTES:

• The turnover threshold of $75,000 is NOT for a financial or calendar year – it is for ANY consecutive block of 12 months
• You need to register for GST as soon as you expect to exceed that turnover threshold (not after your receive your 75001st dollar)
• If you are not registered for GST, you cannot legally charge GST on your invoices!
• You ARE able to register for GST any time from the moment you register your ABN – you do not need to wait until you expect your turnover to exceed $75,000. Doing so allows you to claim back the GST you pay on invoices from other businesses.  👈 READ: You can’t claim GST on the invoices you pay unless you are registered for GST

“If you are not registered for GST, you cannot legally charge GST on your invoices!”

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Why Some Businesses Charge GST Without Being Registered

So, why do businesses find themselves in this situation? It’s not always intentional. Here are a few common reasons:

• Misunderstanding the Rules: Some business owners think GST applies to all businesses or follow incorrect advice.
• Trying to appear “Professional”: Adding GST to invoices can be seen as a way to look bigger or more established.
• Careless pricing habits: GST is added to invoices automatically, without confirming if it’s actually required.

Whatever the reason, the bottom line is this: charging GST without being registered is illegal and the consequences can be serious.

What Happens if You’re Caught?

If the ATO discovers you’ve been charging GST without being registered, you could face:

• Refunding GST to Customers: You’ll need to pay back the GST you’ve charged, even if you’ve already spent it.
• Financial Penalties: The ATO may hit you with fines, interest charges, and audits.
• Reputational Damage: Mistakes like this can break customer trust and impact your business credibility.

If this sounds stressful, don’t worry – you’re not alone. Many businesses face challenges with compliance, and there are steps you can take to fix the situation (more on that below).

How to Avoid This Mistake

Want to steer clear of GST trouble? Follow these three practical steps to stay compliant:

1. Check your Registration Status: Use the ABN Lookup Tool to confirm your GST status before issuing invoices.
2. Understand your Pricing: If you’re not registered for GST, make it clear that your prices don’t include GST. Avoid phrases like “GST-inclusive” or “plus GST” unless you’re officially registered.
3. Get Professional Support: A qualified bookkeeper or accountant can guide you through GST requirements, ensuring your invoices and processes are fully compliant.

What to Do if You’ve Already Made a Mistake

Mistakes happen but the sooner you act, the better. Here’s how to handle it if you’ve been charging GST without being registered:

Refund the GST: Reach out to your customers, explain the situation, and return the GST portion of their payment.

Update Your Invoices: Remove any mention of GST from your invoices until you’re properly registered.

Notify the ATO: Depending on the circumstances, you may need to report the issue and work with the ATO to resolve it. Transparency is always the best policy.

For more guidance, check out the ATO’s GST compliance resources.

Assume Others will Make Mistakes

Before you pay someone’s invoice, check to make sure you aren’t paying GST to a business that is not registered to do so.

Their invoice should list their ABN, which you can search for here to check their GST registration.

Get Back on Track with Dollars + Sense

Charging GST without being registered can feel overwhelming, but it’s 100% fixable with the right knowledge and support. Staying on top of your compliance doesn’t just save you from penalties, it gives you peace of mind and lets you focus on growing your business.

At Dollars + Sense, we’re here to help. Whether you’re unsure about GST registration or need support fixing past mistakes, we’ll make the process easy and stress-free.