The $75,000 GST Threshold Counts Turnover, Not Profit: How the Rolling Test Works

The GST registration threshold of $75,000 is tested on turnover, not profit, over a rolling 12 months, and it is tested forward as well as back. A business can stay under $75,000 in every financial year and still be required to register. The common shorthand, “under $75,000 a year”, describes neither the measure nor the period.

This article sets out how the Australian Taxation Office (ATO) describes the test, works one hypothetical through month by month, and names what the figures leave out. It is general information only. It does not say whether any particular business must register, and the ATO is the authority on that question. The wording below follows the ATO’s Registering for GST guidance as last updated on 23 May 2025, together with the business.gov.au page on the same subject.

What counts as GST turnover

The ATO defines GST turnover as total business income, not profit, less certain listed amounts. The business.gov.au page makes the same point in its own words: GST turnover is business income, excluding certain sales, and not profit. Its example is a business with $80,000 in sales and $40,000 in profit. The measure is $80,000, which is over the threshold, even though only half of it was kept.

Costs do not appear in either column. Because the measure is income and not profit, what the business spends is not subtracted, and a business with high costs and a thin margin can still be over the line.

The same logic holds for any pair of businesses. Take two hypothetical sole traders who each invoice $80,000 over 12 months. One spends $70,000 on stock and materials and keeps $10,000. The other spends $20,000 and keeps $60,000. Their profit differs six-fold, and their GST turnover is identical, so the threshold treats them identically. (Both sets of figures are invented.)

Three other points from the same guidance complete the picture.

• The threshold is $75,000 for a business and $150,000 for a non-profit organisation.
• GST group turnover includes the turnover of group members, so an entity inside a group does not measure itself in isolation.
• Taxi and limousine travel, including ride-sourcing, requires registration regardless of turnover.

Two tests, run every month

The ATO describes two measures, and meeting either one triggers the requirement.

1. Current GST turnover is the current month plus the previous 11 months.
2. Projected GST turnover is the current month plus the next 11 months. The test is whether it is “likely to be” at or above the threshold.

The first is a record. The second is a judgement, which is why it can bite earlier. Neither is a financial-year total, and neither resets on 1 July. The ATO’s advice is to check each month, which follows from the structure: a new month drops the oldest from the current figure and adds one to the projection.

The financial year matters for tax returns, but it plays no part in this measure. Consider a hypothetical business whose busiest months fall in May, June, July and August. A financial-year reading splits that busy stretch across two years, and each year may look modest on its own. The rolling window ignores the 30 June boundary and counts the four busy months together, so the picture can look very different.

On timing, the two sources differ slightly in wording. The ATO states that registration is due within 21 days of GST turnover exceeding the threshold. The business.gov.au page states 21 days from becoming aware that turnover will exceed it. The shared practical advice is the same: check every month, not at the end of the year. The business.gov.au page adds that a new business should register if it expects to reach $75,000 in its first year.

Other thresholds exist for other purposes, so a figure seen elsewhere in small business tax material may not be this one.

A worked example, month by month

The figures below are hypothetical. Every income figure is invented, the method is the ATO’s, and the example is not drawn from any real business.

A sole trader earns $3,500 a month, excluding GST, in months 1 to 6, and $5,500 a month in months 7 to 12. Income then rises: $9,000 in month 13, $9,500 in month 14, $10,000 in month 15 and $10,500 in month 16. If months 1 to 12 were a financial year, the total would be $54,000, below $75,000.

The current column moves by one rule. Each month the oldest month drops out of the window and the newest enters. Between months 12 and 13, $3,500 from month 1 leaves and $9,000 arrives, so the total rises from $54,000 to $59,500. Months 14, 15 and 16 each drop another $3,500 month, which is why the current figure climbs by $6,000, $6,500 and then $7,000 as the monthly income rises. The projected column moves faster in this example because it takes the latest month’s income and repeats it forward, so a single higher month changes the whole forecast.

The projected test is met from month 13, three months before the current test. In month 13 the trader has not yet reached $75,000 in the past 12 months, and has still passed the forward-looking test. A person reading the rule as “$75,000 a year” would see no reason to act until month 16.

What the figures exclude:

• Incomes are before GST.
• The projected column assumes the month’s income repeats. The ATO says “likely to be”, which is a judgement the owner makes, and this assumption is a simplification of it.
• Sales of a capital asset and sales made only because the enterprise is ending are left out of the projected test.
• No tax, cost or profit appears, because none counts.

What if turnover was high for one stretch only?

The ATO addresses this directly. Even where current GST turnover is at or above the threshold, a business does not have to register if its projected GST turnover will be below it.

The projected figure has its own exclusions. It leaves out the sale of a capital asset, and it leaves out sales made solely because the business is ceasing or substantially reducing its activity. A one-off sale of a business vehicle, for example, is the type of income that the capital asset exclusion describes.

Two features of the wording are worth keeping in view. The first is that the projected test asks whether turnover is “likely to be” at or above the threshold, so it is a judgement about the coming 11 months and not a mechanical sum. The second is that the relief runs in one direction only: it allows a business with a high current figure to stay unregistered when the forward view is lower, and it says nothing in favour of a business whose current figure is low but whose forward view is high. In the worked example above, the projected test is the one that fires first.

The ATO page does not work through the month in which a one-off lands, or how the current and projected measures interact across that month. That gap is real, and this article does not fill it. A business in that position should take the specific facts to a registered tax agent.

If you miss it

The ATO states that a business required to be registered that is not registered may have to pay GST on its sales from the date it was required to register. That applies even where no GST was included in the price charged. Penalties and interest may also apply. The ATO page states that backdating of a registration is limited to 4 years.

The practical consequence is a cost that may be hard to recover from customers after the event, since the sales were priced without GST. For that reason, the monthly check matters more than the annual one.

Registering before you have to

Below the threshold, registration is optional. The ATO page states that a business that registers voluntarily should generally stay registered for at least 12 months. The business.gov.au page lists the obligations: include GST in prices, claim credits, and lodge activity statements.

There is a fair case for registering early, and it deserves to be stated. Some owners register at the start so that they can claim credits on start-up costs, or because it presents the business as established to commercial customers. Others prefer to wait, in order to avoid the activity statements and the need to charge GST. Both views are legitimate. Which suits a given business depends on its customers, its costs and its other obligations, and the decision is one for the owner and the owner’s accountant.

Registration also brings the lodging duty with it. A business that registers early and then does not lodge its activity statements has taken on an obligation it is not meeting. The two pages state the obligation and not its consequences, so this article states only the obligation.

What the threshold does not change

Four points from the guidance hold whatever the figures show.

1. The measure stays turnover. The business.gov.au example of $80,000 in sales and $40,000 in profit is measured at $80,000.
2. The window stays rolling. The worked example above crosses the threshold in month 13 and month 16 without any financial year being complete.
3. A group is measured as a group. GST group turnover includes group members, so a single member’s figure is not the test.
4. Some businesses sit outside the threshold altogether. Taxi and limousine travel, including ride-sourcing, requires registration regardless of turnover.

None of these points tells a particular business what to do. They set out what the test measures, and the registered tax agent or the ATO applies it to the facts.

Run the Numbers Monthly

One step covers most of it: add this month to the previous 11, then add it to a forecast for the next 11, and compare each total with $75,000. If either reaches it, check the ATO’s page, and speak to a registered tax agent about the 21 days.

Sources: Australian Taxation Office, Registering for GST, version last updated 23 May 2025 (https://www.ato.gov.au/businesses-and-organisations/gst-excise-and-indirect-taxes/gst/registering-for-gst); business.gov.au, Register for goods and services tax (GST) (https://business.gov.au/registrations/register-for-taxes/register-for-goods-and-services-tax-gst)