GST and BAS Basics for Sole Trader Contractors

By Jordan Reilly · Tax & ATO basics

GST trips up a lot of contractors in their first year or two — not because it's complicated once you understand it, but because nobody sits you down and explains it before you're already over the threshold and wondering why your accountant is suddenly asking about quarterly lodgements. Here's the plain-English version: when you need to register, what a BAS actually is, and what happens if you get the timing wrong.

Do you actually need to register for GST?

You're required to register for GST once your business turnover reaches $75,000 in a 12-month period (the threshold is $150,000 for non-profits, which doesn't apply to most contractors). "Turnover" here means your gross income from invoicing — before expenses come off, not your profit. A lot of contractors underestimate this because they're mentally tracking take-home pay, not gross invoiced amounts.

Once you cross that threshold, or you can reasonably see that you're going to cross it, you have 21 days to register. You don't have to wait until you've actually hit $75,000 — if you can see it coming (say, you've just signed a contract that puts you well past it for the year), the ATO expects you to register ahead of time, not after the fact.

You can also register voluntarily below the threshold. Some contractors do this deliberately, because it lets you claim back the GST on business purchases (a laptop, software, tools) even while you're small. The trade-off is you then have to charge GST on everything you invoice and lodge BAS regularly, so it's not free admin — it's a genuine decision, not just a formality.

What happens if you register late

This is the part that catches people out. If you were required to register and didn't, the ATO can treat you as if you'd been registered from the date you should have been — meaning you may owe GST on sales you made since that date, even if you never charged your clients GST on those invoices. On top of that, penalties and interest can apply. Practically, this means going back to clients months later asking for an extra 10% is an awkward conversation you can avoid entirely by registering on time.

Once you're registered: what changes

• You charge GST — an extra 10% on top of your invoiced amount for taxable sales, which you collect on the ATO's behalf rather than keep.
• You can claim GST credits on business purchases — the GST you pay on tools, software, a laptop, professional subscriptions, and so on gets credited back to you.
• You need an ABN if you don't already have one (registering for GST without one isn't possible).
• Your invoices need to say "Tax Invoice" and show the GST component separately once you're registered — this is a specific formatting requirement, not just good practice.

So what is a BAS, exactly?

A Business Activity Statement (BAS) is the form you lodge to report and pay the GST you've collected (minus the GST credits you're claiming back). For most sole trader contractors this is done quarterly, though monthly and annual lodgement cycles exist depending on your turnover and what the ATO assigns you.

Standard quarterly BAS due dates are:

• Quarter 1 (Jul–Sep): 28 October
• Quarter 2 (Oct–Dec): 28 February (extended from the usual 28th-of-the-month-after pattern because of the holiday period)
• Quarter 3 (Jan–Mar): 28 April
• Quarter 4 (Apr–Jun): 28 July

If you lodge through a registered tax or BAS agent, you usually get an automatic extension on these dates — another reason a lot of contractors hand quarterly BAS lodgement to someone else once turnover picks up, even if they do everything else themselves.

What actually goes into preparing a BAS

At its simplest, a BAS asks you to report: total sales for the quarter, the GST you collected on those sales, total business purchases, and the GST you paid on those purchases (which you claim back as a credit). The net difference is what you either pay to the ATO or, less commonly for most contractors, get refunded.

This is where decent bookkeeping habits actually pay off. If you've been coding your income and expenses correctly through the quarter — whether that's in accounting software or a well-kept spreadsheet — preparing a BAS is mostly a matter of running a report and checking it looks right. If you've been letting receipts and invoices pile up, it turns into an afternoon of reconstruction every three months, which is exactly the kind of admin that makes contractors put off registering in the first place.

A practical starting point

If you're approaching the $75,000 mark, don't wait for the ATO to catch up with you. Register on time, set up a simple system for separating GST-collected from GST-paid as you go (even a basic spreadsheet works if you're disciplined about it), and calendar the quarterly due dates now rather than finding out about them the week before. None of this is complicated in isolation — it just needs to happen in the right order, and on time.