Potential rise to 10% GST rate; modernisation of design and requirements
Australia is taking a hard look at its 25 year-old Goods and Services Tax (GST) system, with fresh momentum building to overhaul the indirect tax regime that many see as riddled with inconsistencies and ill-suited to today’s economy. Plus, whether an Australian GST rate rise is due to help fund a productivity-driving Income Tax rate cut.
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Creaking after 25 years since July 2020 implementation
Introduced on 1 July 2000 at a flat 10%, GST was designed to be a robust, broad-based tax on consumption, helping fund both federal and state budgets. Yet over time, cracks have widened. The GST has barely changed since its introduction, even as Australians spend more on exempt sectors like health, education, and housing. As a result, GST collections have not kept pace with economic growth and now represent their lowest share of total Commonwealth tax revenues since the early 2000s.
See our Australia GST guide for more on compliance rules.
Pivoting from direct to indirect taxes
This imbalance leaves Australia dangerously reliant on personal income tax, which is among the highest in the OECD. They point to an opportunity: by broadening the GST base and modestly increasing the rate, Australia could raise significant new revenue—up to $40 billion annually under some models—while freeing room to reduce the tax burden on wages and business. This shift from taxing income to taxing consumption, they say, would better support growth by encouraging work and investment.
A leading accounting body Australia’s CPA, has mapped out a comprehensive path forward. Their five-point plan calls for:
- forging a national consensus among states and territories;
- carefully defining what a broadened tax base would include;
- modelling the societal impacts;
- recalibrating overall tax settings; and
- designing a detailed rollout program.
They emphasise that it’s time for what they call a “grown-up conversation” about modernising the GST, after decades of politically fraught debate that has largely ducked the issue. Any reform, they stress, must also include strong compensation to protect lower-income Australians from shouldering an undue share of the changes.
GST rise to 12.5% to fund productivity-driving income tax cut
One scenario would simply lift the GST to 12.5%, generating an extra $14 billion annually even without touching existing exemptions. Another, more ambitious blueprint would expand the tax to cover essential services like health, education, childcare, water and food, while also raising the rate to 12.5%, delivering a revenue windfall of around $40 billion. These reforms could be designed to preserve fairness, especially if paired with targeted relief for vulnerable households.
Modernising for digital, e-invoicing and crypto
Alongside the push for structural reform, Australia has also been busy updating its GST framework to better capture the modern digital economy. In 2023, new rules came into effect to ensure GST applies consistently to digital services and low-value imports from overseas, closing long-standing loopholes. This means streaming services, SaaS products, online courses, games and e-books—whether sold by Australian or foreign suppliers—are firmly within the GST net.
Meanwhile, Australia’s embrace of e-invoicing continues to deepen. By July 2025, all businesses voluntarily exchanging e-invoices will be required to accept e-invoices via the Peppol network, using the standardised PINT A‑NZ format. This builds on an e-invoicing push that began with government agencies and has already seen adoption surge, promising to slash admin costs and streamline compliance.
On the cryptocurrency front, Australia treats digital assets as property for tax purposes, meaning most transactions trigger capital gains or ordinary income. Since 2017, however, cryptocurrency used as a payment method is explicitly GST-free, helping avoid double taxation. Even so, the tax office is ramping up enforcement, using data-matching to monitor over a million crypto users.
Altogether, these targeted updates on digital, e-commerce, and crypto signal that Australia is already moving to future-proof its GST system in piecemeal ways. But many believe a larger, coordinated overhaul is essential. Reform advocates see this as the best path to secure long-term revenue, reduce the heavy reliance on personal income tax, and equip the budget to meet future challenges—all while maintaining fairness and protecting those most in need. In a rapidly changing economy, they argue, standing still on GST is no longer a serious option.
