Australia Considers Raising GST Registration Threshold to $250,000
A proposal to significantly raise Australia’s Goods and Services Tax (GST) registration threshold has been submitted to the Parliamentary Budget Office (PBO). The current threshold is AUD $75,000 for businesses and AUD $150,000 for non-profit organisations, assessed over a rolling 12-month period. The proposal recommends increasing the threshold to AUD $250,000 for both groups.
See more in our Australian GST guide. By comparison, neighbouring New Zealand has a NZ$ 60,000 (approx AUD 58,000) threshold.
Taking small businesses out of GST net
The aim is to reduce the administrative burden for small businesses and charities by exempting more low-turnover entities from the requirement to register for GST. Entities falling below the new threshold would no longer need to submit business activity statements (BAS), resulting in cost savings for both the private sector and the Australian Taxation Office (ATO).
Admin savings of $78m
From a fiscal perspective, the policy is expected to improve the federal budget balance by $78 million and the underlying cash balance by $283 million over the 2025–26 forward estimates period. These figures reflect a complex mix of revenue impacts: a decline in GST revenue (since fewer entities will be collecting it), partially offset by lower GST payments to the states and territories, higher business income tax receipts, and reduced ATO administrative costs.
The differing impacts on the fiscal and cash balances stem from timing differences in GST revenue recognition versus when tax payments are collected and distributed to state governments. A more detailed breakdown of the long-term financial effects, including public debt interest (PDI), is expected in further documentation extending to 2035–36.
The GST is collected by the federal government on behalf of the states and territories. Businesses choosing to de-register due to the higher threshold are expected to maintain their pricing levels, potentially increasing their taxable income because they will no longer deduct GST from sales or claim input tax credits on purchases.
The policy’s overall impact is subject to uncertainty, particularly regarding how many businesses would become eligible, how many would opt out of GST registration, and how many of those businesses would be profitable.
