What is the GST?

The Goods and Services Tax (GST) is a 10 per cent value-added tax applied to most goods and services sold or consumed in Australia. It was introduced on 1 July 2000 by the Howard Coalition government's A New Tax System (Goods and Services Tax) Act 1999, replacing the old wholesale sales tax and a range of smaller state taxes.

GST is paid by the consumer at the point of sale and is collected and remitted to the Australian Taxation Office by the seller. Businesses with annual turnover of 75,000 dollars or more (150,000 dollars for non-profit organisations and 75,000 dollars for ride-share drivers) must register for GST, charge GST on their taxable sales, and lodge a Business Activity Statement (BAS) monthly, quarterly, or annually. Businesses can claim back GST paid on their own purchases as input tax credits.

Some categories of goods and services are GST-free or input-taxed. Basic food (fresh fruit, vegetables, meat, milk, bread, but not prepared meals or takeaways), most education courses, most medical services, child care, water and sewerage, exports, religious services, and certain charitable activities are GST-free. Residential rent and the sale of an existing residential dwelling are input-taxed, meaning GST is not charged but the seller cannot claim back GST on related expenses.

All GST revenue is distributed to the states and territories under a horizontal fiscal equalisation formula recommended each year by the Commonwealth Grants Commission. The formula gives proportionally more GST revenue to states with weaker own-source revenue, particularly Tasmania, the Northern Territory, and South Australia. Total GST collections were about 91 billion dollars in 2023 to 2024, making GST the second-largest source of Commonwealth-collected revenue after personal income tax. The 10 per cent rate has remained unchanged since the introduction of the GST, despite occasional proposals to raise or broaden it.