ATO GST Compliance Alert for Growing Businesses

The Australian Taxation Office (ATO) published a notice warning taxable persons that their GST obligations depend on their turnover, and that some companies have failed to update how they report and account for GST after crossing key thresholds. The ATO also stated that certain taxable persons will be moved to the correct GST reporting and accounting methods.

Main Thresholds and GST Reporting

The ATO reminded businesses that there are two main thresholds that taxable persons must pay attention to. The first is the AUD 10 million GST turnover threshold. Once taxable persons exceed this threshold, they can no longer use simplified reporting and cash accounting. Instead, complete Business Activity Statement reporting and switch to accrual accounting are required. Consequently, the GST must be reported when invoices are issued rather than when cash is received or paid.

The second critical threshold is AUD 20 million. Once this threshold is exceeded, GST reporting must also shift from quarterly to monthly, increasing the frequency and discipline of compliance. Additionally, the ATO identified businesses that have not made these transitions even though they should have. These taxable persons will automatically be moved to the correct GST reporting methods starting from July 1, 2026.

Notably, taxable persons do not need to wait for July to be automatically moved to correct GST reporting and accounting methods, and can do that voluntarily through the ATO's “Online services for business” portal. Furthermore, ATO also outlined the practical implications of moving to the correct GST reporting methods.

Conclusion

The message from the ATO is loud and clear: businesses must regularly review their GST turnover and ensure their reporting method matches their size, or they will be automatically subject to these rules. While the announcement leaves time and space for voluntary compliance, it also creates administrative pressure on taxable persons, especially those who take this announcement lightly.

Source: Australian Taxation Office