Australia’s GST Registration Threshold May Rise to $250K – PBO Policy Costing Report

The Australian Parliamentary Budget Office (PBO) released a policy costing report regarding the proposal to increase the mandatory threshold for GTS registration from AUD 75,000 to AUD 250,000. The proposed increased threshold would apply to businesses and non-profit organizations. 

The policy costing report provides insight into the financial implications and assumptions on the government budget if the proposed increase is adopted and implemented.

Key Insights From Policy Costing Report

The mandatory GST registration threshold is AUD 75,000 for businesses and AUD 150,000 for non-profit organizations. Therefore, the same GST registration threshold would be established for companies and non-profit organizations if the proposal is adopted.

Furthermore, increasing the GST registration threshold would decrease GST revenue, offset by decreased GST payments to the states and territories, increased business income tax revenue, and decreased departmental expenses.

The policy costing report noted that around 95% of businesses between the current and new turnover thresholds receiving a net GST refund would remain registered and stay in the GST system. Additionally, around 80% of companies that are eligible based on their GST value and have net GST to pay are expected to stay registered, since that allows them to claim back GST on their expenses and makes it easier to do business. 

This is especially beneficial and important for small businesses that supply to other companies and must be GST-registered to be part of the supply chain. Moreover, many companies would remain registered to avoid the issues and cost of re-registering if their turnover exceeds the threshold in the future. On top of that, taxi and ridesharing drivers are required to be GST registered in all cases.

Conclusion

The PBO's policy costing report offers a clear and comprehensive assessment of the proposed increase to the GST registration threshold. It shows that shifts in other budget areas, such as income tax and departmental expenses, would balance the broader fiscal impact, including a reduction in GST revenue. 

The proposed effective date for increasing the mandatory turnover threshold for GST registration is July 1, 2025. However, whether the proposal will be adopted and implemented is still uncertain, especially considering the fact that most businesses currently registered for GST are likely to remain in the system regardless of the higher threshold.

Source: Parliamentary Budget Office - GST threshold change