Pay GST when you actually receive payment, or when you issue the invoice? The basis you choose changes your cash flow, not the total GST you eventually pay.
Last updated: June 2026
Under accruals (non-cash) basis, you report GST in the period you issue an invoice or receive payment, whichever happens first — meaning you can owe GST to the ATO before your customer has actually paid you. Under cash basis, you report GST only in the period you actually receive or make a payment, regardless of when the invoice was issued.
Both methods result in the same total GST paid over the life of a transaction — the difference is purely about timing, which matters a great deal for cash flow if there’s a meaningful gap between invoicing and getting paid.
You can generally choose the cash basis if your GST turnover is under A$10 million, or if you account for income tax purposes on a cash basis, or you’re a specific type of enterprise (like some charities or government bodies) regardless of turnover. Most small businesses and freelancers with turnover under A$10 million can freely choose whichever method suits them.
Cash basis tends to suit businesses with a gap between invoicing and payment — B2B service businesses with 30/60/90-day payment terms, or anyone who’s been caught paying GST on an invoice a client hasn’t settled yet. It also means you never owe GST on money you never actually collect, offering natural protection against bad debts on the output side.
Accruals basis can suit businesses that get paid quickly but pay their own suppliers slowly, since it lets you claim GST credits on supplier invoices as soon as you receive them, rather than waiting until you’ve actually paid.
No, it only changes the timing of when GST becomes due and when credits can be claimed — not the total amount owed over the life of a transaction.
Yes, subject to notifying the ATO and meeting eligibility requirements at the time of the switch — there are specific transitional rules to avoid GST being double-counted or missed.
Generally yes, though there are some exceptions for specific entity types (certain charities, government bodies) regardless of turnover.
Not necessarily — they can be aligned or handled separately depending on your circumstances, though many small businesses keep GST and income tax accounting methods consistent for simplicity.
Cash basis is common among freelancers and small businesses specifically because it avoids paying GST on invoices that haven’t been paid yet, which is a genuine cash-flow benefit for many.
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