Australian Sales Tax 2025: What Consumers & Businesses Need to Know

When you’re standing at the checkout or running a business in Australia, the sales tax—better known here as the Goods and Services Tax (GST)—is an ever-present part of the transaction. But what’s really happening behind the scenes? In 2025, new policy tweaks and economic shifts are influencing how GST affects households, retailers, and service providers across the country. Here’s what you need to know to stay savvy with your finances.

How Sales Tax (GST) Works in Australia

Unlike the patchwork of sales taxes overseas, Australia operates with a single, broad-based 10% GST applied to most goods and services. Introduced in 2000, GST is collected at each stage of the supply chain, but it’s the end consumer who ultimately bears the cost. Businesses registered for GST claim credits for the tax paid on business inputs, so only the final sale to the consumer is taxed.

• GST rate: 10% (no increase announced for 2025, despite previous speculation)
• Who pays: Most businesses with a turnover above $75,000 must register and collect GST
• How it’s charged: Displayed as part of the advertised price for consumer transparency

For example, if you buy a $110 pair of sneakers, $10 of that is GST—already included in the price tag.

Key Changes to Sales Tax in 2025

This year, the federal government has reaffirmed its commitment to keeping the GST rate steady, but there are a few notable developments:

• Digital Goods and Services: The ATO continues to tighten compliance on GST for overseas digital services (think streaming subscriptions or e-books), ensuring that offshore providers collect GST from Aussie consumers.
• Low-Value Imports: Since the 2018 reforms, GST applies to most imported goods under $1,000. In 2025, customs enforcement has ramped up, with stronger data-matching to catch non-compliant sellers.
• Small Business Concessions: In the May 2025 budget, the government extended simplified GST reporting for micro-businesses, allowing quarterly payments and streamlined record-keeping for those with turnover under $10 million.

Despite calls from some state governments to broaden the GST base or raise the rate, no federal changes have been legislated this year.

What’s Exempt from GST?

While most goods and services attract GST, some essentials remain exempt or ‘GST-free’:

• Basic food items (e.g., fresh fruit, bread, milk)
• Healthcare and medical services
• Education services and course fees
• Exports (goods shipped overseas)
• Most financial supplies (e.g., loan interest)

This means your weekly grocery shop for fresh produce is GST-free, but a takeaway coffee or packet of chips isn’t. The ATO’s food exemption list is detailed and, at times, controversial—think of the classic debate over whether a cake or a biscuit is GST-free!

How GST Affects Your Finances in 2025

For consumers, GST is a hidden cost in almost every purchase, subtly influencing household budgets. With inflationary pressures easing in early 2025 but the cost of living still high, understanding which items are GST-free can help families stretch their dollars further. For businesses, GST compliance remains a significant administrative task—especially for online retailers selling domestically and overseas.

Here are a few practical tips:

• Check receipts: GST must be included in advertised prices, but make sure it’s itemised on your receipts for business claims.
• For business owners: Stay on top of quarterly BAS (Business Activity Statement) lodgements to avoid ATO penalties. The ATO has rolled out new online tools in 2025 to help automate GST calculations for small businesses.
• For online shoppers: Be aware that GST now applies to most imports, including those from major global marketplaces.

Looking Ahead: The Future of Sales Tax in Australia

While the GST rate remains unchanged in 2025, the ongoing digitalisation of commerce means more goods and services—especially from overseas—are falling within the tax net. This trend is likely to continue, with the ATO leveraging data analytics to close loopholes and ensure a level playing field for local retailers.

For now, Australians can expect GST to remain a stable, visible part of the tax landscape, even as debates continue about its scope and fairness. Staying informed and vigilant about what’s taxed—and what isn’t—can help you make smarter spending and business decisions as we move through 2025.