GST for Sole Trader Support Workers: the $75,000 Rule

Here is the trap, in one sentence. Most NDIS supports you deliver are GST-free, but GST-free income still counts towards the $75,000 GST registration threshold, so a busy sole trader support worker can be legally required to register for GST while charging exactly zero GST to anyone.

Every year this catches people out. They reason, sensibly enough, that GST-free means GST does not apply to them. It does not mean that. GST-free describes the treatment of the sale. Registration is triggered by turnover, and turnover includes GST-free sales.

This guide covers what the threshold actually is, when you have to register, and the four conditions the ATO requires before an NDIS support is GST-free. It is general information. Your own position depends on your mix of work, so confirm it with a registered tax agent or the ATO before you act.

The $75,000 threshold

The ATO’s registering for GST page sets the rule. You must register for GST:

• when your business has a GST turnover of $75,000 or more (the GST threshold)
• when you start a new business and expect turnover to reach the threshold in the first year
• if you are already in business and have reached the threshold
• if your non-profit organisation has a GST turnover of $150,000 a year or more
• when you provide taxi or limousine travel for passengers, including ride-sourcing, regardless of turnover
• if you want to claim fuel tax credits.

Two of those matter to support workers more than people expect. The threshold is $75,000 of turnover, not profit, so it is measured before your insurance, fuel, training and phone come out. And the taxi rule is about passenger transport as a service in its own right, not about driving a participant to an appointment as part of a support shift, but if you are doing rideshare driving on the side that income and that rule both apply to you.

Once you are required to register, you have 21 days to do it. You need an ABN first. If you do not have one yet, start with how to get an ABN as an NDIS support worker.

Current turnover and projected turnover

The ATO tests two numbers, and hitting either one triggers registration:

• Current GST turnover: your turnover for the current month and the previous 11 months.
• Projected GST turnover: your total turnover for the current month and the next 11 months.

This is a rolling 12 months, not a financial year. Someone who picks up three new clients in October can cross the threshold in March without any single financial year showing $75,000.

There is one relieving rule worth knowing. The ATO says that even if your current GST turnover is at or above the threshold, you do not have to register if your projected GST turnover will be less than the threshold. A worker who had a huge year and is deliberately winding back to part-time hours is not automatically caught.

What counts in GST turnover

This is the part that decides the whole question. The ATO defines GST turnover as your total business income, not your profit, minus:

• GST included in sales to your customers
• sales to associates that are not for payment and are not taxable
• sales not connected with an enterprise you run
• input-taxed sales you make
• sales not connected with Australia.

Read that list again. GST-free sales are not on it. Input-taxed sales are excluded; GST-free sales are not the same thing and are not excluded. So your GST-free NDIS support income goes into the turnover calculation at full value.

A sole trader billing $82,000 across a year of entirely GST-free NDIS supports has crossed the threshold and is required to register, even though every invoice showed $0 GST.

When NDIS supports are GST-free: all four conditions

The ATO’s GST and the NDIS guidance is a four-part test. A supply to an NDIS participant is GST-free only if all of the following are met.

1. The participant has an NDIS plan in effect. The plan must be in effect under section 37 of the NDIS Act, meaning approved by the NDIA. It stops being in effect when it is replaced by another plan, or when the person stops being a participant.

2. The supply is of reasonable and necessary supports specified in the statement of supports in the participant’s plan. The ATO adds a detail that matters for busy workers: where the plan specifies an amount, such as time or quantity, any supply in excess of that specification is not a GST-free NDIS supply.

3. There is a written agreement between you and the participant, or another person. The agreement must identify the participant and state that the supply is a supply of one or more of the reasonable and necessary supports specified in the participant’s plan under subsection 33(2) of the NDIS Act. The other person can be a plan manager, the NDIA, or a guardian or relative. The ATO accepts a combination of documents, including emails, letters and invoices, as long as together they evidence a legally binding obligation to make the supply and that it is a specified reasonable and necessary support.

4. The supply is covered by one of the tables in the GST-free Supply (NDIS Supports) Determination 2021. The ATO notes the Determination applies to supplies made on or after 1 July 2021 but before 1 July 2027.

That fourth condition has two tables. Table 1 supports are GST-free on their own, and include household tasks, assistance in coordinating or managing life stages and transitions, assistance with and training in travel or transport arrangements (excluding taxi fares), interpreting and translation, assistance to access and maintain education and employment, and management of funding in a participant’s plan.

Table 2 supports are only covered if they are also listed in one of three other determinations (the Care Determination, the Residential Care Determination or the Health Services Determination). Table 2 includes assistance with daily personal activities, specialised assessment and development of daily living and life skills including community participation, assistive equipment for general tasks and leisure, behavioural and therapeutic supports, and home modifications.

Personal care, medication management and continence management are the everyday examples the ATO gives of Table 2 items that are also covered by the Care Determination, so they land as GST-free.

Where it stops being GST-free

Four situations trip sole traders up.

Subcontracting to a provider or agency. This is the big one. The ATO’s own example has a registered provider engaging contractors to do home and yard maintenance for a participant. The supply from the provider to the participant is GST-free. The contractors, though, are making a separate supply of services to the provider, and because the provider is not an NDIS participant, that supply is not GST-free under section 38-38 and is taxable if the usual requirements are met. If you invoice an agency rather than the participant or their plan manager, do not assume your invoice is GST-free.

Hours beyond what the plan specifies. Supports in excess of a quantity stated in the plan fall outside condition 2.

Supports not covered by the Determination. The ATO’s worked example is exercise physiology delivered at a clinic to a participant whose plan funds it. The first three conditions are met and it still is not GST-free, because Table 1 does not cover it and the Table 2 item is not covered by one of the three other determinations unless it is delivered in a residential care setting. It can still be GST-free on other grounds, such as a Medicare benefit being payable.

Work that is not NDIS at all. Private clients, aged care work and Home Care Package work sit under different rules. Do not carry an NDIS conclusion across to them.

What to actually do

1. Track turnover monthly, not annually. Check your rolling 12 months at the end of each month. The ATO specifically advises checking each month to see if you have reached or are likely to exceed the threshold.
2. Include your GST-free NDIS income in that number. All of it.
3. Register within 21 days of crossing. Online services for business, by phone, or through a registered tax or BAS agent.
4. Keep charging $0 GST on supports that meet all four conditions. Registering does not make a GST-free supply taxable. What changes is that you lodge BAS and can claim GST credits on business purchases.
5. Separate your invoice streams. Participant-facing GST-free work and agency subcontract work are different treatments. If you do both, your invoicing needs to reflect it. The NDIS invoice generator and the invoice template guide cover the fields an invoice needs.
6. Keep the written agreement current. Condition 3 is the one most likely to be quietly broken by a rate change or a shift in supports that never made it onto paper. The service agreement template and the rate increase letter template both include a variation record for that reason.

If you got it wrong

The ATO is direct about this. If you do not register when required, you may have to pay GST on sales made since the date you were required to register, even if you did not include GST in the price of those sales, and penalties and interest may apply. Backdating a registration is limited to four years.

None of that gets better by waiting. Talk to a registered tax agent, work out the date you actually crossed, and deal with it.

Where this sits in setting yourself up

GST is one piece of going independent, and not the first one. The guide to becoming an independent support worker covers the whole sequence, support worker insurance covers cover you need before your first shift, and the independent support worker pay rates guide covers what your hourly rate has to absorb.

If you work independently, sign up for Carevo with your email and choose support worker. Carevo connects participants, families and providers with independent workers; it does not employ workers, deliver supports, or give tax, legal or financial advice.

This is general information only, current as at the review date above. GST outcomes depend on your specific circumstances and your mix of work. Confirm your position with a registered tax agent or directly with the ATO before you rely on any of it.