If you run a small business in Australia, there’s a good chance you’re registered for GST (Goods and Services Tax). That means for every $100 you invoice, $10 isn’t yours — it belongs to the ATO.
But many businesses fall into a common trap: treating the entire bank balance as spendable income.
Why That $10 Isn’t Yours
GST isn’t a tax on your profits — it’s a tax you collect on behalf of the government. You’re just the middleman.
Each month or quarter, you’re expected to report and hand over the GST you’ve collected. If you’ve already spent it — on rent, staff, or gear — you could be in for a nasty surprise when it’s time to lodge your BAS (Business Activity Statement).
This Is Where Liquidity Risk Hits
Liquidity risk is the risk of not having enough cash to meet short-term obligations — like tax payments, wages, or bills. Even a profitable business can run into trouble if it’s low on cash when the ATO comes knocking.
It’s a silent killer for growing businesses: the more you sell, the more GST you collect — and the more damage it does if you’re not setting it aside.
5 Tips to Stay Ahead of GST Trouble
Separate your GST as it comes in
Create a dedicated bank account. If you invoice $1,100, transfer $100 to your GST account immediately.Understand your GST liabilities
Not everything is subject to GST. Work closely with your accountant to avoid under- or over-paying.Watch your timing
If you use accrual accounting, GST is owed on issued invoices — not just the ones you’ve been paid for.Stay on top of BAS deadlines
Penalties and interest add up fast. Review your GST position monthly, even if your BAS is quarterly.Don’t confuse GST with income
If you have $10,000 in your account and $1,000 is GST, you don’t have $10,000 to spend.
A Little Discipline Goes a Long Way
Running a business is hard enough without tax-time shocks. Setting aside GST regularly gives you peace of mind — and protects your business from cash flow crunches.
Need help with GST planning or cash flow management?
Our accounting team supports small businesses across Australia to stay compliant, cash-positive, and stress-free.