Handing over cash feels old-school, doesn’t it? Especially with tap-and-go everywhere. But walk into certain spots in Sydney—maybe a weekend market, your neighbourhood barber, or the family-run café—and chances are, you’ll spot a cardboard sign: “Cash preferred.” It’s quick, sometimes lets you skip the line, and for small businesses, cuts out a heap of EFTPOS fees. But here's the curveball: does that old-fashioned $50 note mean you can sidestep paying GST? Or does it just bring you a whole new batch of headaches with the tax office? Heaps of Aussie business owners wonder about these cash deals, and plenty wind up in hot water because they don’t know the rules.
How GST Works: The Basics You Can’t Afford to Ignore
GST, or Goods and Services Tax, is that 10% lump slapped on nearly everything you buy and sell in Australia. Doesn’t matter if you’re trading online, sending out fancy invoices, or just handing over an egg-and-bacon roll in exchange for cash by Bondi Beach. If your business is registered for GST, you’re supposed to collect it—every time you make a taxable sale, cash or card.
The rule is super clear from the Australian Taxation Office (ATO): a sale is a sale, full stop. If the product or service is GST-applicable, you must charge it whether the person is swiping a card or dropping cash in your palm. Ignoring this gets people into all sorts of trouble with audits and fines. The government doesn’t care if it’s a giant retailer or a side-hustle market stall; the policy is GST on cash sales is mandatory if you hit the registration threshold (currently $75,000 annual turnover) or if you’ve chosen to be GST registered.
People try to argue all sorts of things. “It’s just a bit of cash, not a real business,” or “Nobody’s going to notice.” Wishful thinking! In 2023 alone, more than 16% of ATO audit activity focused specifically on monitoring small businesses for under-reporting cash sales. That translates into real audits and, if you get caught, repayable GST, interest, even penalties up to 75% of what you owe. Remember that famous headline from a couple of years ago? A popular inner-city restaurant was shut down and handed a hefty bill because they tried to be clever with their cash drawer. Those fines aren’t urban legends—they’re very real.
Cash Sales: Keeping It Clean, Smart, and Legal
Lots of people assume cash is slippery and invisible, but there’s a reason the ATO always refers to it as “the black economy’s best friend.” If you’re running a legit business, there’s really no way to “hide” cash sales, and honestly you shouldn’t want to. Think it through: failing to include cash puts you at risk, sure, but it also means you lose out on accurate business records, access to loans, and even opportunities to sell or expand the business later.
Here’s what’s expected if you’re GST-registered:
- Issue a GST-compliant tax invoice for every sale over $82.50 (including GST), regardless of how payment arrives. If the customer wants one, even for smaller amounts, you need to provide it.
- Record cash sales in your accounting system—no shortcuts, no “forgetting.” Everything goes in, like any card or online transaction.
- Remit the GST portion through your quarterly (or monthly) BAS. The ATO checks these reports for the sort of anomalies that cash skimming creates.
If you ever get an audit, they’ll cross-check your reported sales with your bank deposits, supply invoices, and even your product ordering habits. It’s not as easy to fudge numbers as some think—digital footprints are everywhere. Remember: always record every cent, keep tax invoices, and stash those cash register tapes (or mobile POS records) just in case you need to back up your numbers.
Now, here’s a pro tip for staying safe: get in the habit of depositing all your cash takings into your business bank account before spending it. This simple move creates a clean paper trail, and if the ATO ever wants a look, you can show exactly where cash came in and how it lined up with the GST you reported.
"Small businesses relying on cash transactions must keep records as meticulously as they do for digital sales—there’s no exemption from the rules," says Michael Croker, tax leader at Chartered Accountants ANZ.
What Counts as a Taxable Sale? And What Doesn’t?
Not every cash transaction gets hit with GST. The classic exceptions are:
- Basic groceries and most fresh food—GST-free.
- Health services provided by a registered practitioner—usually GST-free.
- Educational courses, childcare, and some exports—again, GST-free.
If you’re selling books at a market, for example, yes, GST applies. But if you’re running a home cleaning business and only earning $40,000 a year, you don’t need to register for GST, so you don’t collect it. Once you go over the threshold or opt in, though, it’s game on—every cash sale counts, GST-wise.
Curious about what does and doesn’t attract GST? The ATO’s website has a GST tool that takes two minutes to use. Check your business’s goods and services, and you’ll know for sure. Always check the current rules, since thresholds and exceptions can quietly change (they’re reviewed every few years).
The other kicker: some businesses split between GST and non-GST items. Cafés, for example—coffee and hot meals are GST-applicable, but basic bread isn’t. So if you mix up your reporting, you can accidentally underpay (or overpay) GST. That’s why a lot of business owners use accounting tools like Xero or MYOB, which let you tag sales correctly at the register so you don’t need to worry about it every BAS cycle.
Tips for Getting GST on Cash Sales Right Without Losing Sleep
If you’re managing a business that deals in a lot of cash, here’s how to protect yourself from slip-ups:
- Automate your paperwork: Invest in a decent POS (point-of-sale) system that records every transaction, cash or card. The tiny outlay is nothing compared to the cost of a tax audit.
- Set a daily cash counting routine: Check your register against receipts. Even if your business is just you and a shoebox, this keeps things straight—and it’s the first thing an auditor will check.
- Keep your receipts and invoices: Whether you’re selling smoothies or dog-walking services, stash them somewhere safe for at least five years. The ATO loves paperwork, and lacking it is a nightmare if you’re reviewed.
- Don’t spend takings from the till: Treat cash as you would digital income—bank it first, then use it for business expenses or wages.
- Get GST advice before you hit the threshold: Don’t wait until you cross the $75,000 annual turnover. Talk to an accountant as you approach it, so you’re ready to charge GST the very day it’s needed.
- Stay on top of your BAS: Falling behind with quarterly (or monthly) statements will throw up red flags. Even a few late returns can put you in the ATO’s spotlight.
- Watch for sudden spikes: If your cash income jumps, make sure you can explain why. The ATO follows spending trends, especially in industries known for under-reporting.
- Be honest if you’ve messed up: Caught out? Voluntarily disclose any mistakes before an audit and the penalties are way, way lower.
One other trick: stay aware of industry benchmarks. The ATO publicly shares average cash-to-card ratios by sector. If your numbers are way off, they’ll want to know why. Google “ATO small business benchmarks” for your industry and make sure you’re in the right ballpark.
So, the answer’s pretty simple after all. GST on cash sales isn’t optional if your business is GST-registered—it’s the law, plain as day. Try to duck it, and you’re risking way more than a lecture from your accountant: it could cost your business, your reputation, and a massive chunk of spare change. But keep things above board, record everything, and you don’t just stay safe—you build a business that’s ready to grow, get loans, or even sell one day. And honestly, sleeping easy at night knowing the taxman’s got nothing on you? That’s worth more than a few skipped EFTPOS fees any day.
