# ATO GST Cash vs Accrual (Non-Cash) Basis & Simpler BAS Guide for Sole Traders (2026–27)

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- **Summary:** ATO GST cash vs accrual (non-cash) basis for Australian sole traders (2026–27): $10M cash threshold, Simpler BAS labels G1/1A/1B & Division 21 bad debts.

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# ATO GST Cash vs Accrual (Non-Cash) Basis & Simpler BAS Guide for Sole Traders (2026–27)

**Short answer: Under Australian Taxation Office (ATO) rules for 2026–27, choosing between GST cash vs accrual ATO accounting determines when you report 10% GST on your Business Activity Statement (`Simpler BAS` labels `G1`, `1A`, and `1B`). Any sole trader or tradie with aggregated turnover under $10 million can elect the Cash Basis (`A New Tax System (Goods and Services Tax) Act 1999` Division 29), meaning you only remit `1/11th` GST at Label `1A` after the client pays your tax invoice, and claim GST credits at Label `1B` when you pay the supplier.**

> **⚡ Instant Australian Sole Trader `10% GST` (`1/11th`), Simpler BAS & Tradie Invoice Toolkit (`$AUD`):** Calculate your `G1`, `1A`, and `1B` GST figures and sole trader income tax in the interactive **[Australian Sole Trader Tax & GST Calculator](/keel/self-employment-tax-calculator/)** right below (or click **🔗 Embed / CSV Template**), save your first 5 ABN tax invoices, Bunnings dockets, or ute logbook trips in the **[iCloud Web Workspace (5 Free Saves)](/keel/workspace/)**, explore the **[AU/NZ Tradie & Sole Trader App Store Edition](/keel/cpp/australia-nz-sole-traders/)** and **[No-Subscription Bookkeeping Edition](/keel/cpp/no-subscription-bookkeeping/)**, or **[Download Keel Free on the App Store (`$0/mo` Core)](https://apps.apple.com/au/app/keel-invoice-maker-receipts/id6786659713?ppid=8470921a-830e-47a3-abf5-bf0b1cce24ac)** (`au-nz-tradies`).

Every Australian tradie, builder, sparkie, plumber, and sole trader who crosses the **$75,000 GST registration turnover threshold** faces an immediate question inside **myGov / Online services for business**: *should I account for GST on a Cash basis or a Non-cash (Accrual) basis?*

Picking the wrong box when registering can force you to pay **10% GST (`1/11th`)** to the ATO on a $22,000 progress claim weeks before the head contractor or homeowner actually pays your invoice. Below is the complete **2026–27 Australian Taxation Office (ATO)** breakdown of **[accounting for GST on a cash vs non-cash basis](https://www.ato.gov.au/businesses-and-organisations/gst-excise-and-indirect-taxes/gst/accounting-for-gst-in-your-business/choosing-an-accounting-method)**, how both methods map to **[Simpler BAS labels `G1`, `1A`, and `1B`](/keel/australia-ato-simpler-bas-and-no-abn-withholding-guide/)**, and how **Division 21 bad debt adjustments** work if an invoice goes unpaid. For companion Australian guides, see [how to do a BAS](/keel/australia-how-to-do-a-bas/), [ATO tax invoice requirements](/keel/australia-ato-tax-invoice-requirements-sole-trader-guide/), and [how to invoice as a sole trader in Australia](/keel/australia-how-to-invoice-sole-trader/).

## How does GST cash vs accrual ATO accounting compare under Division 29?

Under *Division 29 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)*, the attribution rules for GST depend on whether you account on a **Cash basis** or a **Non-cash (Accrual) basis**:

| Feature / ATO Statutory Rule | **Cash Basis (`s 29-5(2)` & `s 29-10(2)`)** | **Non-Cash / Accrual Basis (`s 29-5(1)` & `s 29-10(1)`)** |
|---|---|---|
| **Who can use it (ATO eligibility)** | Small businesses with aggregated annual turnover **under $10 million**, OR businesses using the cash method for income tax | Available to **all GST-registered businesses** (mandatory once aggregated turnover reaches $10 million or more) |
| **When you report GST on sales (`Simpler BAS Label G1 & 1A`)** | In the BAS period in which you **actually receive payment** (if paid in instalments, only on the portion received in that quarter) | In the BAS period in which the **earliest** happens: you **issue a tax invoice** OR you **receive any part of the payment** |
| **When you claim GST credits on purchases (`Simpler BAS Label 1B`)** | In the BAS period in which you **actually pay** the supplier (provided you hold a valid tax invoice for purchases over **$82.50 incl. GST**) | In the BAS period in which the **earliest** happens: you **receive the supplier's tax invoice** OR you **pay any part of the bill** |
| **What happens if a client pays 60 days late across a quarter end?** | **Zero GST owing** until the quarter the money lands in your bank account | You must **pay the full 10% GST (`1/11th`) to the ATO first**, out of your own pocket, before the client has paid you |
| **Bad debt recovery (`Division 21 GST Act`)** | Not needed — because you never remitted GST on the unpaid invoice in the first place | You must wait until the debt is **written off as bad** or remains **overdue for 12 months** before claiming a decreasing adjustment |
| **Best suited for** | **98% of Australian sole traders, tradies & subcontractors** issuing 14–30 day tradie quote & invoice claims | High-volume retailers who get paid immediately at point of sale while paying trade suppliers on 30–60 day credit accounts |

## How do Simpler BAS labels `G1`, `1A`, and `1B` change between Cash and Accrual?

Since the ATO made **[Simpler BAS](https://www.ato.gov.au/businesses-and-organisations/preparing-lodging-and-paying/business-activity-statements-bas/simpler-bas)** the default reporting method for small businesses with GST turnover **under $10 million**, you only complete three GST boxes every quarter (`28 October`, `28 February`, `28 April`, and `28 July`):

1. **Label `G1` (Total sales):**
   - **On Cash Basis:** Total payments actually received from customers during the quarter (including GST-free sales), whether reported GST-inclusive or GST-exclusive.
   - **On Accrual Basis:** Total value of all invoices issued to customers during the quarter (plus any uninvoiced deposits received), regardless of whether the customer has paid yet.
2. **Label `1A` (GST on sales):**
   - **On Cash Basis:** `1/11th` of the taxable customer payments actually **received** during the quarter (rounded down to the nearest whole dollar).
   - **On Accrual Basis:** `1/11th` of the taxable invoices **issued** during the quarter—even if a progress claim is still sitting unpaid on 30 September, 31 December, 31 March, or 30 June.
3. **Label `1B` (GST on purchases):**
   - **On Cash Basis:** `1/11th` of creditable business expenses actually **paid** during the quarter (tools, Bunnings/Reece materials, ute fuel, insurances), provided you hold a valid **ATO tax invoice** for any purchase over **$82.50 (incl. GST)**.
   - **On Accrual Basis:** `1/11th` of creditable supplier tax invoices **received** during the quarter, even if the 30-day trade account is paid in the next quarter.

## Worked example in `$AUD`: Brisbane sparkie across the 30 June quarter boundary

Suppose Liam, a GST-registered electrical sole trader in Brisbane, completes a commercial switchboard and lighting upgrade on **20 June 2026**:

- **Tax invoice issued (`20 June 2026`):** **$11,000 incl. GST** (`$10,000` labour & materials + `$1,000` GST).
- **Supplier trade account paid (`18 June 2026`):** **$3,300 incl. GST** (`$3,000` switchgear + `$300` GST credit).
- **Date the builder pays Liam's invoice:** **17 July 2026** (inside the *next* financial year and Q1 BAS period).

Here is how Liam's **Q4 BAS (`1 April – 30 June`, due 28 July)** looks under both methods:

| BAS Quarter & Line Item | **Liam on Cash Basis (Recommended)** | **Liam on Non-Cash (Accrual) Basis** |
|---|---|---|
| **Q4 BAS (`Apr–Jun`) — Label `G1` (Total sales)** | **$0** *(client paid on 17 July)* | **$11,000** *(invoiced on 20 June)* |
| **Q4 BAS (`Apr–Jun`) — Label `1A` (GST on sales)** | **$0** | **$1,000** *(payable to ATO by 28 July)* |
| **Q4 BAS (`Apr–Jun`) — Label `1B` (GST on purchases)** | **$300** *(paid trade supplier on 18 June)* | **$300** |
| **Q4 BAS Net Outcome (`1A − 1B`)** | **$300 GST Refund from the ATO** | **$700 GST Bill payable to the ATO** |
| **Q1 BAS (`Jul–Sep`) — Label `1A` (GST on sales)** | **$1,000** *(reported after the $11,000 landed on 17 July)* | **$0** *(already reported in Q4)* |

By electing the **Cash Basis**, Liam gets a **$300 GST refund** in Q4 when he buys the materials and only remits the **$1,000 GST** in Q1 after the $11,000 payment clears his account.

## Can you use Cash Basis for GST and Accrual Basis for your income tax return?

Yes — the ATO treats your **GST accounting basis (`Simpler BAS`)** and your **Income Tax accounting method (`Individual tax return — Business and professional items schedule`)** as separate elections, though most sole traders align both on the **Cash (Receipts) method**:

- Under **Taxation Ruling `TR 98/1`**, sole traders who earn income primarily from their own personal labour and skill (or operate small trade businesses with minimal employee structure) generally use the **Cash (Receipts) method** for both income tax and GST.
- If you switch between Cash and Non-cash (Accrual) for GST inside **Online services for business**, the change takes effect from the **first day of a tax period (quarter or month)**—never mid-quarter—and *Division 159 of the GST Act* requires a transitional adjustment on your first BAS under the new method so no invoice or expense is counted twice or missed.

## How to track Cash-Basis paid dates vs Invoice dates without linking a bank feed

To lodge an accurate Cash-Basis **Simpler BAS** in under 10 minutes each quarter, your records only need two dates on every transaction:
1. **Invoice / Expense Date** (when the tax invoice was issued or the docket was printed).
2. **Paid Date** (the exact day the client paid your invoice or you paid the supplier).

With **[Keel (`$0/mo` Core on iOS & iCloud Web Workspace)](/keel/cpp/australia-nz-sole-traders/)**, every **tradie quote & invoice** and snapped thermal docket stores both its issue date and payment status locally on your iPhone—with **no Plaid/Basiq bank login required** and a 5-year ATO audit pack ready at year-end.

## Frequently asked questions

**Should a sole trader use cash or accrual for GST in Australia?**

Almost all Australian sole traders and tradies with aggregated turnover under $10 million should elect the **Cash basis** for GST. Under the Cash basis, you only report and pay the `1/11th` GST (`Label 1A`) in the BAS quarter when your customer actually pays you, protecting your cash flow against late payers.

**What is the ATO turnover threshold for Cash-Basis GST in 2026–27?**

Under *Division 29 of the GST Act 1999*, you can account for GST on a Cash basis if you are a small business entity with **aggregated annual turnover of less than $10 million**, or if you already account for income tax on a cash receipts basis.

**What happens if a customer never pays an invoice under Accrual vs Cash GST?**

On the **Cash basis**, you never received payment, so you never reported or paid GST on that invoice—no adjustment is needed. On the **Non-cash (Accrual) basis**, you already paid the 10% GST to the ATO when you issued the invoice, so under *Division 21 of the GST Act* you must wait until you formally write off the bad debt (or until it has been overdue for 12 months) to claim a decreasing GST adjustment on your BAS.

**How do I check or change my GST accounting method with the ATO?**

Log in to **myGov** linked to **ATO Online services** (or **Online services for business**), navigate to **Tax → Accounts → GST**, and view your current accounting method (`Cash` or `Non-cash`). You can switch methods effective from the start of a new quarterly or monthly BAS period.

**Can I claim a GST credit on a purchase before I have a tax invoice?**

No. Even if you have already paid the supplier (Cash basis) or received the goods (Accrual basis), *section 29-10(3) of the GST Act* states that for any taxable purchase over **$82.50 (including GST)**, you must hold a valid **ATO tax invoice** at the time you lodge the BAS for that period.

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*This guide is general information based on Australian Taxation Office (ATO) legislation (`GST Act 1999` Divisions 21, 29, and 159) for the 2026–27 financial year and is not personal tax advice. Confirm your obligations at ato.gov.au or with a registered BAS or tax agent.*