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 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), explore the AU/NZ Tradie & Sole Trader App Store Edition and No-Subscription Bookkeeping Edition, or Download Keel Free on the App Store ($0/mo Core) (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, how both methods map to Simpler BAS labels G1, 1A, and 1B, and how Division 21 bad debt adjustments work if an invoice goes unpaid. For companion Australian guides, see how to do a BAS, ATO tax invoice requirements, and how to invoice as a sole trader in Australia.

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 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), 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.