GST in Australia: how much revenue it raises and how the 10% rate compares to the world

The GST raised $94.8 billion for the Commonwealth in 2024–25, on the accrual measure in the ABS government finance statistics. That was 14.0% of the Commonwealth's $675.2 billion of taxation revenue, derived by dividing $94,790 million by $675,173 million. It was also 11.3% of the $839.0 billion in taxation revenue recorded across all levels of government¹.

The ATO describes the GST as a broad-based tax of 10% on most goods, services and other items sold or consumed in Australia. The rate is set by the A New Tax System (Goods and Services Tax) Act 1999, which fixes the amount of GST on a taxable supply at 10% of the value of the supply, and it has applied at that rate since the tax began on 1 July 2000².

On the cash measure, the ATO collected $90.2 billion of net GST in 2024–25, including $5.6 billion collected on imports by the Department of Home Affairs³. The states and territories had a combined GST entitlement of $91.2 billion for the year. The totals differ because each publication measures a different point in the tax flow, from the liabilities that accrued on sales to the cash collections and the final state and territory entitlement.

Sales by a GST-registered business fall into three categories: taxable, GST-free or input taxed. A taxable sale carries 10% GST in its price, and the seller can claim credits for the GST on the inputs used to make it. The GST Act's GST-free categories include food, health, education and child care, under Subdivisions 38-A to 38-D of the Act; its input-taxed categories include financial supplies and residential rent, under Division 40².

GST-free and input-taxed sales both have no GST added to the sale price, but their treatment differs for the seller. A business makes a GST-free sale without charging GST and can still claim credits for the GST included in the price of purchases used to make that sale. ATO guidance lists most basic foods, some education courses and some medical, health and care products and services as GST-free⁵. A business making an input-taxed sale also charges no GST, but generally cannot claim credits on purchases used to make that sale. Common input-taxed sales are financial supplies, such as lending money, and selling or renting out residential premises⁶.

GST revenue is distributed among the states and territories using population shares and revenue-sharing relativities. Under section 5 of the Federal Financial Relations Act 2009, each state is entitled to a grant worked out from the GST pool and its population share, adjusted by a relativity factor. In 2024–25, the combined GST entitlement of states and territories was $91.2 billion, including a pool top-up of $981 million. The Australian Government has added $600 million a year into the pool since 2021–22, growing with the pool, and added a further $250 million in 2024–25. The entitlement is based on cash receipts rather than accrual revenue. The Final Budget Outcome reconciles $96.5 billion of accrual GST revenue to $90.3 billion of cash receipts, subtracts small penalty and agency adjustments, and adds the $981 million top-up to reach $91.2 billion⁹.

The shares are not equal per person. The Australian Government distributes the GST on revenue-sharing relativities recommended by the Commonwealth Grants Commission, with the Treasurer issuing a determination each year. The commission's objective is to give each state and territory the financial capacity to provide services at a comparable standard if each made the same effort to raise revenue¹⁰. A relativity above 1 gives a state or territory more than its equal per-person share. In the commission's 2026 Update, the Northern Territory's recommended relativity for 2026–27 is 5.24149, the highest of the eight. New South Wales and Western Australia have the lowest recommended relativities, both at 0.81964. The commission estimated a GST pool of $102.5 billion for distribution in 2026–27.

Australia's 10% GST rate is one of the lowest standard VAT or GST rates in the OECD. Value-added taxes operate in 37 of the 38 OECD countries, with the United States the only member without one. The unweighted average standard rate across the 37 countries with a VAT or GST was 19.3% at 1 January 2024. Only Canada's 5% federal GST and Switzerland's 8.1% rate were lower than Australia's. Japan and Korea also had standard rates of 10%. Hungary had the highest standard rate at 27%¹¹.

The comparison is a snapshot as at 1 January 2024, and some rates have since changed. The same report records that Estonia's standard rate rose from 20% to 22% at the start of 2024¹¹, and that Finland's rate, shown at 24% in the table, increased to 25.5% on 1 September 2024.

Australia's rate has remained 10% since the tax began. The OECD also compares registration thresholds. Australia's $75,000 threshold, equivalent to about USD 54,000 at purchasing power parity, falls within the report's band of seven countries with thresholds between USD 40,000 and USD 80,000. Twelve OECD countries had thresholds above USD 80,000¹¹.

GST exemptions and concessions keep some consumption outside the tax base, and Treasury estimates the resulting revenue forgone. In Treasury's 2025–26 Tax Expenditures and Insights Statement, the estimated revenue forgone in 2024–25 from GST-free food was $9.5 billion, the largest GST item in the statement. GST-free medical and health services were estimated at $6.3 billion and education at $4.2 billion. Across food, education and the five health-related GST-free items listed in the statement, the estimated revenue forgone was $22,985 million. That was about 24% of GST revenue on the ABS measure for 2024–25, derived by dividing $22,985 million by $94,790 million¹². These are estimates of revenue forgone, not amounts collected, and they assume behaviour would not change if the exemptions ended.

The input-taxed treatment of financial supplies is also counted as a concession, with an estimated $3.7 billion of revenue forgone in 2024–25. GST-free child care services and water and sewerage accounted for a further $2.4 billion and $1.3 billion respectively. Treasury rates most of these estimates as having medium reliability. The medical aids estimate is rated low, and the financial supplies and child care estimates medium to low. Residential rent also carries no GST, because renting out residential premises is input taxed. The statement treats residential rent as part of the GST benchmark rather than a concession, so it publishes no revenue-forgone estimate for it¹².

The OECD's VAT revenue ratio measures the VAT actually collected against the amount that would be collected if the standard rate applied to all final consumption expenditure. Australia's ratio was 0.50 in 2022, the latest year published by the OECD, compared with an OECD unweighted average of 0.58; New Zealand recorded 0.96. The OECD states that the ratio combines the effect of exemptions and reduced rates, fraud, evasion and tax planning. It therefore measures the overall gap between the theoretical and actual VAT base, rather than the exemptions alone¹¹.