FoderisCash or Accrual GST Accounting: Which Method Suits Your Business?
When you register for GST, you choose how to account for it: on a cash basis or a non-cash basis, which most people call accrual. The method does not change how much GST you pay over time. It changes which BAS each amount lands in. For a business paid instantly by card, the difference is often small.
In short
- Businesses with an aggregated turnover under A$10 million can choose cash or non-cash (accrual) GST accounting. A few other groups can use cash too.
- Cash basis: you report GST on sales when you are paid and claim credits on purchases when you pay.
- Accrual basis: you report GST at the earlier of issuing the invoice or being paid, and claim credits at the earlier of receiving the invoice or paying.
- For card and Stripe sales paid on the spot, both methods usually give the same result.
- To change method, contact the ATO or ask your accountant. Moving from cash to accrual takes effect from the start of a tax period.
Who can use the cash method
The ATO’s page on choosing an accounting method says you can account for GST on a cash basis if any of these apply:
- you are a small business entity, meaning an individual, partnership, trust or company with an aggregated turnover of less than A$10 million
- you are not carrying on a business, but your enterprise’s GST turnover is A$2 million or less
- you account for income tax on a cash basis
- you are a government school, an endorsed charitable institution or fund, or certain gift-deductible entities.
If none of these fit, you can ask the ATO for permission. Most larger businesses must use the non-cash method.
Aggregated turnover is not quite the same as GST turnover. It includes the turnover of businesses connected with you or affiliated with you. If you own several companies, add them up before assuming you are under A$10 million. These thresholds can change, so check the current ATO guidance when you register.
Both methods work with Simpler BAS, the default reporting method for businesses with a GST turnover under A$10 million.
How the timing differs
| Cash basis | Accrual (non-cash) basis | |
|---|---|---|
| GST on sales | In the period you receive payment | In the period you issue the tax invoice or receive any payment, whichever is first |
| Part payments | Only the GST in the part you received | The full GST once the invoice is issued or any payment is received |
| GST credits on purchases | In the period you pay | In the period you receive the invoice or pay, whichever is first |
| Tax invoice rule | You need a tax invoice for purchases over A$82.50 before claiming | Same |
Under both methods, you cannot claim a credit for a purchase over A$82.50 until you hold a tax invoice, as the ATO’s GST credits page explains. You generally have 4 years to claim a credit you missed.
Why people choose cash
Your BAS lines up with the money moving through your business, so you never pay GST on a sale before the customer has paid you.
Why people choose accrual
Accrual tracks what you owe and are owed, and can bring GST credits forward, because you can claim once you hold the tax invoice, even before paying. The ATO notes it can be more complicated and suits businesses that are not paid immediately.
Worked example
A SaaS business reports GST quarterly. The July to September quarter ends on 30 September.
| Transaction | Dates | Cash basis | Accrual basis |
|---|---|---|---|
| Invoice to an Australian business customer, A$11,000 including A$1,000 GST | Invoice issued 15 September, paid 20 October | GST of A$1,000 in October to December | GST of A$1,000 in July to September |
| Bill from an Australian contractor, A$2,200 including A$200 GST | Tax invoice received 25 September, paid 5 October | Credit of A$200 in October to December | Credit of A$200 in July to September |
| Card subscriptions through Stripe, A$5,500 including A$500 GST | Paid by customers in September | GST of A$500 in July to September | GST of A$500 in July to September |
On a cash basis, the September quarter includes only the Stripe sales: A$500 of GST. On an accrual basis, it includes A$1,500 of GST on sales and A$200 of credits, so A$1,300 net. Over the two quarters the totals are the same. Only the timing moves.
How Stripe payouts fit in
With Stripe, a customer’s card payment and the payout to your bank are different events, often a few days apart. Under the cash method, the key date is when payment is received. Because Stripe collects the money on your behalf, the date the customer pays is generally treated as the date you are paid, not the later payout date. A charge made on 30 September usually belongs in the September quarter even if the payout reaches your bank on 2 October. If large amounts sit around a quarter end, confirm the treatment with your accountant.
Other points for Stripe businesses:
- Instant payment means little difference. Most subscription sales are paid at checkout, so the invoice and the payment happen together. Cash and accrual give the same quarter.
- Annual plans paid upfront. If a customer pays for a year in advance, both methods report all the GST when the payment is received, because payment comes before or with the invoice. Spreading the revenue across the year in your profit and loss does not spread the GST.
- Invoices with payment terms. If you send invoices with 14 or 30 day terms, the methods diverge as shown above.
- Stripe fees. If Stripe’s tax invoice shows GST on your fees, you can claim it as a credit. Check how your Stripe account is billed.
- Refunds and disputes. These generally reduce the GST on your sales in the period they happen. They are adjustments, not changes to the original BAS.
How to change methods
If you are eligible to change, contact the ATO or ask your accountant to.
When moving from cash to non-cash, the change can only take effect on the first day of a tax period. In the first period after the switch you need to:
- report GST on sales you invoiced before the change but had not been paid for
- account for the rest of the GST on sales that had been partly accounted for
- claim any unclaimed GST credits for which you hold a tax invoice.
Moving from accrual to cash also needs care so amounts are not counted twice or missed. Check the current ATO guidance and talk to your accountant before switching.
Questions
Can my small business use cash accounting for GST?
Usually, yes. If your aggregated turnover is under A$10 million, you can choose either method. Some other entities, such as those using cash accounting for income tax, can also use it.
Does the accounting method change how much GST I pay?
Not over time, only which BAS period each amount falls in.
Which method is better for a Stripe-based SaaS?
If almost all sales are paid by card at checkout, both methods give similar results, and cash is often simpler. If you invoice on terms, compare the cash flow effect.
Can I change from cash to accrual later?
Yes, if you are eligible. Contact the ATO or your accountant. The change takes effect from the first day of a tax period, with catch-up amounts in that period.
How Foderis helps
Foderis supports both cash and accrual GST accounting, set once for your business. Stripe is connected directly, so each charge, fee, refund and payout is recorded with its date, and bank files import with AI-suggested categories. Your Simpler BAS figures for the period are ready to copy each quarter. Foderis is hosted in Sydney and costs A$9 a month, with a 30-day free trial.
This is general information, not tax advice. Your situation may differ: check with your accountant or the ATO.