Tutoring businesses play an important role in helping Australian students strengthen their understanding, improve their study skills and prepare for tests and exams.
As your tutoring business grows, you may need to consider whether you are required to register for goods and services tax (GST) and how GST applies to the services you provide.
In this article, we’ll walk through what the Australian Taxation Office (ATO) actually says about GST and tutoring, when tutoring services are and aren’t GST-free, when you need to register for GST, and answer some of the most common questions we hear from tutoring business owners.
Do Tutoring Businesses Need to Register for GST?
A tutoring business generally needs to register for GST if its GST turnover reaches $75,000 or more. This threshold applies to most businesses and enterprises in Australia.
GST turnover is generally based on the value of your business sales and may involve considering both your current and projected turnover.
For a tutoring business, income may come from services such as:
- One-on-one tutoring sessions
- Small-group classes
- After-school study programs
- School holiday revision programs
- Exam preparation courses
- Online tutoring
- Term-based tutoring packages
- Academic support programs
As student enrolments grow, it is important to monitor your turnover regularly rather than waiting until the end of the financial year.
If you are starting a new tutoring business and expect your GST turnover to reach the threshold during your first year, you may also need to register.
Can a Tutoring Business Register for GST Voluntarily?
Yes, if your GST turnover is below the registration threshold, you may choose to register voluntarily.
Potential advantages
- You can claim GST credits on business expenses such as materials, software, rent, equipment and marketing.
- It may support the impression of running an established, professional operation, particularly if invoicing schools or corporate clients.
Potential downsides
- You’ll need to charge GST on your fees, effectively increasing your price to families by 10% unless you absorb the cost yourself.
- You take on ongoing BAS lodgement obligations, adding to your admin and compliance workload.
When Tutoring Services Are GST-Free: The Exceptions
There are exceptions where tutoring can be GST-free. Outside of these, tutoring is generally taxable.
Exception 1: Special Education Courses for Students with Disabilities
Tutoring can be GST-free if it’s a special education course, a program specifically designed for children or students with disabilities, involving structured, targeted teaching.
Tutoring for conditions like dyslexia can qualify if it’s specifically designed for that purpose.
Exception 2: Students Located Overseas
Online tutoring provided to students located outside Australia is GST-free under the general export rules for services.
Exception 3: Contracting Directly With a School
If a school engages your tutoring business, for example, for remedial teaching, you charge the school a GST-inclusive fee, and the school can claim this back as an input tax credit. The school’s supply to the student is then GST-free.
However, if you contract directly with parents or students, even if the tutoring happens on school grounds, it’s still a taxable supply.
When Should a Tutoring Business Speak With an Accountant?
Professional advice may be helpful if your tutoring business is:
- Approaching the GST registration threshold
- Unsure whether a particular service is taxable or GST-free
- Expanding from one-on-one tutoring to group classes
- Starting to hire employees
- Opening more centres nationally or entering into franchise or joint venture arrangements with other business partners
- Exploring business structuring options for tax planning, succession and asset protection
At Chan & Naylor, we can help you review your business model, assess your GST obligations and establish appropriate systems for invoicing, record-keeping and BAS reporting.
Stay on Top of GST as Your Tutoring Business Grows
Most private tutoring is taxable, and GST-free treatment only applies in a few specific cases.
If you’re unsure where your business fits, or you’re approaching the $75,000 GST threshold, it’s worth getting proper advice rather than guessing.
Speak to Chan & Naylor so we can help you get your GST obligations right.
Frequently Asked Questions
Do private tutors need to charge GST?
If you’re registered or required to be registered for GST, yes. Private tutoring is generally a taxable supply, and GST applies to your fees.
Is online tutoring GST-free?
Not automatically. GST treatment generally does not depend on whether a service is delivered in person or online. It depends on whether it fits into one of the GST-free categories.
If you’re tutoring Australian-based students online and don’t fall under an exception, GST still applies, the same as it would for face-to-face lessons.
Do I need an ABN to tutor in Australia?
If you’re operating a tutoring business rather than working as an employee, you’ll generally need an Australian Business Number (ABN) to invoice clients and operate legitimately.
An ABN is separate from GST registration. You can hold an ABN without being registered for GST if your turnover is under $75,000.
About Chan & Naylor
Since 1990, Chan & Naylor has partnered with business owners and property investors in managing their taxes and building a tax-effective wealth. Choosing Chan & Naylor means you’re not just selecting a service provider; you’re gaining a partner aligned with your financial goals. You’ll have access to a dedicated client manager supported by a team of accountants that specialises in business and property tax.
Disclaimer
This article provides general information only and does not constitute tax or financial advice. GST treatment can depend on the specific facts of your business, how your services are structured, and your arrangements with schools or institutions.
Before making decisions about GST registration or invoicing, we recommend speaking with a registered tax agent or accountant who can assess your individual circumstances.
