This is one of those decisions that gets made once, usually by whoever set up the business, and then never revisited. It is worth revisiting, because for a business with slow paying customers it can make a material difference to cash flow.
The difference
On a cash basis, you account for GST when money actually moves. You pay GST on a sale when the customer pays you, and you claim the credit on a purchase when you pay the supplier.
On an accruals basis, you account for GST when the invoice is issued. You pay GST on a sale when you invoice it, whether or not you have been paid, and you claim credits when you receive the supplier's invoice.
Why this affects cash flow
Consider a business that invoices $110,000 including GST in the June quarter and has been paid for $60,000 of it by the due date.
On accruals, you remit GST on the full $110,000. You are paying $10,000 of GST, $4,545 of which relates to money you have not received.
On cash, you remit GST only on the $60,000 you were actually paid.
For a business with 60 day customers, or one that has just landed a large job, accruals can mean funding the ATO's GST out of working capital months before the customer pays. That is a real cost and it is invisible in the profit and loss.
Who can use cash
Broadly, businesses with an aggregated turnover under the relevant threshold, and certain entities regardless of turnover. Some entities are required to account on an accruals basis once they exceed the threshold. The eligibility rules have specific tests and it is worth confirming your position rather than assuming.
When accruals is actually better
It is not always cash. Accruals suits a business that pays its suppliers slowly and gets paid quickly, because you claim credits on supplier invoices before you have paid them.
A retail business that takes payment at the point of sale and buys stock on 30 day terms is generally better on accruals. A trades business invoicing commercial clients on 45 day terms is generally better on cash.
The question is which side of your working capital cycle is longer.
The other considerations
Consistency with income tax. Your GST method and your income tax accounting can differ, but it adds complexity to the reconciliation and to your reporting.
Bad debts. On accruals you have already remitted GST on an invoice that goes bad, and you claim an adjustment later. On cash you never remitted it in the first place. For a business with genuine bad debt exposure that is worth something.
Changing methods has transitional consequences and generally requires you to make adjustments so that nothing is counted twice or missed. It is not difficult, but it needs doing properly and it is not something to do casually mid year.
Your reporting. Cash basis GST reporting alongside accruals management accounts means your BAS and your profit and loss will not agree, and you need to understand why so you are not chasing a difference that is supposed to be there.
How to decide
Look at your average debtor days and your average creditor days. If customers pay you materially slower than you pay suppliers, cash is likely to suit you better. If the reverse, accruals.
Then check your eligibility, because preference does not override the rules.