Beginners Guide to GST in Australia

Updated on July 19, 2022

Does my business need to register for GST?

If your annual revenue exceeds $75,000, you’ll have to file for GST registration. If the fee is less than that, you have the option of registering or not.

If your business has a revenue of $75,000 or more, you must apply for GST registration. You have 21 days from the time you pass the turnover criterion to register.

Taxi and ride-sharing drivers must register for and collect GST regardless of their total sales volume. Non-profit organizations, on the other hand, are not needed to register until they have a turnover of $150,000.

The Australian Business Register (ABR) website allows you to apply for an ABN and register for GST online (www.abr.gov.au). It is possible to register for GST using the ATO’s Business Portal or H&R Block.

When you register for GST and an ABN, you can also apply for PAYG withholding, acquire a business tax filing number (TFN), and register your business name with the Australian Business Registry.

How does the GST work?

The current GST rate is 10%. As a result, if you sell something for $100, your consumer will pay $110 for it. It costs an additional $10 to pay the Australian Taxation Office (ATO) for GST.

Ten percent of the GST you pay on business supplies can be reclaimed as a credit.

Once a quarter, you must account for all of the GST you’ve collected on your sales less all of the GST you’ve paid on your purchases (the credits). The difference between the two sums is what is owed (or refundable if credits on purchases exceed debits on sales).

A business activity statement and net GST payment to the ATO are required for this.

It is up to the firm to decide whether or not to register for GST because they may want to claim back some of the money they spend on goods and services. This is especially true if the GST credits on purchases are more than the GST that customers have to pay out of pocket.

GST reporting

Tax obligations and entitlements can be reported on your business activity statement (BAS).

In addition to your pay as you go (PAYG) payments and PAYG withholding tax, you must declare all GST levied on your sales and credits on your business purchases on your BAS.

On a monthly basis, firms with a turnover of more than $20 million are required to submit a BAS, although other enterprises can do so if they prefer (for instance, if there are cash flow advantages to your business).

Otherwise, BAS forms are required on a quarter-to-quarter basis.

To file your BAS, you must do it no later than 28 days after each quarter’s end (September, December, March, June).

A monthly BAS must be filed within 21 days of the end of the month in which it is due.

Accounting for GST

You must provide a tax invoice for any taxable sale over $82.50 to your GST-registered customers in order for them to claim the GST credit (including GST). 28 days from the time they ask for one, if you don’t give it to them immediately.

Invoices must have specific information.

For purchases over $1,000, invoices must include the following information:

Among the elements of a tax invoice are the seller’s ABN and date of invoice, the buyer’s name and ABN or address, the description of the products sold, their number and price, and whether or not the total amount includes GST.
Invoices for less than $1,000 do not need to include the buyer’s information.

A cash basis or an accruals basis can be used to account for GST.

The preferred mode of payment is up to the discretion of businesses with a revenue under $2 million. Accruals-based accounting is mandated for all other businesses.

The time in which you receive payment for sales or purchases is the period in which you must account for them on a cash basis. Small businesses may benefit from GST reporting since it is more closely linked to their cash flow.

Using the accruals basis, you must record sales and purchases in the period in which you receive an invoice for sales or a purchase invoice, respectively.

GST and income tax deductions

If you bought something for your business and can deduct it from your income, you can only deduct the net amount (without the GST).

It’s a way to keep you from collecting tax-free money twice.

You can deduct the gross amount of the purchase if there is no GST credit available (for example, if it is a ‘input taxed’ item) (including the GST).

It is not possible to claim a GST credit on ‘input taxed’ items because they do not include a GST component in the pricing.

Financial activities, such as loans, ATM transactions, and sales of existing residential properties (excluding new residences or commercial buildings) are examples of input taxed goods.

Contact our Tax & Business Services team today on 13 40 42 or by email at [email protected] for more information about GST and how it affects your business.

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