GST is a 10% tax paid on most goods and services sold or consumed in Australia. You must register for GST if you:
GST will need to be added to the goods and services you sell in Australia, unless they are GST free. Products and services exempt from GST can include most basic foods, some education courses, some medical, health & care products, some childcare services, water and sale of businesses as going concerns. Input-taxed sales don't include GST. These are usually financial supplies and selling or renting out residential premises.
Sales of business assets such as equipment or motor vehicles are usually subject to GST. This also applies to business assets you may trade in.
You pay the GST collected on the taxable sales you make when you lodge your Business Activity Statement (BAS).
You can claim GST credits in your BAS if the following conditions apply:
When claiming GST credits, make sure your suppliers are registered for GST. You can check the GST registration status of an entity by searching the ABN Lookup website.
Input-taxed purchases don't include GST. These include bank fees, loan interest and residential accommodation. If you purchase goods or services for both business and private use, you can only claim a GST credit for the part of the purchase relating to your business use.
As a GST-registered business, you charge and collect GST. If the GST you collect is more than the GST credits you are claiming, you pay the difference to the ATO with your BAS. Most businesses do this every three months.
It's important to put aside the GST you collect so you can meet your obligations when they fall due.
Many banks offer low or no-fee accounts where you can put aside the GST you have collected.
If you aren't registered for GST, check each month to see whether you've reached the registration turnover threshold of $75,000, or are likely to reach it. If you do, you need to register for GST within 21 days.
You can elect to report and pay GST annually. You can only use this method if you are voluntarily registered for GST. That is, you are registered for GST and your turnover is under $75,000 (or $150,000 for not-for-profit bodies).
If you are eligible and have elected to report and pay GST annually, you do not need to report or pay any GST during the year. At the end of the financial year, you must report and pay any amount due.
Keeping good records helps you stay on top of your business and meet GST obligations.
Make sure you keep records of all sales, fees, expenses, wages and other business costs. Logbooks and diaries should also be kept to substantiate motor vehicle and telephone expense claims. Keep all your tax invoices and other GST records for five years.
Need assistance with registering or reporting GST? Contact our office today.