If you’re starting a business, or have been in market for a while, you need to consider registering for Goods and Services Tax, otherwise known as GST.
What is the Goods and Services Tax?
Goods and Services Tax (GST) is a broad-based tax applied to most goods, services and items sold or consumed within Australia.
The current Australian Goods and Services Tax rate is 10%. This means when you charge $200 for a good or service, your customer will be charged $220. This additional $20 is classed as Goods and Services Tax and is paid to the Australian Taxation office (ATO).
When do I need to pay GST?
If your annual business turnover is above $75,000 you must register for GST. However, you have the option to do so if it is below that threshold. Once you have passed the threshold, you have 21 days to register.
Businesses with a turnover below the threshold are given the choice to register as, if a business is spending extensively on business supplies, they may want to claim those GST credits back. This is particularly applicable when GST credits on purchases exceed the GST charged to customers.
What are GST credits?
When purchasing supplies for your business, you will be charged 10% in Goods and Services Tax which you can claim as a credit. At the end of each period, which can fall either quarterly or monthly, you must account for all GST collected minus any credits from business purchases in that period.
This difference is the amount payable, or refundable in the circumstance that credits exceed debits collected from your customers. This is completed through your regular Business Activity Statement and paying the net GST to the ATO.
So, how do I account for GST in my business?
You need to account for GST within your regular Business Activity Statement (BAS). This statement is used to report all your tax obligations and entitlements within set periods. It will report all the GST charged, and all credits accumulated on your business purchases – alongside your Pay as You Go (PAYG) instalments and withholding tax. All tax invoices given to your paying customers, plus the collected GST must be included with your BAS.
BAS forms are generally due quarterly, but you can opt to lodge them monthly. If your business has an annual turnover greater than $20 million, you must complete it monthly. Business Activity Statements must be lodged within 21 days of the end of each month. If you lodge quarterly, the due date will be the 28th of February for the December quarter, 28th of April for the March quarter, 28th of July for the June quarter, and the 28th of October for the September quarter.
|January, February and March||April 28th|
|April, May and June||July 28th|
|July, August and September||October 28th|
|October, November and December||February 28th|
What about customers that want to claim GST credits?
When you make a taxable sale greater than $82.50 including GST, your registered customers must be provided a tax invoice, so they can claim those credits. If they request one, and you can not provide it at the time, you must provide it within 28 days from their request. Note: this rule includes ride-shares like Uber, and you can read more about that here.
Invoices need to provide specific information on the sale. For sales above $1000, they must display:
- That the document is a tax invoice;
- The seller’s identity;
- The sellers Australian Business Number (ABN);
- The date issued;
- A description of the items sold, including quantities and price;
- The GST amount charged, either separately or “total price includes GST”;
- The extent to which each sale on the invoice is a taxable sale.
Can Online Tax Return help me?
Of course! As Australia’s leading online tax return and tax accounting service, we have a team of experienced registered tax agents available to assist you. We are open year-round, so you can be sure of support lodging your BAS throughout the year, alongside the annual tax season.
Contact us today to get your Goods and Services Tax in order!
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice.