GST Guide for Small Business
Goods & Services Tax (GST) is a broad-based tax of 10% that is placed on most goods & services sold in Australia.
The GST amount is represented as 1/11th of the sale price.
Although businesses account for the GST, it is designed to be paid by the end consumer of a commercial supply chain.
Registering for GST
Registering for GST is compulsory for businesses once annual turnover reaches $75,000.
The only exceptions are ‘non-for profits’ which have a threshold of $150,000 & ride-share services, like Taxi’s or Uber, that must register for GST regardless of their income.
If your business is operating below the threshold it may still be worth registering for GST voluntarily as businesses generally will prefer to engage the services of someone who is GST registered.
GST on Sales
When your business is registered for GST all your invoices will have an additional 10% GST added onto the total. This is known as GST collected and it is payable to the ATO at the end of the reporting period. It is very important to make sure that all your invoices clearly state the total amount of GST on them.
GST on Purchases
If you are making a purchase and the business you are purchasing from is registered for GST then there will be a GST amount on the tax invoice they provide. This amount is known as the GST Paid and it can be claimed back as a GST credit at the end of the reporting period. It is important that you carefully check all receipts before entering them into your accounting software, as some items will be GST-free.
Business Activity Statements
Once registered you will be responsible for collecting, calculating and passing on the right amount of GST to the ATO through a Business Activity Statement (BAS).
A BAS will include the total GST Collected from all your Sales, which is money Owed to the ATO. As well as the total GST Paid on all your Purchases, which is money you can claim back from the ATO.
The Difference will determine whether your BAS will have a Refundable or Payable amount.
Paying GST on a ‘Cash Basis’ is the most common method used by small businesses. This allows you to only account for the GST that you have paid or received. So if you still haven’t received a payment for an old invoice, you don’t have to pay the GST until the reporting period you receive the payment.
Most small businesses will elect to lodge their BAS Quarterly, however you may find lodging a monthly BAS helps you to better manage your cashflow, despite the added compliance requirement.
Always remember if your lodging a BAS yourself that the Due Dates are 28 Days after quarter end, except for December which gives you an extra month.
There are Penalties for failing to meet these deadlines so be sure to Lodge on Time!
Training, Support & Lodgement
We are Experts in GST and can help you with ll your GST concerns. We can Lodge your BAS if you require and can teach you all the necessary skills to have you coding your transactions GST with confidence. So be sure to give us a call if you have any questions!