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 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 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.
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 you 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 refund or an amount to pay.
It is very important to make sure that all invoices clearly state the total amount of GST on them. It is also important that you carefully check the receipts of your purchases when recording them, as some items will be GST-free.
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.
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.
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!
We are experts in GST and can help you with ll your GST concerns so be sure to give us a call if you have any questions!