The goods and services tax, known as GST, is a broad-based tax charging 10% on goods and services sold in Australia. This tax affects businesses regarding their revenue.
As a businessman, it is your responsibility to get your business registered for GST in three situations.
- Your business’ income is $75,000 or more. It is advised by the Australian Tax Office that it should be done even if you have set up a new business but are expecting its turnover to be $75,000.
- Secondly, if you’re running a non-profit earning company and you ’re earning gross income of $150,000 or over per year.
- Thirdly, when you are providing taxi services for passengers for which the fares are a part of your earning regardless of your GST revenue. This rule applies to the taxi drivers, owners and people using the taxi.
How to Register
Australian Business Number is required to get yourself registered for GST. In case there is no ABN then use the online form that was used for applying for registrations.
Alternatively, AGILIS CA can help setup your business and also ensure you have the correct structure in place for the most effective tax benefits.
There are certain benefits for registering for GST for example once registered for GST; you may demand tax credits for the GST on products purchased for business requirements. In case of not being registered, you can’t demand the tax credits. GST credits are a certain amount that you may demand from ATO through your business.
If you have GST registration, your bill should follow the guidelines set by the tax authority. As, as per the Australian taxation office you are required to include certain information on your invoices. Tax invoices help you claim your full tax rights, which is why these need to be documented and recorded appropriately. Maintaining timely financial records might sound hectic to you. However, that will surely assist you in the efficient management of your business.
If your GST gross income is less than $75,000 and you aren’t registered for GST, there would be no GST charges in your prices, and hence you won’t be eligible to demand GST credits.
Once you have registered, you will have to collect additional money, one-eleventh of the sale price, from your customers and pay it to the Australian Taxation Office (ATO) when it’s due.
Another advantage of registration for GST is that you would be legally recognised as a supplier of goods or services. As certain businesses prefer to get supplies from a registered supplier to get their tax credits you can get benefit from this.
However, consider the circumstances of your business before automatically going for registration as sometimes it is optional and you can benefit from lower selling prices as compared to your GST registered industry competitors.
Not sure what is right for you? Feel free to give our experts at AGILIS CA & Advisors a call on 07 3510 1500 and we can assist in ensuring you get the right structure setup that best suits your needs and your future growth.