According to ATO Goods and services tax (GST) is a broad-based tax of 10% on most goods, services and other items sold or consumed in Australia.
Is it compulsory for all businesses to register for GST?
Not all businesses need to register for GST. Businesses with annual turnover of $75,000 or more must register for GST. It is their choice if the annual turnover is less than $75,000.
Does my business need to register for GST?
Your business will need to register for GST if your annual turnover is $75,000 or more. You have a choice to register or not if it’s less than that.
If you’re a taxi driver or ride sharing driver and you’re not employed by someone else, you must: register for GST – regardless of how much you earn. As fares paid to taxi drivers or ride sharing driver by passengers include goods and services tax (GST), they need to lodge business activity statement (BAS) quarterly.
How Do I Register for GST?
You can register for GST online (and also apply for an ABN) via the Australian Business Register (ABR) website (www.abr.gov.au). You can also register for GST via the Business Portal on the ATO website. If you are unsure about the process you can also do it via registered tax agent or accountant.
The ABR is the central registry of Australian business information so as well as getting an ABN and registering for GST you can get a business tax file number (TFN), apply for pay-as-you-go (PAYG) withholding and register your business name.
How much GST do I need to pay?
• The current rate of GST is 10%. For example, if the price of goods and services is $10 (Ex. GST) the final price that customer pay will be $11. The difference of $1 is the GST and it needs to be paid to ATO.
• When you buy supplies for your business, you’ll be charged 10% in GST which you can claim back as a credit. At the end of each GST period – usually quarterly but occasionally monthly – you need to account for the GST you’ve collected on your sales minus any that you’ve paid (the credits) on your purchases. The difference is the amount payable (or refundable if credits on purchases exceed debits on sales). You do this by completing a business activity statement and paying the net GST to the ATO.
It is worth to mention that if a business is paying more GST on their supplies than their actual collection of GST on sales it is better to register for GST to claim GST credits back.
How to Report GST
Lodging Business Activity Statement (BAS) is the process to report tax paid on supplies and tax received on sales of goods and service periodically. All the business who are registered for GST are required to report all the GST charged on sale of goods and services and also the credits on the purchase of business supplies on their BAS and also their Pay As You Go (PAYG) installments and PAYG withholding tax. If a Business has a turnover greater than $20 million they must complete a BAS on a monthly basis.
Is it compulsory to provide tax invoice to the customer with GST?
When you make a taxable sale of more than $82.50 (including GST), your GST registered customers must be given a tax invoice in order for them to be able to claim the GST credit. If they request one and you don’t provide it at the time, you have 28 days from their request to give it to them.
What information does Tax Invoice need to have?
All the invoices need to display specific information. For sales of $1,000 or more, it must display:
• the words ‘tax invoice’
• the seller’s name and ABN
• date of the invoice
• buyer name and ABN or address
• a description of the items sold, the quantity and the price
• the GST amount or that the total amount includes GST.
Invoices for less than $1,000 need to have all the above but not the buyer’s details.
Contact our Tax Agent, Accurate Business and Accounting Services, for more information about GST and discuss the way to correctly using the GST reporting, accounting according to ATO terms and conditions.