Goods and Services Tax (GST) is a broad-based tax of 10% on most goods, services, and other items sold or consumed in Australia. As a business owner, it is crucial that you understand your GST obligations to ensure compliance and avoid penalties.

Registering for GST

Businesses must register for GST if:

• Their annual turnover is $75,000 or more.
• They provide taxi or ride-sourcing services (regardless of turnover).
• They want to claim fuel tax credits.

This can be done either:

• Online through the Australian Business Register (ABR) website;
• Via a registered tax agent (like us!) or;
• By contacting the Australian Taxation Office (ATO) directly.

Businesses with a turnover below the threshold can voluntarily register for GST. This allows them to claim GST credits for business purchases, which can be beneficial even for smaller businesses.

Charging and Collecting GST

When registered for GST, you need to issue tax invoices for sales of $82.50 (including GST) or more.

Tax invoices must include:

• Your business name and ABN.
• The date of the invoice.
• A description of the items sold.
• The GST amount payable.
• If the invoice totals $1,000 or more, the buyer’s details must also be included.

GST-Free Sales

Some goods and services are GST-free, meaning you don't charge GST on them, but you can still claim credits for the GST included in the price of purchases related to these sales. Examples include basic food items, medical services, and exports.

Claiming GST Credits

You can claim GST credits for the GST included in the price of goods and services you buy for your business if:

• You are registered for GST.
• The purchase is for business purposes.
• You have a valid tax invoice for purchases over $82.50.

GST credits can be claimed in the tax period when you pay for the goods or services or when you receive the invoice, depending upon whether you are registered for GST on a cash basis or an accrual basis.

Reporting and Paying GST

GST-registered businesses need to report their GST obligations through a Business Activity Statement (BAS). Items that need to be included on the BAS include:

• GST collected on sales.
• GST paid on purchases (input tax credits).
• Other taxes and obligations include PAYG withholding, PAYG instalments, and fuel tax credits.

How often you need to lodge a BAS will depend upon the turnover of the business. If the business's GST turnover is over $20 million, then the business will need to lodge a BAS every month. If the turnover is less than $20 million, then you can lodge quarterly.

For businesses under the threshold ($75,000 or $150,000 for not-for-profits) and have registered for GST voluntarily, you have the option to lodge either quarterly or annually.

The due dates for lodging your BAS and paying GST are:

• Monthly: 21 days after the end of the month.
• Quarterly: 28 days after the end of the quarter (or 28 February for the December quarter).
• Annually: 31 October following the end of the financial year.

Dealing with GST on Imports and Exports

When importing goods into Australia, you generally need to pay GST on the value of the goods plus any customs duty, transport, and insurance costs. You can claim a GST credit for the GST paid on imports if the goods are for business use.

Exports of goods and services are generally GST-free, so you do not charge GST on these amounts. However, you can still claim GST credits for purchases related to these exports.

Adjustments and Corrections

You may need to make adjustments to your BAS for various reasons, such as returning goods, receiving a discount, or changing the use of an item from business to private.

If you’ve made an error on a previous BAS, you can correct it on a later BAS subject to it being below certain limits. For significant errors, you may need to revise the original BAS.

Understanding and complying with GST requirements is essential for your business's smooth operation. Regularly reviewing your GST practices, maintaining accurate records, and seeking professional advice when needed can help you manage your GST obligations effectively.

If you have any questions or need assistance with your GST reporting, please contact us below.