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Goods and services tax (commonly referred to as GST) is a value-added tax adding on most goods and services sales in Australia. It is currently 10% on top of the final value. It is levied on transactions mostly in the production process. However, the tax can be refunded to parties other than the final consumer. This article will explain:

  • what GST is; 
  • when to register for GST; and 
  • how to register for it. 

What Is GST?

GST stands for Goods and Services Tax. In Australia, GST is currently 10% of the final value of goods and services. Businesses generally add GST to almost all products in Australia. It applies to a range of products, whether it be a physical good like clothing, furniture or tech devices, or services such as airline or transport services, wedding photography, or even legal representation.

When to Register for GST

There are a few thresholds in place governing when it is mandatory to register for GST in Australia. These include:

  • business with an annual turnover of $75,000 per annum;
  • non-profit organisations with an annual turnover of $150,000 or over per annum;  
  • if you provide taxi or limousine services to customers regardless of your turnover; or
  • if your business wishes to claim fuel tax credits regardless of your annual turnover.  

It is optional for businesses below the $75,000 threshold to register for GST.

Businesses and GST

When you register for GST, you need to pay GST on all sales to the Australian Taxation Office (ATO). You should generally include GST in your sales price and set this out in a tax invoice to your customers. When you register, you can also claim GST credits on purchases made in carrying out your business activities.

Additionally, businesses that collect GST can gain credit for any GST it has paid for in their expenditures on goods and services. Businesses can redeem this amount through a Business Activity Statement (BAS). You can lodge your BAS monthly, quarterly or annually. Likewise, businesses must lodge their BAS with the Australian Tax Office within twenty working days of the end of each quarter.

For Example

Michael runs a paper company, and the company has just purchased a new copier for the office. The copier cost Michael $5,500, including GST. Therefore, the GST paid on the copier is $500. Michael is registered for GST because the paper company’s turnover is over $75,000. As a result, Michael can claim $500 in GST credits for the GST included in the purchase price of the copier.

At the end of the financial year, he can claim a $500 credit on the GST they owe to the ATO. If the company’s credits are higher than the amount of GST they have to pay, Michael will get a refund.

If your business has registered for GST, any invoice you issue must be a tax invoice (not just an invoice). Tax invoices are different from regular invoices. They include the GST amount for each item and some extra details.

If your business’ GST turnover is under $75,000 annually and you do not register for GST, you cannot claim GST credits for your business purchases. Therefore, if you plan to claim GST credits for your business, it is essential to register for GST even if your turnover is under $75,000.

How to Register for GST

Individuals or businesses can register for GST so long as they have an Australian Business Number (ABN). Registration can occur online via the ATO Business Portal, by phone or through a registered tax agent or BAS agent. Registration can also be done by mail (ABN registration for sole traders or BN registration for companies, partnerships, trust and other organisations)

If you meet the threshold requirements, the ATO will notify you of your application by mail. Successful applicants will receive GST registration details, including the date of registration.

Calculating GST Turnover

Your business’ GST turnover is its gross business income. The gross business income excludes:

  • any GST you included in sales to your customers;
  • sales that are not for payment and are not taxable;
  • sales not connected with an enterprise you run;
  • input-taxed sales you make; and 
  • sales not connected with Australia.

For example: 

Jim runs a sports management business with an annual gross turnover of $100,000. After expenses, Jim’s business makes just over $50,000. Jim still has to register for GST as his gross earnings are over the $75,000 threshold.

Tourist Refund Scheme

If a good is over $300, it is eligible for a refund. This is paid upon exiting the country with refunds claimed at a Tourist Refund Scheme (TRS) counter at an exit point, such as an airport. It is permissible to buy goods 60 days before departure and use it freely as long as it is shown to customs officials before being checked in as baggage.

Key Takeaways

As an Australian business owner, be aware of the threshold requirements governing when it is mandatory to register for GST. Situations where you must register for GST include:

  • business with an annual turnover of $75,000 per annum;
  • non-profit organisations with an annual turnover of $150,000 or over per annum;  
  • if you provide taxi or limousine services to customers regardless of your turnover; or
  • if your business wishes to claim fuel tax credits regardless of your annual turnover.  

For more information about GST and your taxation obligations, contact LegalVision’s taxation lawyers on 1300 544 755 or fill out the form on this page. 

Frequently Asked Questions

What is GST?

The Goods and Services Tax, or GST, is a value-added tax added to most goods and services in Australia. It is currently 10% on top of the final value.

How do I register for GST?

Individuals or businesses need an ABN to register for GST. Once you obtain your ABN, you can register online through the ATO Business Portal, by phone or through a registered tax agent or BAS agent.

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