Goods and services tax, or simply GST, is a broad-based tax of 10 % on most goods, services, and other items sold or consumed in Australia.
Like in many countries, registered businesses are required to include GST in the price of most goods and services sold to customers; and, claim credits for the GST included in the price of your own business purchases.
For example:
Jack’s business is timber production. He sells timber worth $110 to a furniture manufacturer. He keeps $100 and pays $10 GST to the ATO.
NOTE: There are some exemptions for certain industries such as food and healthcare. Here are more details on these exemptions.
When to register
Your business must be registered for GST if:
- Business turnover meets or exceeds $75,000 per year, or $150,000 or more for not-for-profit organisations
- Your business provides taxi or limousine travel for passengers
- Claiming tax fuel credits for your business or enterprise
If your business does not meet any of these, you have an option to register for GST.
How to register
You need to have an Australian Business Number (ABN) before your GST registration. Once you have an ABN, you can register your business via:
- Online
- Phone
- Registered tax or BAS agent
The ATO will notify you in writing once you have successfully registered your business for GST. This will include:
- Your GST registration details
- Effectivity date of your registration
- Your ABN details (if you haven’t received them yet)
You will now be required to collect an additional 10% on goods and/or services you sell to customers, and claim credits for the GST included on your own business purchases. You are also required to issue a tax invoice to your customers.
When and how to pay to the ATO
Your reporting and payment cycle depends on your circumstances such as your GST turnover or if you prefer a different cycle.
The reporting and payment cycle will be:
- Monthly, if turnover meets or exceeds $20 million
- Quarterly, if turnover is lower than $20 million
- Annually, if you voluntarily registered for GST
You can pay GST to the ATO through:
- Credit card
- Direct/overseas transfer
- In person at Australia Post
- Registered tax or BAS agent, accountant or bookkeeper
When paying, you need to use your Payment Reference Number (PRN) to make sure your payment goes to the right account.
Essential GST and BAS record keeping tips
Good record keeping of your GST and Business Activity Statements (BAS) information helps you keep the business on track.
When preparing and lodging these, remember to:
- Keep all tax invoices and other GST records for five years
- Secure tax invoices for business purchases over $82.50
- Enter the right information when completing your BAS – fill in the amounts on your activity statement as whole dollars, leave out cents, and don’t round up to the nearest dollar
- Make a separate bank account for GST you receive
- Keep records of sales, fees, expenses, wages, and other business costs
It is a good practice to lodge on time to avoid penalties. ATO’s online service helps you check errors when lodging your BAS.
Message our team today at bbsi.admin@beale.net.au if you need assistance with your GST or any of your accounting and bookkeeping tasks. You may also send a message through our Contact Us page.
This article is provided as general information only and does not consider your specific situation, objectives or needs. It does not represent accounting advice upon which any person may act.
