A Simple Guide to GST in Australia

GST refers to goods and service tax, which is usually a 10% tax on most goods and services which are sold in Australia. If you have a business, you would need to understand how to register, account, and claim credits for GST. This is a simple guide on all you need to know about GST in Australia.

GST Registration

Every business with an annual turnover of at least $75,000 has to register for GST. The ATO requires businesses that get to this threshold to register.  In the event that you have not registered and in a given year, your turnover exceeds the threshold, you need to register for GST within 21 days. The good news is that you can now apply for GST online through the Australian Business Register website i.e. www.abr.gov.au. Alternatively, you can choose to use the Business Portal on the ATO site for GST registration. If you are not sure of the process, Accurate Business & Accounting Services is here to help you out.

What Does the GST Entail?

The GST is currently charged at a rate of 10% on goods and services. This means a customer has to pay an additional 10% for most goods and services. However, there are some products and services which are exempted from GST. The 10% tax collected by businesses needs to be paid to the ATO monthly or quarterly. If your business has paid for goods and services and has been charged GST, you can make claims to get credit for the specific period.

You will need to compute the total GST that you have charged your customers in a given period and then less the GST you have paid. The difference is the GST payable or refundable. Your business can only be eligible for the credit claims if it is registered for GST.

How to Report GST

Every business gets a business activity statement, which will report all tax claims and obligations for a given period. It is compulsory for businesses to report all GST charged on sales and what you have been charged for your purchases. There is a requirement by the ATO for business with a turnover that exceeds $20 million to complete the BAS monthly and lodged by the 21st day of the following month. For the other businesses, the business activity statement is lodged on a quarterly basis. The lodgment is required to happen on the 28th day of the following month at the end of a quarter.

GST Accounting

Every time you make a sale of more than $82.50, which is taxable, you should give the customer a tax invoice. If the customer has registered for GST, they will be able to make credit claim. If you do not have an invoice, you should make every effort to give the customer the invoice within 28 days from the time of the purchase. Invoices of more than $1,000 need to capture all the details of the seller and the buyer, including the total amount including GST. The general accounting for GST is done in two methods; accrual and cash basis.

For businesses with a turnover of less than $2 million, they can choose how to account for the GST. When using the cash basis, you should factor in all sales and purchases for the period in which the cash was paid. This method is preferred as it aligns with the cash flow and can be ideal for small businesses. For accrual, the invoices issued and received in a given period are the ones considered.

If you want to learn more about GST and the impact it has on your business, Accurate Business & Accounting Services is here to help you out. Contact us today!