Registering for GST is optional if your yearly GST turnover or gross income is below $75,000. It only becomes an obligation if you’re earning over that amount. For non-profit organizations, the yearly GST turnover amount limit before GST registration is $150,000. However, if you provide taxi travel services for a fare, you are required to be GST registered regardless of the amount of your income.
GST or goods and services tax is a 10% tax levied on the sale of most goods and services in Australia. Sellers, retailers, and service providers who are earning the threshold amounts of income are obligated to collect GST from their customers.
Business owners are given 21 days to register from the time they realize they would earn more than the set threshold $75,000. You will be required to collect GST once you are registered, regardless if your GST turnover for the year falls below the threshold.
Filling out forms and filing for the GST returns can be a hassle. It is time consuming and will require detailed reports. Your bookkeeper should be able to provide the necessary documents for filing.
Advantage of GST Registration
Despite the annual time-consuming (if you don’t have a bookkeeper) obligation of filing for the GST returns, there are good reasons to be registered.
First, your business records are kept updated and accurate because of the yearly filing.
Getting registered for GST is advantageous to businesses. When you are registered, you can claim tax input tax credits for the GST you paid on all your business purchases. See the effect of GST to your business in the illustration below;
Your gross income or GST turnover for the year is $100,000. You were able to collect $10,000 of taxes you will need to remit to ATO.
Your total expenses totaled to $55,000, including the $5,000 GST you paid.
During the GST filing, you will pay $5,000 to ATO. That is $10,000 GST you collected less the $5,000 GST you already paid with your expenses.
This brings down your expenses to $50,000, not the $55,000 you paid out. Supposing you are a non-profit organization and GST registration is optional, you just saved $5,000 just by being GST registered.
Collecting GST will not affect your selling price or your income. And in cases where your GST credits exceed your collection, ATO will give you a refund.
GST Concessions for Small Businesses
ATO offers GST concessions for small businesses earning less than $2 million annually.
– Cash basis accounting – Cash basis recognition of GST collected and GST paid.
– Installment payment of GST – GST can be paid quarterly based on ATO estimates, instead of annually.
– Full GST credits – Full GST credit can be claimed for purchases intended to be used in part privately. Adjustment to your income is required to account the percentage of private use.
Call us to discuss more about the GST, BAS, and tax requirements of your business. We are here to help make your bookkeeping, BAS lodging, and business taxation easy, done correctly and on time. We take away the time-consuming and complex part of running a business. So you have time for things that matter to you – like growing the business and spending time with your family.