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When You Should Charge GST (And When You Shouldn’t)

For most businesses based or operating in Australia they will have to charge GST. However, some businesses may sell goods or services that are exempt from GST. Some non-profit organisations may also be entitled to concessions on some transactions with GST.

Will I need to register for GST if my goods or services are exempt?

If you have a turnover of $75,000 you will have to register for GST even if you only sell GST exempt goods or services. You will also have to lodge a BAS at the required dates. But there are some benefits for being registered for GST!

When registered for GST you will be able to claim GST credits, allowing you to claim back some of what you spent on starting costs.

What goods and services are GST exempt?

There are a few products or services that are GST-free. These generally include basic foods, certain education courses, and medical or healthcare products. According to the ATO the following goods or services are exempt from GST:

  • basic foods
  • certain education courses, course materials and excursions or field trips that are related
  • some medical, health and care services
  • some menstrual products (from 1 January 2019)
  • some medical aids and appliances
  • certain medicines
  • certain childcare services
  • some religious services and charitable activities
  • supplies of accommodation and meals to residents of retirement villages by some operators
  • cars for disabled people to use, as long as requirements are met
  • water, sewerage and drainage
  • international transport and related matters
  • precious metals
  • sales through duty-free shops
  • grants of land by government
  • farmland
  • international mail
  • exports
  • sales of businesses as going concerns
  • some telecommunications supplies
  • eligible emissions units.

If your business sells any of these products or services, you do not need to add GST to the cost of these items. However, you still must submit a BAS if you are registered for GST.

What about exports?

Exports from Australia to another country are GST-free. If you are exporting goods you will have to meet one of the following requirements for them to be GST-free within 60 days:

  • The supplier of the goods received a payment for the goods.
  • Or, the supplier issued an invoice for the goods.

If these conditions are met, the exported item will be GST-free. If the goods are paid in instalments the payment or invoice will need to be for the final instalment. In some cases, it may be difficult to meet the 60 day deadline. For these cases you may be able to get an extension by applying for an extension with the ATO.

If your export is a service, various rights or other professional services you generally will not have to charge GST. However, the recipient of the service must be outside of Australia.

When Should I charge GST?

If you are registered for GST and you sell products that are not GST exempt then you must charge GST. However, you only need to charge GST on non-exempt products.

If you are not registered for GST, as you are under the $75,000 threshold, you do not have to charge GST. It is up to you whether you do or not. However, if you do backdate your registration to when you did not charge GST you will have to pay the ATO the amount you would have collected in GST at the time as if you did charge GST.

Conclusion

If you need further assistance understanding what products or services are GST exempt, have a chat with GST Register. We are registered tax agents and are happy to answer any questions you may have. Give us a call today.