GST is a 10% tax on most goods and services designed to be paid for by the end consumer. As a business, you are obligated to register for GST once certain conditions are met. When registered for GST, businesses must collect GST on top of sales they make, except for the sale of GST-free items. This GST is then paid to the ATO.
When to register for GST
Most businesses will need to register for GST. However, for some it will be optional. You must register for GST when your business exceeds an annual GST turnover rate of $75,000 per year. For non-profits this threshold increases to $150,000 per year. Any business that involves providing a taxi service or ride-sharing service for passengers must be registered for GST from day 1 of business operations.
After hitting the annual threshold, you will have 21 days to register for GST. Once registered you will be required to collect GST, submit a BAS, and you will be able to declare GST tax credits.
How to calculate for the $75,000 threshold
Your GST turnover is essentially your gross business income excluding GST included in sales, any sales that are not for payment, input-taxed sale, and sales not connected to Australia. To calculate whether you are over the threshold you simply take away any of the exclusions from your gross business income.
To determine if you meet the threshold look at your current GST turnover and your projected GST turnover. If turnover for the current month plus either the previous 11 months, or future 11 months equals $75,000 you must register for GST.
What could happen if you don’t register for GST?
Your clients are encouraged by the ATO to find out whether you are registered for GST or not by doing a search on the ABN Lookup website (www.abr.business.gov.au) or by calling the Australian Taxation Office on 13 28 66. All they need is your ABN in order to conduct the search.
If you are not registered for GST, it means they will not be able to claim any GST credits for the products or services they get from you and they might prefer to take their business somewhere else.
Businesses who are not registered for GST are also unable to claim GST tax credits. Depending on your business, you could be financially worse off without GST tax credits. Talk to your accountant about your options.
Finally, if you are required to register for GST but have not, you may find the ATO chasing you. If caught having not registered by the correct date, you will be penalised by the ATO. These penalties could include being required to pay all owed GST, potential interest on your repayments and potential fines.
How to register for GST
Registering for GST is easy with GSTRegister.com.au. We are registered agents with the Tax Practitioners Board. This means we can help you with any GST or registration questions you may have regarding your business or obligations. Talk to our friendly staff for help with your registration.
GSTRegister.com.au also comes with a convenient registration form that you can complete in a matter of minutes. After you have filled the form, we will do the rest of the work for you, ensuring it has been completed correctly before lodging the application with the ATO. From there, you could receive notice of a successful registration within 1-2 business days. Register with GSTRegister.com.au today.