15-Aug-2020 By - Anna Eydlish
You must register for GST if: your business has a GST turnover of $75,000 or more. your non-profit organisation has a GST turnover of $150,000 or more. you provide taxi or limousine travel (including ride-sourcing services like Uber, GoCatch, Didi or OLA) regardless of your GST turnover.

So, what is the GST threshold? Small businesses in Australia who turn over less than $75,000 per year don't have to pay GST. If you're a registered not-for-profit, you also don't have to pay GST as long as your turnover is less than $150,000.

Entrepreneurs can register for GST/HST online through the Canada Revenue Agency's (CRA) business registration system, through the mail using Form RC1, or by calling 1-800-959-5525. Once registered, the owner will receive an individual GST/HST number to be included on all invoices.
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How Does GST Works for Businesses?

The general goods and services tax, abbreviated as GST, is currently set at 10% and applies to most items and services purchased or used in Australia. This implies that if your goods or services price is $100, the consumer will be charged $110 for them. The additional ten dollars represent the value-added tax (GST) that has to be paid to the ATO.

When a firm makes a sale of goods or services, they are required to collect and remit GST to the government. This obligation applies whether the company is selling goods or services. This requirement applies to the corporation even if it is just selling services and not products. The third step is to file a report with the Australian Taxation Office on the aforementioned income (ATO). When you make purchases of supplies for your company, you will be subject to a Goods and Services Tax (GST) of ten percent, which you will be required to pay. In the case that you overpay for this tax, on the other hand, you are eligible to receive a refund for the difference. At the conclusion of each GST period – which is normally quarterly but can occasionally be monthly – you are expected to account for the GST that you have received on your sales minus any that you have paid (the credits) on your purchases. This is done by subtracting the amount of GST you’ve paid on your purchases from the GST you’ve collected on your sales. To calculate this, you will need to deduct the total amount of GST that you paid out on your purchases from the total amount of GST that you got from your sales. The amount that must be paid is the difference (or refundable if credits on purchases exceed debits on sales). You can accomplish this by filling out a business activity statement and making a payment to the ATO for the nett GST amount.

There is an option for businesses with a revenue of less than $75,000 to register for the goods and services tax (GST). This is due to the fact that businesses that spend a significant amount of money on supplies may seek to recoup the GST credits they have spent. This is especially the case if the amount of GST credits on purchases is more than that of GST charged to customers.

Whether you are an individual attempting to make sense of current tax rules or a small family-owned firm, EWM Accountants can provide taxation services and work towards your success.

After that, the federal government transfers these monies to the states and territories, so that they may be used by those jurisdictions to pay for public services and infrastructure. Public hospitals and schools are two good examples of this type of establishment.

Because the money collected from the GST plays such an important part in the growth of our communities, it is crucial to determine whether or not you are needed to register for the GST. This may be done by looking up the relevant requirements on the GST website.

If any of the following describe you, you are required to fill out a registration form:

  • You run a business or venture that has a yearly revenue of more than $75,000
  • Managing a charitable organisation with an annual revenue of at least $150,000 is required.
  • If you drive for a taxi company or ride-sourcing company, you must register for GST even if your yearly revenue is less than the threshold.
  • If any of these conditions apply to your situation, you have 21 days to register for GST before it becomes mandatory. After that, you are eligible to receive a credit for the goods and services tax (GST) that you paid on any purchases made for the purpose of operating your business.

Importantly, in order to register, you will be required to have an Australian Business Number, sometimes known as a “ABN.”

GST Reporting

To submit all of your quarterly company tax requirements and entitlements, you will need to utilise something called a business activity statement, or BAS. On your BAS, you must disclose not only the pay-as-you-go (PAYG) instalments and the PAYG withholding tax but also the GST levied on your sales and the GST credits that you received on your business purchases.

Enterprises with a monthly turnover of more than $20 million are required to file a Business Activity Statement (BAS). Other businesses can also opt to do this if they want to (for instance, if there are cash flow advantages to your business). If not, the BAS forms have to be turned in every three months.

You have until the 28th day of the month after the end of each financial quarter to submit your BAS return for the previous quarter (September, December, March, June). You have until the 21st day after the end of each month to submit your BAS if you want to file your return on a monthly basis, which gives you plenty of time.

Accounting for GST

If you make a taxable sale of more than $82.50 (including GST), you are required to send a tax invoice to your GST-registered customers in order for them to be able to claim the GST credit. This tax invoice must be submitted electronically. This is due to the fact that they will not be able to claim the credit if they do not have the tax invoice. You have up to 28 days from the day that they made the request for you to provide the item to them, in the event that they want one and you do not supply it at the time of their request.

Customers are entitled to get specific information that must be presented on their invoices. When the amount being sold is $1,000 or more, the invoices need to include the following information in order to be valid:

  • the words “tax invoice,” the seller’s name and ABN, and the due date of the invoice,
  • the date that the invoice was issued,
  • the name of the purchaser and either their ABN or address,
  • a list of the products that are being sold,
  • both in terms of quantity and cost,
  • the GST amount, 
  • alternatively, a remark noting the total sum is inclusive of GST could be included.

Invoices for sums less than $1,000 are needed to include the aforementioned things, with the exception of the details of the buyer. However, if the amount is greater than $1,000, the details of the buyer must be included.

The cash basis and the accruals basis are the two approaches that can be taken when accounting for GST.

One of these two approaches is available to employ for businesses that have yearly sales of less than two million dollars. The utilisation of the accrual approach is required while dealing with certain different kinds of businesses.

If you use the cash basis of accounting, you have to record your sales and purchases in the same period that you get payment for your sales or make payments for your purchases. Therefore, GST reporting via this technique can be more matched with cash flow, which may be beneficial for smaller enterprises.

If you use the accruals basis of accounting, you need to record your sales and purchases during the same time period that you send out sales invoices and receive purchase invoices, respectively. This is because the accruals basis of accounting requires that you record transactions in the period in which they occurred.

Deductions for income tax and GST

If you are able to take a deduction on your taxes for anything that you have purchased for your business, the most that you are allowed to deduct is the purchase’s nett value (without the GST). This is done so that you do not receive tax relief on the same amount more than once, which is the purpose for this requirement.

If there is no GST credit for that purchase (for example, if it’s an item that is considered to be a “input taxable“), you are eligible to claim a deduction on your income tax return for the total gross amount (including the GST).

Consumers are unable to claim a credit for the Goods and Services Tax (GST) since the pricing of products that are ‘input taxed’ do not include a component that accounts for the GST. Input taxable items include, but are not limited to, rent paid on residential properties, financial transactions such as loans and ATM withdrawals, and sales of previously owned residential properties (with the exception of new residences and commercial structures).

When the Goods and Services Tax (GST) will be included in the price of your products or when it will not be included If you are registered for GST, the price of the goods and services you sell in Australia will normally include GST, unless the goods and services are exempt from GST or have been taxed on an input basis. If you are not registered for GST, the price of the goods and services you sell in Australia will not include GST.

Taxable Sales

Taxable sales must be:

For payment of some kind

A sale must be conducted in exchange for money in order for it to be considered taxable. This is typically monetary compensation, although it may also take the shape of various forms of payment, such as:

Made in the course of operating your business

You have to offer the product or service as part of your regular company operations for the transaction to be considered a taxable sale. This includes selling any and all business assets, such as motor cars, office plant and equipment, among other things. It also encompasses activities carried out during the process of establishing or shutting down your firm.

Connected with Australia

The Products and Services Tax (GST) is charged on all transactions that include Australia, regardless of whether the transaction involves the sale of goods, property, or something else.

Goods

If the items being sold are any of the following, then the sale of those things is associated with Australia:

  • delivered or made accessible in Australia to the purchaser removed from Australia brought to Australia – provided the seller either imports the products or instals or assembles the items in Australia. delivered or made available in Australia to the purchaser removed from Australia brought to Australia
  • Beginning on July 1, 2018, an Australian customer’s supply of low-value imported items will be subject to a new tax.

Despite the fact that the transaction is related with Australia, GST does not apply to the majority of exports of goods and services coming from Australia. Please refer to Exports and GST on Low Value Imported Goods for further details.

Property

If the property being sold is located in Australia, then the sale of that property is associated with Australia. Property is defined as the following items: land, land and structures, interests in land, rights over land, and a licence to occupy land for the purposes of the GST.

Things other than goods or property

There is a connection between Australia and the sale of something that is not goods or property if any of the following conditions are met:

  • the transaction takes place in Australia, 
  • the seller conducts their company in Australia, 
  • and the item being sold is either the right or the opportunity to buy anything that is associated with Australia.
  • The customer from Australia is the one who ends up buying the item.

When you make taxable sales, you are required to the following actions: 

  • include the GST in the price of your products and services; 
  • provide the customer with a tax invoice
  • pay the GST that you have collected, minus any credits that are owed to you; 
  • and submit your activity statement.

Remember that you are eligible to claim credits for the GST that was included in the price of items necessary for you to make taxable sales.

You may be required to account for GST on a transaction if you are registered for GST and are doing business with an overseas supplier or firm. On the ATO website, under “Reverse charging of GST on products acquired from overseas,” you may learn additional details about this topic.

Are you looking for someone to assist you with your ATO audit? There is no need to look any further since EMW Accountants and Business Advisors have got you covered.

GST-free sales

The majority of essential foods, as well as various educational programmes and items and services related to medicine, health, and care, are excluded from GST.

You can still claim credits for the GST that is included in the price of purchases that you use to produce GST-free sales, even though the GST is not factored into the price of GST-free sales.

Principal exempted categories of goods and services from GST

The majority of essential foods, as well as various educational programmes and items and services related to medicine, health, and care, are excluded from GST.

Among the things that are exempt from the GST is the most fundamental food.

  • some educational classes, materials for those classes, and outings or field trips relevant to such classes
  • several services related to medicine, health, and care for patients
  • goods for women who are menstruating (from 1 January 2019)
  • a selection of medical instruments and utensils
  • certain drugs
  • some daycare services
  • Acts of worship and volunteer work for nonprofit organisations
  • accommodations and meals provided to members in retirement communities by a select group of business owners and managers.
  • automobiles for the use of individuals with disabilities provided that certain standards are satisfied
  • water, sewage and drainage
  • concerns pertaining to international transportation and associated topics
  • sales of precious metals conducted within duty-free stores
  • lands given away by the government in the form of grants
  • international mail exports sales of firms as going concerns some telecoms supplies qualified emissions units.

Input taxed sales

The most prevalent types of sales subject to an input tax are financial supplies (activities such as lending money or providing credit in exchange for a charge) and the sale or rental of existing residential properties.

Sales of products and services that do not include GST in the total price are referred to as input-taxed sales. You are not permitted to claim GST credits for the amount of GST that is already included into the cost of your “inputs.”

The most prevalent sales types subject to an input tax are financial supplies (activities such as lending money or providing credit in exchange for a charge) and the sale or rental of residential property.

Do you need to register for GST?

The Products and Services Tax (GST) is a tax that is applied to the majority of the goods, services, and other commodities that are sold or consumed in Australia. If any of the following apply to your situation:

  • The amount of GST that your company or organisation has turned over is $75,000.
  • Regardless of the total amount of GST you collect from customers, if you operate a taxi or limousine service, you provide passenger transportation in return for a price.
  • You wish to file a claim for gasoline tax credits on behalf of your company or organisation.

If you do not fall into any of these categories, then it is up to you to decide whether or not to register for GST. If you do choose to register, however, you are often required to maintain your registration for a minimum of one year.

International businesses selling to Australian consumers

If you are a foreign company selling services or digital items to customers in Australia and your annual revenue is more than $75,000, you must register for the Goods and Services Tax.

Suppose you are a merchant that sells imported services or digital items or an operator of an electronic distribution network that facilitates these sales. In that case, you should seriously consider registering for the Goods and Services Tax (GST).

Some examples of digital products and services include movies that may be streamed or downloaded, applications, video games, electronic publications, and professional services such as architectural or legal consulting.

  • Beginning on July 1, 2018, if you are an international company that has a turnover in Australia of more than $75,000 and sells low-value imported items to Australian customers, you will be required to register for the Goods and Services Tax (GST). This will have an effect on things with a value of one thousand Australian dollars or less, including apparel, cosmetics, books, and electrical equipment.

How Do I Pay GST?

Register for GST

The Goods and Services Tax (GST) registration requirement applies to you if you meet at least one of the requirements listed above. You will require an Australian Business Number in order to register for the Goods and Services Tax (GST) (ABN). If you already have an ABN, you may register for GST in one of three ways: 

  • through the ATO’s Business Portal
  • by phoning the Australian Taxation Office (ATO) at 13 28 66; 
  • or by working with a tax or Business Activity Statement (BAS) agent who is registered with the government.

However, even if you have registered your company for the Goods and Services Tax (GST), you are not required to pay GST on all of the products and services that you offer to members of the general public.

Work Out Whether Your Sales Are Taxable

You are obligated to pay GST on any products and services you offer unless such goods and services are exempt from GST or have already been subject to GST. You can pass the Goods and Services Tax (GST) expense on to your customers by including a standard GST rate of 10 percent in the price that you charge for your goods and services.

GST-Free Goods and Services

Some items and services are exempt from the Goods and Services Tax (GST), including the majority of meals considered to be necessities, some educational programmes, medical products and services, and health and care products and services.

When you offer these kinds of items or services to your customers, you are not permitted to charge them GST as a result of this. However, you can make a claim for a refund of the GST that you paid on input materials that you purchased if you do this at the same time you register your Business Activity Statement with the ATO.

Input-Taxed Goods and Services

In a similar vein, you are not permitted to charge the GST to your customers for any products or services that have already been subject to the GST. This is because goods and services are considered to be input-taxed when their pricing does not include the Goods and Services Tax (GST).

These include the provision of financial services, such as the lending and borrowing of monetary resources and the purchase and leasing of residential properties.

You are unable to make a claim for a refund of the GST that you paid on the purchase of your input materials, in contrast to the situation with GST-free products and services.

Should I Charge GST to My Customers Overseas?

Products that are exported do not often incur the GST. Again, this indicates that you are exempt from the requirement to collect GST from your clients; but you are still eligible to submit a claim for a refund of the GST that you paid on any input materials that you purchased. In spite of this, there are situations in which you will still be required to pay the GST.

Lodging Business Activity Statements (BAS) With the ATO

The Business Activity Statement (BAS) is a document that, depending on the size of your company, must be submitted anywhere from one to twelve times per year. The ATO will determine your GST refund or bill based on the information provided on your BAS. In addition to that, it is utilised for employee income tax, fringe benefits tax, luxury automobile tax, wine equalisation tax, and gasoline tax credits (if you are in the pay-as-you-go system).

You are required to prepare a Business Activity Statement and submit it to the ATO at the conclusion of each fiscal quarter of your company’s operations. In addition, you are required to declare the amount of GST that you have collected from your customers in your BAS, and you are also responsible for paying the corresponding amount to the ATO.

There are four different methods that you can submit your BAS.

Check out the variety of Business Planning Services we offer so that you may work towards your company’s success.

Lodge online

You could be eligible for a discount if you file your quarterly BAS electronically, which would give you an additional two weeks to file and pay the return.

Each of the following online choices will guide you through the procedure step by step as you make your way through it:

  • MyGov is an online programme that allows individuals and sole traders to manage their tax and superannuation obligations in a centralised location.
  • Business Portal is a protected website provided by the ATO that allows you to handle the online tax affairs of your company. After the 27th of March, 2020, you will be required to use myGovID in order to access the Business Portal. It won’t be possible for you to use AUSkey or manage ABN connections beyond this point (your myGov login when your account is linked to an ABN).
  • SBR-enabled enables safe online lodgement to be conducted straight from banking, accounting, or payroll software. This type of software is frequently connected with business software geared towards a particular industry’s needs. Examine the many options that are accessible.

Lodge through your tax or BAS agent

If you have a registered tax or BAS agent, that individual will be able to file, modify, and pay your tax return on your behalf via the electronic channel of their choosing.

You may still access your activity statement through the Business Portal or myGov even if your agent handles them on your behalf, which is one of the benefits of using an agent. In addition, agents are able to read activity statements that are sent to your myGov Inbox.

Nothing to report (‘nil’ BAS)

This service is only available to you if you have nothing to report for the time in question and need to submit your BAS using the ‘nil’ response option.

  • You have a several options for submitting your ‘nil’ BAS: online, by phone at 13 72 26, or both.
  • You are free to call at any moment to use this automated service (24 hours a day, seven days a week)
    • You will need to ensure that you have the document identification number (DIN) for your activity statement.

Lodge by mail

Send in your original, filled-out BAS using the envelope given to you, which has already been addressed.

Guest post by : Anna Eydlish Form -

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