GST is a tax, currently at 10%, which is charges in Australia on most goods, services and consumables. All consumers in Australia pay GST on most of their purchases. However there are exemptions to GST on some products. This makes the GST system very complex and confusing.
Registered entities generally charge GST in the price of items that they purchase. A registered entity is one which has an Australian Business Number (ABN) and is registered for GST. You may be entitled to claim input tax credits from the Australian Taxation Office (ATO) if you are registered for GST, and the purchase is made in connection to the running of your business.
If you do not charge GST on your sales, but are entitled to claim input tax credits for GST included in the price that you have paid for supplies, then the supplies will be GST free. For an input tax sale you do not charge GST on the sale of your goods or service to your customers, and you cannot claim input tax credits for the GST portion of any business expenses relating to the items acquired by you to make that supply.
Business Activity Statements (BAS) are used to report GST to the ATO either monthly or quarterly depending on your level of annual turnover. Monthly tax periods end on the last day of the calendar month. Quarterly tax periods are September 30th, December 31st, March 31st, and June 30th. Entities with a turnover of less than $20 million report quarterly, but can elect to report monthly. Entities with a turnover of more than $20 million are required to report monthly and lodge electronically.
Accounting for GST
There are rules which determine whether you have to report using the cash or accruals basis of accounting. You can account for GST using the cash basis if you meet one of the following requirements:
- You are a small business with an annual turnover of less than $2 million. You have to combine the turnover of all your related entities when determining the annual turnover.
- You are not a business, but carry on an enterprise with a turnover of less than $2 million.
- You carry on an enterprise and the Commissioner of Taxation has determined that you can account for GST using the cash basis, regardless of turnover.
- You use the cash basis of accounting for tax return reporting.
- You are an endorsed charitable institution, regardless of your turnover.
- You are the trustee of an endorsed charitable fund, a gift deductible entity (DGR), or a government school, regardless of your turnover.
GST registration threshold
Entities must be registered for GST if:
- your annual turnover is more than $75,000 or
- if a not for profit organisation, and your turnover is more than $150,000.
Below these thresholds you can still register for GST, and therefore must report to the ATO using a BAS as detailed above.
If you are not registered for GST, you cannot, and must not, charge GST on anything you sell or provide. You also cannot claim back any GST included in the price you pay for goods and services used within your entity.
How we can help you:
We ensure we are continuously up to date on legislation changes, and therefore we are able to offer you accurate advice and top quality assistance.
By now it should be obvious that every transaction now brings with it GST issues. We have experience with these issues and are able to offer expert advice on the implications of GST for your business. The GST related services we offer include, but are not limited to:
- Advice on registering for GST
- Filing and adjusting GST returns
- ATO audit assistance
- Provision of audit insurance cover.
Why wait?, contact us now on 03 5571 2774 or 0408 529 730 or at our office which is located at 305 Gray Street, Hamilton, Victoria. 3300. See our Privacy policy.
We are Quality Assured by the Institute of Public Accountants (IPA), which means you can be sure every project we undertake is carried out to International Standards, so that you can be guaranteed the precise result we agree on before we start, and you pay for.
Last updated Saturday 12th February 2011
© Peter Mulcahy 2011