If you are carrying on an enterprise and your turnover for the next 12 months is likely to be more than $75,000 you will be required to register for GST.
If you are under that threshold you can choose to be registered for GST, unless you’re a Taxi or Uber driver in which case you must register for GST, regardless of turnover.
How do I register?
Registering is easy – you can do this online, phoning the ATO on 13 28 66 or alternatively contact your accountant.
If you’re new to business then you can do your GST registration at the same time you apply for your Australian Business Number (ABN).
Once you’ve registered, you must include GST in your sales price (unless you’re providing exempt services such as medical or education).
How do I know how much GST to put aside?
If most of your sales and purchases are subject to GST, then you should put aside an estimated amount based on one-eleventh of your sales less one-eleventh of your purchases.
When do I need to pay the GST?
You report and pay GST amounts to the ATO, and claim GST credits, by lodging a business activity statement (BAS) or an annual GST return. This can be done online or manually.
The ATO will issue your business activity statement about two weeks before the end of your reporting period, which for GST is usually every three months. The date for lodging and paying is shown on your activity statement.
Record Keeping
Ultimately you need a system that is going to track the GST you have received and paid. This could be a simple excel worksheet, manual cashbook or more advanced accounting system such as MYOB or Xero. Your accountant can help you decide which system would best suit your business.
Pro Tips
If you run a small business that deals primarily with home users then it’s usually preferable not to register for GST (if you’re turnover is under the thresholds). This means that your total cost to the end consumer may be less than someone that is registered for GST, and this gives you a competitive advantage.
If you run a small business you can opt to account for GST on a cash basis. The advantage of cash accounting is that it’s easier to manage your cash flow as the money flowing through your business is better aligned with your business activity statement liabilities.
Author: Allan Edmunds
Email: allan@faj.com.au
