Goods and Services Tax (GST) is a 10% tax on most goods, services, and other items sold or consumed in Australia. It’s a key part of the tax system and impacts many businesses, especially those selling products or services.
What is GST?
GST is added to the price of goods and services you buy or sell. For example, if an item costs $100 before GST, the final price will be $110 with GST included. Businesses registered for GST collect this tax from their customers and then pay it to the Australian Taxation Office (ATO).
Who Needs to Register for GST?
You must register for GST if your business:
- Has a turnover of $75,000 or more per year (or $150,000 or more for non-profit organisations)
- Provides taxi or ride-sharing services, not matter your turnover
- Wants to claim GST credits for purchases related to your business
If your turnover is below the threshold, registering is optional.
When to Register for GST
You should register for GST:
- Before you start your business if you expect your turnover to reach the $75,000 threshold within 12 months.
- Within 21 days of your turnover exceeding the threshold.
Registering means you’ll need to:
- Charge GST on your sales
- Lodge regular Business Activity Statements (BAS) to report and pay GST
- Keep records of your sales and purchases
What if Your Business Activity is GST-Exempt?
Some industries, such as health services and NDIS support work, are GST-exempt, meaning you don’t charge GST on the services you provide. However, if your turnover reaches $75,000 or more, you are still legally required to register for GST.
Even though you don’t charge GST to your clients, registration means you must still lodge a quarterly BAS. This allows you to claim GST credits on eligible business expenses (such as supplies, equipment, or overhead costs that include GST). Not registering when required could result in penalties and missed credits that reduce your costs.
What Happens If You Don’t Register When You Should?
If you’re required to register but don’t, you may face penalties or interest charges. Plus, you won’t be able to claim GST credits on your business purchases, which could cost your business more.
What About Small Businesses Below the Threshold?
If your business is below the threshold and you don’t register, you don’t charge GST on your sales and can’t claim GST credits. However, some small businesses choose to register voluntarily to claim credits and appear more established.
Summary
GST is a 10% tax on most goods and services in Australia. Businesses with turnover over $75,000 generally must register for GST and comply with reporting requirements. Whether or not to register if below the threshold is a choice that depends on your business needs.
For advice specific to your situation, speak with the team at Hervey Bay Tax Solutions.