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Does My Small Business Need to Register for GST?

If you’ve heard of GST, but unsure about it, you’re not alone. One of the most frequent questions we got asked by small business owners is around GST. GST stands for Goods and Services Tax. It’s a a tax on most goods, services and other items sold or consumed in Australia. The GST rate is 10%. It’s charged on most sales in Australia, but not all of them.

Whether you’ve just started or whether your business is growing, it’s a good time to look at your numbers and check if your business needs to register for GST.

Let’s break it down into whether you need to register for GST, what to do next, how to do it, and how it may affect your pricing.

Who needs to register for GST?

You must register for GST if you:

  • Are an Australian based business with a GST turnover of $75,000 or more.
  • Are an Australian based non-profit organisation with a GST turnover of $150,000 or more.
  • Provide taxi or limousine services or ride-sharing drivers (e.g. Uber, DiDi or Ola), regardless of your GST turnover.
  • Want to claim fuel tax credits for your business, regardless of your GST turnover.

If you are a non-resident, there are special rules that may apply to you.

Otherwise, registration for GST is optional.

If you’re not registered for GST, check each month to see if you’ve reached the threshold, or are likely to exceed it. You need to register within 21 days of your GST turnover exceeding the threshold.

What is GST turnover?

Your GST turnover is your gross income (revenue), not your profit.

For example, you made an income of $80,000 and after deducting your expenses you made a profit of $50,000. You must register for GST, because your GST turnover is over the $75,000 threshold, even if you only get to keep $50,000.

How do I know my income has reached the GST turnover threshold?

You reach the GST turnover if either:

  • Your ‘current GST turnover’ totals $75,000 or more (current GST turnover = gross income for the current month + the previous 11 months); or
  • Your ‘projected GST turnover’ is likely to be $75,000 or more (projected GST turnover = gross income for the current month + the next 11 months).

My GST turnover is below the threshold. Do I need to register?

No, but you have the option to register for GST. There are various reasons for registering for GST voluntarily.

If your business spends a lot of money purchasing taxable supplies, being registered for GST may have a positive impact on your cash flow, as you may claim the GST credits back. If your business has minimal outgoings and purchases, you may benefit from not being registered for GST.

However, to make things complicated, there are several items which fall in an exception to paying GST, for example staple foods, financial services, some medical and healthcare products. You can see the list of the main GST-free products and services on the ATO website.

If you’re unsure about it, reach out to us to assess your individual circumstances.

My GST turnover is above the threshold. How do I register?

First, you will need your ABN. There are various ways to register for GST, for example:

  • through your registered tax agent or BAS agent.
  • via the ATO Business Portal.
  • call the ATO on 13 28 66.

I’ve registered for GST. What’s next?

Once you’re registered for GST, you need to:

  • Add or include GST to your prices.
  • Issue tax invoices to your customers. Your tax invoice must include at least seven pieces of information as required by the ATO.
  • Keep receipts and invoices to claim back GST on business outgoings and purchases.
  • Lodge Business Activity Statements (BAS) with the ATO. In 8 Important Things to Check When Preparing Your BAS, we talk about due dates and what to review when preparing your BAS.
  • Pay any GST payable.

Hopefully, this gives you some clarification on GST and how it affects your business. For most businesses, if your gross income is less than $75,000, you don’t have to register for GST. However, there may be some benefits that come with being registered for GST, depending on your business model.

Talk to us if you need help with registering for GST or reviewing your numbers.

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