If you’re a small business owner grappling with tax complexities, you’re not alone. A common question we often encounter is, “Do I need to register for Goods and Services Tax (GST)?” The answer depends on various factors, including your business size and the nature of your sales. This blog aims to shed some light on this topic and guide you through the GST registration process.
What Is Goods and Services Tax (GST)?
GST is a broad-based tax of 10% on most goods, services, and other items sold or consumed in Australia. It is an integral part of the Australian Taxation System and affects almost every Australian business. While the rules can seem overwhelming, understanding your GST obligations is vital for compliance and tax optimisation.
When to Register for GST?
You must register for GST if:
- Your enterprise has a GST turnover exceeding $75,000.
- You offer taxi or limousine services, regardless of your GST turnover.
If you’re near the $75,000 GST turnover threshold, it’s wise to register proactively. Once you cross this limit, a 21-day window opens for you to complete the registration, so prompt action is advised to avoid penalties.
Voluntary Registration of GST
Businesses falling below the $75,000 turnover threshold can opt for voluntary registration. This allows the business to claim GST credits on business expenses, which could be financially advantageous.
Special Note for Non-Residents
If you’re a non-resident engaged in business activities in Australia, you might need to register for GST. Keep in mind, different proof-of-identity rules apply for non-residents. You may read more at ATO website.
- Have an Australian Business Number (ABN).
- Provide goods and services that are subject to GST.
How to Register
Registering for GST can be done online through the Australian Business Register or with the help of a registered tax agent. The process typically involves providing information about your business and estimated turnover. Once registered, you’ll be required to submit regular Business Activity Statements (BAS) to report your earnings and GST collected.
After registering for GST, you are required to submit Business Activity Statements (BAS) at regular intervals. These statements are used to report your earnings, GST collected, and GST credits claimed.
Consequences of Not Registering
Failure to register when required can result in penalties and interest. Additionally, you may have to pay GST on sales made since the date you were required to register—even if you didn’t include GST in those sales prices.
Understanding GST and its implications can be complicated. The team of qualified accountants at MKG is here to assist you in navigating this complex landscape. From understanding if you need to register to assisting with the registration process, we’ve got you covered. Contact us today for a personalised consultation.