Big firms are not permitted to register for the GST (goods and services tax). However, there are advantages and disadvantages for small business owners and tradespeople depending on your annual turnover.
What is GST?
The majority of products and services supplied or consumed in Australia are subject to the GST, a 10 percent general tax. Basic goods, health care, education, precious metals, farming, exports, and the sale of firms as going concerns are all exempt from this rule.
If your company has an annual revenue of $75,000 or more, you must register for GST, according to the Australian Taxation Office. You must register as a non-profit organization if your organization has at least $150,000 in annual revenue, you offer taxi or limousine service, or you want to collect fuel tax credits.
How to register for GST
If you have an Australian business number, you can register for GST at any time (ABN). The ATO's Business Portal offers online, phone, and registered tax agent options for GST registration.
The ATO advises business owners to regularly check to determine if the GST registration level has been met. If so, you have 21 days to register in order to avoid being responsible for paying GST on any sales you made after the date you were needed to register, even if you did not include GST in your prices. Penalties and interest are also a possibility.
Benefits of GST registration
GST registration can increase the legitimacy of small enterprises. To be eligible for the GST credit, some firms prefer to purchase from companies that have registered for GST. This calls for a tax invoice from the vendor that specifies the GST owed in full.
GST charging has positive effects on cash flow as well. On sales that must wait until quarterly business activity statements (BAS) are due, an extra 10% will be taken from the customer.
Any purchases made for use in your business, such as gas or phone expenditures, are also eligible for GST credits. You are entitled to a GST return for the difference if the GST return is more than your GST liabilities.
