Running a business in Australia comes with certain tax obligations, one of the most common being GST (Goods and Services Tax). Learn how to register your business for GST in Australia.
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Running a business in Australia comes with certain tax obligations, one of the most common being GST (Goods and Services Tax). Learn how to register your business for GST in Australia.
Running a business in Australia comes with certain tax obligations, one of the most common being GST (Goods and Services Tax). GST is essentially a value-added tax that applies to most goods and services sold in Australia. It is currently set at a rate of 10%.
You must legally register for GST if your business reaches an annual turnover threshold of $75,000. This means you must charge GST on top of the sales price for any taxable goods or services you sell. You can also claim back any GST you pay when purchasing goods and services related to your business operations.
Registering for GST may seem complicated, but if you understand the basic steps, it is a relatively straightforward process. This article will provide a step-by-step guide to registering and tips for managing ongoing GST compliance.
GST stands for Goods and Services Tax. It is a broad-based tax of 10% on most goods and services sold in Australia.
GST is a value-added tax, meaning it applies at every stage of production and distribution. Businesses add GST to the price they charge on taxable sales. They can then claim back credits for any GST included in the price of their business purchases.
In simple terms, GST is charged when a business makes a sale to another business or final consumer. The business collects the GST and passes it on to the Australian Tax Office (ATO). This helps fund government services and infrastructure.
Since its introduction in 2000, GST now applies to the majority of transactions in Australia. There are some exemptions on certain essential goods, like most basic foods, healthcare, and education. Residential rents are also GST-free.
But broadly, GST applies across industries, from retail sales to professional services.
If your business reaches an annual turnover of $75,000 or more, you must legally register for GST. Turnover refers to your gross income, excluding any GST. You must register within 21 days of reaching the $75K threshold. The Australian Taxation Office (ATO) also requires certain businesses to register regardless of turnover, such as:
In addition, some businesses may choose to register for GST voluntarily if their turnover falls under $75,000. While not required, voluntary registration allows you to claim GST credits on business purchases and appear larger to customers.
If your annual turnover fluctuates around the threshold, it pays to keep a close eye on your finances. You may dip over some months requiring GST registration before falling under again. So, staying on top of turnover helps avoid penalties for failing to register when required.
Registering for GST online may seem intimidating, but breaking down the process into clear steps makes it more manageable. Here is an overview of what's involved:
First, make sure your business has an Australian Business Number (ABN). This is a unique identifier that you need to interact with the Australian Tax Office (ATO) and other government agencies.
If you don't have one yet, you can easily apply through the Australian Business Register.
Next, have accounting software ready to track GST obligations. Packages like Xero, QuickBooks or MYOB make it easy to generate tax invoices, record transactions, and report GST collected/paid.
Setting this up early gets you organised for lodging your Business Activity Statement (BAS).
When ready, head to the ATO website and select "Register for GST." You can also link prior ABN and tax lodgements to streamline the process.
It takes about 15 minutes to complete the online application form. Ensure details like business start dates, activity statement periods, and bank account information are ready. Additionally, we can do this for you as part of our entity/business setup services, designed specifically for a trust or company.
Once submitted, the ATO will review your application and validate the details provided. This may involve contacting you for clarification or additional documents. Most registrations are approved within a couple of weeks. But it can take up to 28 days during peak periods.
Once approved, you will receive an email with your GST registration certificate. This contains your unique GST identification number to quote on tax invoices. And with that, you can officially start charging, collecting and reporting GST!
Once registered, you have ongoing responsibilities to comply with GST laws. This includes lodging Business Activity Statements (BAS), issuing tax invoices, and keeping accurate records. Failure to meet obligations can lead to significant penalties from the ATO.
Here are some tips for smoothly managing GST compliance:
Leverage your accounting platform to automate and streamline compliance tasks. Software like Xero or QuickBooks can generate compliant tax invoices, track GST collected/paid on transactions, and prefill your BAS. This saves time while reducing errors.
Tax invoices must include specific details like supplier ABN, date of issue, GST amount, etc. Set up templates in accounting software and ensure staff follow guidelines. Keep copies for five years.
You must submit GST information to the ATO via your BAS quarterly. This outlines sales made, GST collected and any credits you can claim. Stay on top of lodgement deadlines to avoid penalties.
Perform regular reconciliations between accounting and bank records. This helps identify any discrepancies in GST collected/paid early, so you can correct mistakes.
Note: Besides the tips provided, another option is to outsource your GST compliance and accounting to a professional firm like Ashmans Accounting. A team of accountants and bookkeepers can handle all of your tax obligations, so you can focus entirely on running your business. They become your external financial controller, managing everything GST and compliance related on your behalf.
If your business turnover falls under the $75K compulsory registration threshold, you can still choose to register for GST voluntarily. While not required, doing so comes with some key advantages and disadvantages to weigh up.
Some benefits of opting into GST registration include:
Potential downsides to consider are:
As experienced accountants and advisors, Ashmans Accounting specialises in supporting Australian businesses with practical tax advice and strategies.
Our services include:
To learn more about how Ashmans Accounting can help get your business GST-ready, contact our team today.
Setting up GST for your business involves a few key steps. First, make sure you have an Australian Business Number (ABN) to identify your business to the ATO. Next, have accounting software ready to track GST obligations - platforms like Xero or QuickBooks allow you to generate tax invoices and lodge BAS easily.
When you hit the $75K turnover threshold, complete the online GST registration form via the ATO Business Portal, providing details like your ABN, activity statement frequency, bank account info, etc.
Finally, allow 1-4 weeks for the ATO to review and approve your registration. Once approved, you will receive a confirmation email with your unique GST identification number to start charging GST on applicable transactions.
Registering for GST itself does not incur a registration cost or fee from the ATO. Completing the online application form and receiving your GST registration certificate is free. However, there are some indirect costs involved with GST compliance.
For example, you may need to purchase accounting software to track GST collected and paid. Hiring an accountant or bookkeeper to handle tax obligations will also cost additional. So while registration is free, factor in expenses for software and accounting support.
Yes, businesses with an annual turnover under $75K can voluntarily register for GST. While GST registration is only compulsory once turnover exceeds $75K over a 12-month period, businesses can opt-in even if they fall under this threshold. Reasons you may want to register voluntarily include being able to claim GST credits on business purchases to improve cash flow, appearing larger and more credible to customers, and having the ability to sell products interstate.
The downside is taking on the additional administrative workload of GST reporting and BAS, even though it is not strictly required until the $75K mark.
Some of the main benefits for a business registering for GST are: claiming input tax credits for the GST included in the purchase price of goods/services and boosting perceived credibility with customers by being GST registered.
On the other hand, registering does come with added responsibilities like tracking GST collected on sales, meeting digital tax invoice requirements, lodging quarterly BAS and reconciling totals accurately.
But for many businesses, the ability to claim back GST paid makes registration well worth the extra compliance.
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