GST in Australia is a tax of 10% on most goods, services, and consumables.
If you are a registered business, you need to pay GST on most goods and services you sell or supply.
Most of your suppliers will include GST in the price of items you purchase for your business. You’ll be entitled to claim back the GST you pay from the ATO (input tax credit) if you are registered for GST and the purchases are made for the purpose of carrying on your business.
GST Free sales
You don’t include GST in the price of things you sell that are GST-free, but you can still claim credits for the GST included in the price of the purchases that you use to make GST-free sales.
Things that are GST-free include:
- most basic food
- some education courses, course materials and related excursions or field trips
- some medical, health and care services
- water, sewerage and drainage
- the sale of a business as a going concern
Input Taxed sales
If you make Input Taxed sales, you don’t include GST in the price of the sales you make and you can’t claim GST credits for purchases that you use to make those input taxed sales.
The two most common input taxed sales for small businesses are:
- financial supplies (lend or borrow money, grant credit to a customer, buy or sell shares or other securities), and
- selling or renting out existing residential premises.
Quarterly (30 September, 31 December, 31 March, and 30 June) or monthly (last day of the month).
Businesses that have sales <$20 million p.a. generally have quarterly tax periods, but can choose to have monthly tax periods. If your sales >$20 million p.a. you are required to have monthly tax periods and lodge your activity statements electronically.
Cash or Accruals
You can account for GST on a cash basis (only pay GST to the ATO once you’ve received it in your debtors’ payments) if you meet one of these requirements:
- Are a small business – Sales <$2 million.
- Account for income tax on a cash basis.
- Are an endorsed charitable institution regardless of your GST turnover.
- Are a trustee of an endorsed charitable fund, gift-deductible entity, or government school, regardless of your GST turnover.
Entities running an enterprise must register for GST if their annual sales are $75,000 or more ($150,000 for non-profit organisations). Registration is voluntary if your sales are below those amounts.
If you are not registered for GST, you cannot include GST on anything you sell or provide. You also cannot claim back any GST included in the price you pay for goods or services used in your business.
GST has so many facets, it’s often confusing. If you need some help in finding your way through the maze, why don’t you call the office on (03) 9585 7555 and ask for Noel or Amanda, oremail us.