What is GST?
GST is a tax on most goods and services sold or consumed in Australia. Goods and services tax, often known as GST, is collected by registered businesses.
If your business is registered for GST, you will have to collect some extra money (one-eleventh of the sale price) from your customers and pay it to the Australian Taxation Office (ATO) when it is due.
Do I need to register?
You must register for GST if:
- your business has a gross income (also known as ‘GST turnover’) of $75 000 per year or more
- your non-profit organistion has a turnover of $150 000 per year or more
- you provide taxi travel for passengers in exchange for a fare. This rule applies to both taxi owner drivers and people who just rent a taxi.
GST turnover is your business’ gross income, not your business’ profit.
For example, if you run an online clothing store and you sell $80 000 worth of clothes, you’d have to register for GST because your GST turnover is over the $75 000 threshold. This rule still applies, even if you only get to keep $40 000.
If your business doesn’t fit into one of the above categories, you don’t have to register for GST.
Head to the ATO website to work out your GST turnover.
When do I need to register?
If you haven’t registered for GST, and you become aware that your GST turnover will exceed the $75 000 per year threshold, you will have to register for GST within 21 days.
It’s a good idea to check each month to ensure you’re not likely to go over the over the limit. Keeping an eye on your GST turnover is important so you can register if necessary.
How do I register?
You’ll need an ABN to register for GST. Your ABN will also become your GST registration number.
If you anticipate that your GST turnover will be over $75 000, you can register for GST and apply for your ABN at the same time.
If you already have an ABN, but haven’t registered for GST, find out how to register for GST on the ATO website.
What are GST credits?
GST credits are a potential amount of money your business might be able to claim from the ATO.
If you are registered for GST, you can ‘claim back’ the GST that has been included in the purchase price of something you’ve bought for your business.
For example, Laura runs an accountancy firm and has just bought a new computer for the office. The computer cost Laura $1100, including GST. Because GST is one-eleventh of the sale price, Laura would have paid $100 in GST.
Laura is registered for GST because her business’ GST turnover is more than $75 000. She is able to claim GST credits for the GST included in the sale price of her computer ($100).
If at the end of the year her GST credits are higher than the amount of GST she has to pay the ATO, she will be able to get a refund.
What happens if I don’t register for GST?
If your GST turnover is under $75 000 and you don’t register for GST, you won’t include GST in your fees. You also can’t claim GST credits for your business purchases.
Want more information?
- Learn more about GST, including helpful videos, from the ATO.
- Speak to your accountant for more personal advice about your business and tax.