You must have an understanding of when and how you should register for goods and services tax (GST).
How does GST registration work?
Not every business is required to be registered for GST, but if you are liable to register for GST and you fail to do so, then the penalties may apply. If you meet the conditions to register for GST, you need to do so within 21 days. You need to have an ABN before you register. When you first register your business name, you can receive an ABN. Even if you run multiple businesses, you only need to register for GST once. If you are no longer needed to be registered for GST, you can also cancel your GST registration. Depending on the business activities of a non-resident, you may need to register for GST.
What if you don’t register for GST?
If you are not registered for GST, make sure to keep checking each month to see if you have reached the GST threshold or are likely to exceed it. You must register within 21 days of your GST turnover surpassing the relevant GST threshold limit. If you don’t apply for GST registration and are required to, you may need to pay GST on sales made since the date you were required to register. This could happen even if you didn’t include GST in the cost of those sales. You may also have to pay interest and penalties. To handle GST or other tax matters, you can seek help from the best accountant in Melbourne, who specialises in handling the tax affairs of a company.
Working out your GST turnover
Your GST turnover is your total business income (excluding your profit), minus:
- GST included in sales to your clients
- Sales to associates that are not for payment and are not taxable
- Sales not related to an enterprise you run
- Input-taxed sales you make
- Sales not associated with Australia.
GST turnover threshold
You reach the GST turnover threshold if either:
- Your current GST turnover – your turnover for the existing month and the previous 11 months equals to $75,000 or above ($150,000 or above for non-profit organisations)
- Your estimated GST turnover – your total turnover for the existing month and the next 11 months is expected to be $75,000 or above ($150,000 or above for non-profit organisations).
Using a business software package to account for expenses and sales may make this easier. When working out your estimated GST turnover, you should avoid including:
- Amounts you receive for the sale of a business’s assets, such as the sale of a capital asset.
- Any sale you make, or intend to make, only as a consequence of ceasing to carry on an enterprise, or substantially and permanently minimising the size or scale of an enterprise.
Even if your existing GST turnover is at or above the GST threshold limit, you don’t need to register for GST if your estimated GST turnover will be less than the threshold.
Records required for GST
You are required to keep records to show expenses and income used to calculate and support the amounts you report and claim for GST credits. This includes tax invoices, sales, and other GST-related transactions, as well as expenses, wages, fees, and other business costs. You need to keep any other documents showing record adjustments, calculations, or decisions made for GST purposes.
If your records don’t properly support your claims, the ATO may adjust or deny some claims, so it’s crucial to keep the right records and get your calculations right. It is suggested that you set aside your GST in a separate ledger account to get the record-keeping and calculations done easily. It’s not necessary to have a tax invoice to claim GST credits for taxable imports (goods your business imports into Australia). However, in order to meet record-keeping requirements, you are required to have documents from the Department of Home Affairs demonstrating the GST amount you paid on those imports. If you run a ride-sourcing company, there might be other record-keeping requirements for the sharing economy. To ensure you meet record-keeping requirements for GST or other purposes, you can rely on bookkeeper services Melbourne.
Conclusion
To ensure you have a record of everything, you can rely on Reliable Bookkeeping Services because these records can help you support your claim for GST credits or other types of deductions.