The Goods and Services Tax (GST) is a tax applied to goods and services in Australia. GST is a 10% tax imposed on most goods, services, and other items bought or sold across the country. If your business is obligated to register for GST, you are required to collect this additional amount from your customers. When it is due, you must remit it to the Australian Taxation Office (ATO).
How does GST Registration Work?
Not every organisation needs to register for GST, but fines may apply if you don’t register for GST when you are required to do so. After registering for GST, you are required to do so within 21 days. Before registering for GST, make sure you have an Australian Business Number (ABN). You can get an ABN when you first register your organisation name or later. If you run more than one business, you are required to register for GST once. If you are no longer required to be registered for GST, you can cancel your GST registration. If you are a non-resident, based on the activities of your company, you are liable to register for GST.
When Does Your Company Need to Register for GST?
You need to register for GST:
- A company with a GST turnover of $75,000 or over is liable to register for GST.
- When you start a new company, and expect your company’s turnover will reach the GST threshold or may exceed it in the first year.
- If your business has already reached the GST threshold.
- If your non-profit organisation possesses a GST turnover of $150,000 per year or over.
- When you provide your passengers with a limousine or taxi, irrespective of your GST turnover, this applies to both owner-drivers and if you rent or lease a taxi.
- If you are looking to claim fuel tax credits for your business or organisation.
Registering for GST is not required if your business doesn’t fall into these specific categories. However, if you decide to register, you typically need to remain registered for a minimum of 12 months. If your business is registered for GST, you are liable to pay BAS, which is a form issued by the ATO. If you don’t know how to calculate BAS, you can ask your registered tax or BAS agent.
What If You Don’t Register for GST?
You may have to check each month if your company has reached the GST threshold or expects to exceed it. You can also rely on accounting or bookkeeping in Melbourne because a bookkeeper can help you know when you reach the GST threshold or are likely to surpass the threshold, so you can register for GST to prevent penalties. You are required to register within 21 days of your GST turnover surpassing the GST threshold. When you are liable to register for GST, but you don’t register for GST, you must pay GST on sales made since the date you were liable to register. This could happen if you fail to include GST in the cost of the sales.
Records required for GST
You must keep records that show expenses and income used to calculate the amount you report and claim for GST credits. This includes all tax invoices, sales and other transactions, fees, wages, expenses, and other business costs related to GST. When claiming GST credits, it’s advisable to go through a reliable accountant or reach out to the best accounting firm in Melbourne for your Melbourne-based business.
You need to keep documents that record a decision, adjustments, or calculations made for GST. If your records don’t support the claims you are trying to make, the ATO will deny or adjust some claims, so it’s crucial to keep accurate records. To simplify your calculations and record-keeping, it’s recommended to maintain GST in a distinct ledger account. There is no obligation to retain tax invoices for claiming GST credits on taxable imports. However, ensure that you keep your GST records for a minimum of five years from the date you acquired them.
Conclusion
As a business owner, you must be aware of the requirements for registering for GST. Failure to register for GST when you need to can result in penalties. Despite this, make sure to keep accurate records for GST by relying on reliable bookkeeping services.
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