Many countries have a tax on goods and services. In Australia, it is a broad-based, indirect, flat-rate tax of 10% payable on most goods and services sold or consumed in Australia. The end user in a commercial chain of transactions bears the cost of the GST.
There are some exemptions (such as for certain food, health and housing items) and concessions (including qualifying long-term accommodation taxed at an effective rate of 5.5%)
Businesses collect GST for the government when they sell goods and services and pay this income to the Australian tax authorities (ATO). GST is levied on most transactions during the production process, but is reimbursed to all parties in the production chain, except the final consumer.
What does collecting GST mean for my business?
If your business is registered for GST, you will have to charge your customers an extra 10% for the goods and services you sell. You have the right to reclaim a credit for any GST paid for all costs incurred to provide those goods and services (so-called input tax credits). Your company is also required to submit a Business Activity Statement (BAS) monthly, quarterly, and annually. This happens at the same time that the net amount of GST is due to the tax authorities.
When should I register for GST?
You must register for GST if:
Your annual business income is $ 75,000 or more per year, or $ 150,000 or more for nonprofits.
You provide taxi transport (transporting passengers by taxi or limousine for a fee) as part of your business.
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You want to apply for fuel tax credits.
If your annual business income is less than $ 75,000 (or $ 150,000 for nonprofits), you don’t need to register for GST, but you can do so if you wish.
Once you are registered for GST, you can reclaim the GST you pay for the goods and services you buy for your business (as long as you have a tax invoice from the supplier).How do I register for GST?
You can register your business online, by phone, or through a registered tax or BAS agent. To register, you need your Australian Business Number (ABN) and you must register for GST within 21 days of your GST turnover if you reach the annual gross income threshold of $ 75,000. You also need to know your business structure as it will affect how your business pays taxes and claims assets.
What happens after I sign up for GST?
You must now collect GST as part of your transactions with your customers and you must charge your customers an extra 10% on your goods or services. You can claim credits for GST that are included in the price of goods and services you purchase for your business. Companies collecting GST must complete a BAS on an annual, quarterly, or monthly basis and send the collected amount to the ATO.
How do I calculate GST?
You must add an extra 10% to your bill. Simply multiply your bill by 1.1%. You must issue a tax invoice. This is important because it tells people how much GST they paid, and if they qualify, they can reclaim the GST.
When do I make GST payments to the ATO?
Your GST reporting and billing cycle is one of the following:
Monthly – if your GST sales are $ 20 million or more.
Quarterly – if your GST sales are less than $ 20 million – and we didn’t tell you to report monthly.
Annually – if you are voluntarily registered for GST. That is, you are registered for GST; and your GST sales are less than $ 75,000 ($ 150,000 for nonprofits).
Depending on your circumstances, you can change the cycle you use to report and pay GST. This can happen if your GST sales change or if you choose to report and pay through a different cycle.
How do I pay the GST to the ATO?
You can pay the ATO in different ways:
Direct bank transfer / direct debit
In person at Australia Post
Through your registered tax or BAS agent, accountant or bookkeeper
You must use your unique payment reference number (PRN) every time you make a payment that guarantees that your money is going to the correct account and that it is recorded that you have paid.
Which products or services are exempt from VAT?
Most basic foods, some educational courses and some medical, health and care products are exempt from VAT. If you are unsure whether to charge GST, please contact your BAS (Business Activity Statement) agent or accountant.
Are exports exempt from GST?
Exports of goods from Australia are generally GST-free if they are exported from Australia within 60 days after the supplier issues an invoice for the goods or receives payment for those goods.
Services exports are usually GST-free if the recipient of that service is located outside of Australia.
There are rules to determine whether an export sale is GST-free. Talk to your accountant about your specific circumstances.
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