Basis of GST in Australia
Yes, if you are running business in Australia and registered for Goods and Services Tax (GST) you are bound to dedicate certain amount earned, in the form of broad-based tax, from the sale of goods and services, sold or consumed, and make payment to the Australian Taxation Office (ATO) on the due date. This section of expense for Australian businesses is managed by making a collection from the customers on the purchase of a good or a service which is one-eleventh of the sale price. Depending on your business turnover, which is the gross business income, in the running year. Know more with Meru Accounting about GST in Australia.
Method of Calculation of GST
Though various auto calculators facilitate for calculation of GST on the supply goods, services and various consumable items that are available in Australia, it is utmost essential to gather the factors that help to determine the GST levied on the price. In Australia, a tax of 10% is applied on a good or a service that is circulated in the marketing business. Thus if your business is registered for GST, all you need is the price and the tax percentage in order to calculate the GST, for inclusive or exclusive, within the price of the goods and services. This calculation has a further advantage in order to claim the tax credit.
Registering for GST
Who? When? and How? Are the three most prominent questions to prop in your mind while working on GST registration.
Who can register?
- Businesses with a GST turnover of $75000 or more
- Non-profit organizations with a GST turnover of $150,000 or more, yearly basis
- Taxi owners and people who take on rent
- Overseas business dealings to Australian customers which involve the import of low-value goods, services, and digital products.
When to register?
With an affordable and surety gap of 21 days from the time you are able to identify that your business will be exceeding the threshold value for GST turnover, you can register for GST to be inclusive in the fees and also eligible to claim for GST credits.
How to register?
You just have to use your Australian Business number (ABN) which can be generated by filling an ABN application. This GST registration number will act as your point of contact to register online at Business Registration Service or contact the ATO for further guidance.
Working out GST turnover
- While working out your GST turnover in business, it is crucial to note that it includes your gross business income
- Excludes certain factors such as any profit earned, GST in sales to customers, non-payable and non-taxable sale, non-linked enterprise sales, sales non-connected with Australia
- Based on threshold limit for current and projected GST turnover on yearly basis, GST is applied to type of business run.
When not to charge GST.
- In order to avoid any incorrect deduction due to the wrong GST debited, it is necessary to be well informed that GST is exempted for GST-free and Input-taxed sales.
- Also, non-profitable organizations are eligible to avail concessions for certain transactions.
- GST-free sales cover goods and services related to medical and healthcare products, educational courses and materials, export goods sold within specified days, charitable and religious activities, the government initiated construction activities and land grants, telecommunication supplies and so on as listed.
Issuing GST tax invoice
- With respect to GST invoicing rules, issue of tax invoice for goods supplier and service provider is essential for your GST registered customers for a taxable sale of more than $82.50.
- Based on the type of sale, the supplier issues tax invoice and obtains an ‘invoice reference number’ which needs to be provided to the recipient/ customer within 28 days of its request.
Claiming GST credit
- Also known as input tax credit needs to be claimed so as to obtain a credit that was covered in the goods and services purchased for business.
- As mentioned in your business activity statement, you can claim the requisite tax price within with a time frame of 4 years and check on suppliers registered for GST.
Working out your GST turnover
- GST you included in sales to your customers
- Sales that are not for payment and are not taxable
- Sales not connected with an enterprise you run
- Input-taxed sales you make
- Sales not connected with Australia
The Goods and Services Tax in Australia