The Basics of Goods & Services Tax (GST)

INTRODUCTION

Australia has one of the most complex and highest tax systems in the world. A major part of this complexity involves the introduction of the Goods and Services Tax (GST) which commenced on the 1^st July 2000 by the Howard Government.

WHAT IT IS

GST is a 10% value added tax on most goods and services within Australia. It is paid by consumers with the 10% paid to the government by the business/seller.

If you are required to register for GST, you will need to report your income and expenses on a quarterly (in most cases) basis. This means you will need to lodge a report to the ATO and pay any GST owing to them every 3 months.

There have been some recent debates within parliament to have the value added tax increased from 10% t0 15%. At this point in time, parliament is struggling to get bipartisan support to increase the levy however, it is still important to note that GST may increase in the future.

WHEN TO REGISTER

If you business has annual turnover of $75,000 at any time during the year, you will need to register for GST within 21 days from the date you exceeded the threshold.

If a business has projected that their annual turnover for the year will most likely be over $75,000 then you will also need to register for GST.

If your business is a non-profit organisation, you will need to register for GST once your annual turnover is over $150,000.

If you are looking to claim FUEL TAX CREDITS, you will be required to register for GST

For individuals and businesses that provide taxi or travel services, you will need to register for GST regardless of how much you earn. This also includes ride hailing services like:

Uber
Ola
DiDi
GoCatch
Taxify
Scooti

Here is an example of how the sale-side GST works:

Business sells laptop to consumer for $1,000 plus $100 GST (10% value added tax)

Consumer pays the business $1,100

 Business reports the $1,100 sale with $100 GST in a Business Activity Statement

Business pays the Australian Taxation Office (ATO) $100 of the GST.

ADVICE

GST can involve many transactions in your day-to-day life. Some requiring more expertise calculations and advice in specific fields. For more information about GST, please contact your trusted accountant in order to go through how it may impact you specifically.