You must register for GST if your current turnover (turnover for the current month and previous 11 months) or projected turnover (turnover for the current month and the next 11 months) is $75,000 or more. If your turnover is under the $75,000 threshold, GST registration is optional.
For example, if you have sales of $80,000, you would be required to register as your turnover is over the $75,000 threshold. This is the case even though you may only keep $50,000. The test is based on turnover, not profit.
Taxi and ride sharing drivers need to register for GST no matter what their turnover is.
Not-for-profit organisations have a turnover threshold of $150,000 before they are required to register.
If you are not registered for GST, you should keep a close eye on your turnover to see if you have exceeded, or expect to exceed the threshold. Once you have passed the turnover threshold, you must register within 21 days. If you do not register and are required to do so, you may have to pay the Australian Taxation Office for GST on your sales (even though you may not have included GST in your prices). Penalties and interest can also apply.
HOW DO I REGISTER FOR GST
You will need an ABN to register for GST.
You can register for GST online (and also apply for an ABN) via the Australian Business Register website (www.abr.gov.au) or contact Newcastle Bookkeeping Solutions and we can do it all for you.
You may need to choose an accounting method – cash or accrual. If your turnover is under $2 million, you can choose either option, however most larger businesses must use the accrual method. The accounting method determines when you report GST to the Australian Taxation Office.
The cash basis method means that you account for sales and purchases in the period in which you are paid for sales or pay for purchases. Cash reporting aligns the flow of cash through your business with any obligation to pay GST to the ATO which can be helpful for small business. Accrual basis means that you account for sales and purchases in the period in which you invoice sales or receive an invoice for purchases.
There are simplified accounting methods (pre calculated business norm percentages) for small food retailers such as bakeries, milk bars and convenience stores who do not have adequate point of sale equipment to capture taxable and GST Free Sales.
HOW DOES THE GST WORK?
- Work out whether your sales are subject to GST and not exempt. If subject to GST include 10% GST in the price of your sales
- Issue tax invoices for taxable sales and obtain tax invoices for business purchases
- Claim GST credits for GST included in the price of business purchases
- Put aside the GST you have collected so that you can pay the ATO as it falls due
- Lodge Activity Statements
At the end of each GST period you need to account for the GST you’ve collected on your sales minus any that you’ve paid on your purchases. The difference is the amount payable (or refundable if GST credits on purchases are higher than GST collected on sales) to the Australian Taxation Office.
A business activity statement (BAS) is used to report your GST transactions. Most businesses are required to complete BAS returns quarterly (provided turnover is under $20 million).
Quarter 1 – July to September, due 28th October
Quarter 2 – October to December, due 28th February
Quarter 3 – January to March, due 28th April
Quarter 4 – April to June, due 28th July
As a registered BAS Agent, Newcastle Bookkeeping Solutions qualifies for a 4 week extension to lodge AND PAY quarterly BAS.