Goods and services tax (GST) is a tax of 10% on most goods, services and other items sold or consumed in Australia. It is a broad-based tax that applies to a wide range of transactions.Small businesses in Australia need to understand how GST works in order to comply with the law and avoid penalties. This guide will provide you with a comprehensive overview of GST, including who needs to register for it, how to calculate and remit GST, and common GST mistakes to avoid.
Who Needs to Register for GST?
Not all small businesses need to register for GST. The Australian Taxation Office (ATO) has set a turnover threshold of $75,000. If your business's annual turnover is less than $75,000, you are not required to register for GST.However, there are some exceptions to this rule. For example, taxi drivers and ride-sharing drivers must register for GST regardless of their turnover. And if you think your business is likely to exceed the $75,000 turnover threshold in the next 12 months, you should register for GST voluntarily.
How to Register for GST
You can register for GST online through the ATO website. You will need to provide some basic information about your business, such as your ABN, your business name, and your address.Once you have registered for GST, you will need to start charging GST on your sales. You will also need to keep records of your GST transactions so that you can calculate and remit GST correctly.
How to Calculate GST
To calculate GST, you need to add 10% to the price of your goods or services. For example, if you sell a product for $100, you would charge $110 GST.You can also calculate GST by multiplying the price of your goods or services by 1.1.
How to Remit GST
You need to remit GST to the ATO on a quarterly basis. You can do this online through the ATO website or by mail.When you remit GST, you need to submit a Business Activity Statement (BAS). The BAS is a form that tells the ATO about your GST transactions for the quarter.
Common GST Mistakes to Avoid
There are a number of common GST mistakes that small businesses make. Here are a few to avoid:
- Failing to register for GST when you are required to.
- Charging GST on exempt or input-taxed goods and services.
- Not keeping accurate records of your GST transactions.
- Remitting GST late or incorrectly.
If you make a GST mistake, you may be liable for penalties. It is important to understand GST and to take steps to avoid making mistakes.
Conclusion
GST is a complex tax, but it is important for small businesses to understand how it works. By following the tips in this guide, you can ensure that you are complying with the law and avoiding penalties.If you have any questions about GST, you should speak to an accountant or tax advisor. They can help you understand your GST obligations and ensure that you are filing your GST returns correctly.
