Whether you're just getting started or preparing to take your Company to the next level, it's important to understand your Australian tax obligations, particularly when it comes to the Goods and Services Tax (GST). If you're looking to register your ABN for GST or wondering how to apply for GST registration, you're in the right place. Let’s dive into the specifics.
GST stands for Goods and Services Tax. It's a broad-based tax of 10% imposed on the supply of most (but not all) goods, services, and other items sold or consumed in Australia.
As a Company Director in Australia, you should be aware of the importance of registering for GST. It’s mandatory for businesses with a turnover of $75,000 or more to register for GST. However, you can voluntarily register for GST too.
In this post, we’ll guide you through the GST registration process, making it easy and stress-free.
Before you can register for GST, you’ll need an ABN (Australian Business Number). An ABN is a unique identifier for your business and is required for GST registration. You can apply for an ABN online in under 10 minutes.
Next, it’s important to determine whether your Company is required to register for GST.
You only need to register for GST when you meet the threshold. Up until that point in time, you aren’t required to register but you can voluntarily register.
You are required to register for GST when your GST turnover is $75,000 or more. Now here’s where it can get a bit tricky. You need to assess your GST turnover on a monthly basis and you’ll exceed the thresholds if either:
It’s this second one that catches everyone out. You need to register if you expect your next 12 months to be over $75k. That’s not on a financial or calendar year basis but instead on a rolling 12-month basis.
Let’s use an example to try clear that up. Steph has started a new business selling cosmetics. Business is going well and after 4 months of trading Steph’s turnover is $10,000 (excluding GST) per month and she’s expecting to keep earning at least that amount for the next year. Steph would be required to register for GST as her GST turnover on a projected basis is $120,000 ($10,000 for the current month plus $10,000 per month for the next 11 months) which is above the $75,000 threshold.
If you exceed the GST turnover threshold like Steph did, you’ll have 21 days to register for GST.
An easy way to assess whether you’re going to be required to register is when your monthly revenue is $6,250 or thereabouts and you expect to continue to make that amount going forward. However, when calculating your monthly GST turnover, exclude any sales or services to overseas clients as these are generally GST-free.
To register for GST, you need to complete the GST registration form, which is available on the Australian Taxation Office (ATO) website. The form requires information about your business, including your ABN, business structure, and contact details.
Once your GST registration is approved, you need to start collecting GST from your customers. You can do this by adding the GST amount to the price of your goods and services. Read our guide on How To Invoice as a Sole Trader (And Get Paid Faster!).
As a GST-registered business, you need to lodge a Business Activity Statement (BAS) on a regular basis. The BAS is used to report your sales, purchases, and GST amounts. You can lodge your BAS electronically through the ATO's Online Services for Business or with the help of a registered tax or BAS agent. You can read our step-by-step guide to preparing you BAS here.
Aside from compliance, GST registration allows your company to claim GST credits for eligible business expenses, or 'input tax credits'. This can help improve your cash flow, especially when you've paid out more GST than you've collected in a given reporting period.
Registering for GST in Australia can be a simple process that can be done online. Following these five steps, can help you to ensure that your business is compliant with the tax laws and regulations in Australia. If you have any questions or need assistance with GST registration, you can contact the ATO or a registered tax or BAS agent for more information.
Note: The information in this blog post is for informational purposes only and does not constitute professional tax advice. Please consult with a tax professional for specific advice related to your business.