You’ve probably heard of GST before – it stands for goods and services tax and is added to nearly everything you buy in Australia. If you purchase goods and services for your business, the price paid is generally inclusive of goods and services tax (GST). Businesses are eligible to claim ‘GST credits’ (otherwise known as an input tax credit) on the GST paid for the goods and services.
Who needs to register for GST?
- Australian based businesses with an annual turnover of $75,000 or more.
- Taxi drivers and ride-sharing drivers, no matter what their turnover is.
- Not-for-profit organisations with an annual turnover of $150,000 or more.
- Businesses that want to claim fuel tax credits.
- International retailers with total Australian sales of $75,000 or more a year.
You can get into legal difficulty if you don’t register for (and collect) GST when you should.
The benefits of registering for GST
If you purchase goods and services for your business, the price paid is generally inclusive of goods and services tax (GST). Businesses are eligible to claim ‘GST credits’ (otherwise known as an input tax credit) on the GST paid for the goods and services.
However, to qualify for GST credit the goods and services purchased MUST be for business purposes only. Business owners should also be aware that they need to register for GST prior to lodging a claim for GST credits.
Registering for GST?
Assuming you meet the registration requirements, you’ll need an Australian Business Number (ABN). However, if you are registering as a company, then you’ll need an Australian Company Number (ACN) before applying for your ABN.
The most popular form of registration for GST is through the ATO business portal.
Claiming GST credits
Your business may be eligible to claim the GST included in the price of goods and services purchased for business use, if the following conditions are met:
- The purchase relates directly to business use.
- You have a tax invoice for proof of purchase where the cost exceeds $82.50 (AUD).
- The price paid for the goods or services include GST.
- You have paid or will be liable to pay for the item purchased.
If you meet the above, a business can claim GST credits through their business activity statement (BAS) – more about BAS in a moment.
Claim Your GST Credits
Get in touch today to start lodging your Business Activity Statements and claim your maximum GST Credits. Call 1300 180 630 to speak to one of our consultants for a no-obligation consultation or follow the link below.
What happens when you aren't collecting any GST?
You can claim back GST on supplies even if the end product or service that you sell is GST free.
Claiming back GST on a bad debt
If you account for GST on an accrual basis, you can sometimes get caught out by a bad debt. For example, you might raise an invoice and pay GST on the expected income then find your customer doesn’t pay you.
If this is the case, you may be able to claim back the GST from the ATO on your next return. If the customer pays later, you will repay the GST then.
Purchases for business and personal use
There may be instances where you have purchased goods or services for both personal and business use. Businesses can only claim GST credits on the proportion of the purchase used for business purposes, so you’ll need to calculate and appropriately adjust the amount to be claimed.
ATO exceptions and special rules
As you might expect our friends at the ATO do have some exceptions to GST credits. These include:
- A business that is not registered for GST.
- The goods or services purchased are for personal/private use.
- Purchases that are ‘GST-free’ goods (i.e., do not include GST in their purchase price). Some examples include basic food, some education courses, some medicines and aids, any purchases made in duty-free stores and some financial services.
- Any purchases claimed after the four year time limit has passed in relation to GST credit.
The ATO has also listed ‘special rules’ in relation to claiming GST credits on some specific areas, including:
- Pre-establishment costs for setting up a business
- Second-hand items
- Periodic payments (e.g., lease payments)
- Purchases made using a corporate credit card
GST and your Business ACtivity Statement
A Business Activity Statement (or more commonly referred to BAS) is an Australian Taxation Office form issued to all GST registered entities and reports a businesses’ Goods and Services Tax (GST) activity for a specific period.
If the annual turnover of a business is more than $75,000 it must register for GST and lodge a BAS.
Information submitted via BAS enables the ATO to calculate the tax a business needs to pay.
Calculating GST, payments and rebates
So, a BAS is used to notify the Australian Tax Office (ATO) of how much GST you have received in your business income and how much GST you have paid in your business expenses. Here’s how it works in action:
When you have received more GST than you have spent >
If the amount of GST you have received in your income is greater than the amount of GST you have paid in your expenses, then you will need to pay the difference to the ATO.
When you have spent more GST than you have received >
If the amount of GST you have paid in your expenses is greater than the amount of GST you have received in your income, then the ATO will pay the difference to you (yay).
Submitting a claim
To complete your BAS, you’ll need a record of how much GST you collected on sales, and how much was paid on purchases. You won’t need to submit tax invoices when you lodge your BAS, but you will need to have them on hand as the ATO may ask to see them later.
Because your BAS may also be used for other tax reasons, you’ll need to be prepared to supply extra information about your business, its income, and any employees (as required).
Lodging information with the ATO
The ATO provides multiple channels for businesses to lodge their BAS.
Businesses that prepare their own BAS can lodge it either online or via the post.
Lodging a BAS online can be done through the ATO Business Portal, the Australian Government – MyGov website, or directly from certain payroll and accounting software systems.
Businesses that choose to lodge their own BAS online may also qualify for a two-week extension of the deadlines for lodging and paying their BAS.
Thriday is a game-changer for BAS calculations and tax lodgment, streamlining the process for businesses. With intuitive features, it simplifies complex calculations and facilitates seamless lodgment. Thriday also has an integration with POP Business, ensuring businesses have assistance throughout, making BAS management a hassle-free and efficient part of financial operations.
And finally...
While GST/BAS reporting can be submitted by business owners, seeking professional advice is highly recommended to ensure you meet ATO obligations and requirements, and receive the maximum rebates and allowances to minimise tax owed. Need help? The team at POP Business can provide expert BAS advice and services. To find out more, call the team today on 1300 180 630, or follow the links below to get started.
Online BAS Lodgements
Get in touch today to start lodging your Business Activity Statements and claim your maximum GST Credits. Call 1300 180 630 to speak to one of our consultants for a no-obligation consultation or follow the link below.
