When Do You Need To Register For GST?
If you’re confused by the whole concept of GST, you aren’t alone! As a new business owner, it can be tricky to understand; should you be registered for it? How should you calculate it to charge clients appropriately? What even is it?!
Lucky for you, we’re here to help! Let’s take a look at everything you need to know about GST.
WHAT IS GST?
GST is a 10% tax on most goods and services sold in Australia. If registered, businesses must collect GST from each sale, which then gets passed to the ATO through the lodgement of a business activity statement (BAS).
SHOULD YOU BE REGISTERED FOR GST?
You should be registered for GST if your expected turnover for the financial year is $75,000 or more.
You need to register for GST within 21 days of becoming aware that your revenue will go over the threshold, so it's a good idea to check your earnings each month to see where you’re at.
If your business has a turnover less than $75,000 you may still wish to register for GST, to claim tax credits (more information on this further down) on purchases needed for your business.
It’s also important to note that if you are an employee and a sole trader (i.e. you are running a side business in your own name), you only register for and pay GST if you are earning $75,000 or more from your business. For example, if you are only earning $35,000 from your side business, but you are earning $50,000 per year in wages as an employee, you don’t need to apply for GST.
HOW DO YOU REGISTER FOR GST?
To register for GST:
Apply for an ABN via the Australian Government’s Business Registration Service
Once you’ve received your ABN, set up and log in to your business portal
- Navigate to Select one of the following options to view these details then Registrations then Next
- Select Activity Statement then select Tax type summary
- Select Goods and Services Tax then Next
- Enter your details
- Submit your application and verify
Please note, you do not need to set up your business portal if you have a tax agent that is lodging your BAS on your behalf.
HOW DO YOU CALCULATE GST?
There’s a simple formula you can use to calculate the GST for your goods or services:
Original Cost x 0.1 = GST
For example, if the price of the good/service is $50, the calculation would be:
$50 x 0.1 = $5
$50 + $5 = $55
The total you would charge is $55, and you would pay the ATO the $5 tax
If maths isn’t your strong suit, you can also use the Australia GST calculator