GST does not apply to every good and service traded. The rules are quite complex. While we cannot answer every scenario, below are the most common GST registration questions and answers. If you have a question not answered here, leave your comment below.
1. When does my business have to become registered for GST?
There are some exceptions but small businesses must register for GST when the turnover (gross income less GST) reaches $75,000. There are two methods to calculate this. If you project your income over the next 12 months will reach $75,000, you must register for GST from the start. This is called ‘projected GST turnover’. The other method is ‘current GST turnover’ and is calculated as the total turnover for the previous 12 months (including the current month). GST turnover to calculate registration eligibility does not work on a financial year.
So, if you are starting your business, and reasonably project you will turnover $75,000 or more, you must register for GST. If you are not sure what your turnover will be, run a report each month. Once your turnover reaches $75,000 including the current month, you must register within 21 days of this.
If you are a not for profit business operator, or operate a taxi there are different regulations for you.
2. Can I back date the GST registration?
Yes, you can have your GST registration backdated to up to four years. You will need to lodge the BAS or annual GST statements for the backdated period. You will also need to pay GST on taxable supplies you have made. If you are planning to do this, seek advice from your accountant. There may be other things you need to consider for your specific situation before you backdate your registration.
3. I am not registered for GST, what do I put on the invoices to my customers?
If you are not registered for GST, you must not use the words ‘Tax Invoice’. A tax invoice indicates the supply is inclusive of GST. You must not include anywhere on the invoice a GST component for the supply. There are rules about what is to be included on an invoice to a customer. These can be found on the www.ato.gov.au website.
Your customers should be able to tell from your invoice that you are not registered for GST. You may choose to use the title ‘Invoice’. There will be no GST included and many business owners choose to enter a comment on the invoice advising the customer there is GST on this supply.
4. I am registered for GST, what should I put on the invoices to my customers?
You must title your invoices ‘Tax Invoice’ if you are registered for GST. You must issue a tax invoice for all supplies of more than $82.50 including GST. There are seven pieces of information you must include for sales less than $1,000 and other information to include for sales greater than $1,000. Please see www.ato.gov.au for more information on this.
You must specify the GST amount on your invoices. If the GST amount is exactly 1/11th of the total, you can specify that the total amount is inclusive of GST.
5. If I am not registered for GST, do I claim the GST inclusive price of a purchase or the ex GST price?
If you are not registered for GST, you can claim the total purchase price of a business expense inclusive of GST as the business deduction, to the extent the purchase was used by your business. For example, ABC works is not registered for GST.
They are claiming telephone costs for the financial year of $1,000 + GST = $1,100. This telephone was used 100% by the business (no personal use), so ABC works can claim $1,100 as a business deduction.
6. Do I have to lodge GST quarterly, or can I lodge annually?
You may elect to lodge your GST return annually if your turnover is less than $2M and you have elected to register for GST. If you are a business that must register for GST, you are not allowed to report and lodge an annual return.
If your turnover is less than $20M and the ATO have not advised otherwise, you must pay your GST quarterly. You can pay a quarterly instalment and lodge an annual report in some cases. See your accountant for specific advise regarding your options.
7. How do I register for GST?
You must have an ABN to register for GST. You can register via the business portal, through your BAS agent, use a form or over the phone by contacting the ATO. Once registered, you will receive a notification and GST registration number. If you need a BAS agent, we can help you. Submit your details via the Contact Us form.