This is a sticky topic that comes up regularly so I thought it was high time I bust some of those myths and give it to you straight. Before we get into it, remember, there’s now extra things on the ‘To Do’ list. You will be required to report on your GST income via a quarterly BAS. If you do need to register and you don’t do it, you may be up for penalties and backpaying loads of taxes later on so, it’s crucial you get it right.
You must register for GST when…
There are a lot of cowboys out there who are great at sharing the wrong information far and wide. It’s a pet hate of mine TBH! If you are ever unsure, speak with a qualified bookkeeper or accountant. In the meantime, you must register for GST when:
- Your rolling income over 12 months is likely to reach or exceed $75,000.
- When you launch a new business and you believe you will reach $75,000 in your first year (go you!).
- If you are a non-profit organisation and your income over 12 months is likely to reach or exceed $150,000.
- If you are a Taxi, Lyft, Limousine or Uber driver. Your income is not taken into account here, you will need to register regardless.
- If you want to claim fuel tax credits.
Now, most of those won’t apply to newbie business owners however, I always say to keep a close eye on your income so you know when it’s time to register for GST – you should be watching your income daily/weekly anyway 😉. If you fail to register in time, you will be required to backpay the GST and their could be fines and interest. Don’t let a misstep bring you down!
Here’s the ATO’s wordy downlow.
GST Sticky Topics
I get a LOT of questions about the if’s and but’s about GST and as much as I’d love for there to be some grey area, there just isn’t. Here’s what you need to know:
- GST is based on your income not your profit. If your net income is $76,000 and $45,000 of that is expenses, you still need to register for GST.
- Once you’ve registered, you must have a GST component on your invoices, this is 10%. You can choose to add this to your pricing or absorb it temporarily (making sure you do a review and increase stat!). Either way, you will need to report on your GST income.
- You are required to submit quarterly BAS’s (Business Activity Statements) along with a yearly tax return. One does not cancel the other.
- If you chose to register for GST voluntarily, meaning you’re not yet at the $75k, you can opt for annual or quarterly BAS
- Your BAS payments are required to be paid quarterly and it’s something you will always hear me chattering on about, set up a separate bank account to pop your GST savings aside so you know it’s always there and ready to pay when due, because you’re just the collection agency for the ATO 😆 it’s not your money to keep or spend.
Still not sure? Check out my blog ‘Are You Making These 10 GST Mistakes’ to check out a few scenarios.
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