GST registration and calculation: all you need to know
What is GST?
Goods and Services Tax (GST) is a 10% tax put onto most goods and services provided in Australia.
The Australian Taxation Office (ATO) collects GST from businesses. The government then uses the money to pay for public services throughout the country.
Not everything for sale in Australia has GST attached to it.
Some goods and services are exempt, including certain medical products and services, foods and education courses.
Check the ATO's website for more information.
Do I need to register for GST?
You have to register your business for GST if:
your business sells goods and services that aren't GST-free
you run a business or enterprise with an annual turnover of $75,000 or more
you run a not-for-profit organisation with an annual turnover of $150,000 or more
you are a taxi or ride-sharing driver — regardless of what your annual turnover is.
You need to register for GST within 21 days of any of the above applying to your business.
How to register for GST
When registering for GST, you need to provide your Australian Business Number (ABN).
There are several ways to register your business for GST, including:
registering online using the myGovID app
calling the ATO on 13 28 66
using a registered tax or BAS agent.
For more information, visit this ATO guide.
How to calculate GST
Once you're a GST-registered business, you need to add GST to all your prices. Here's an easy formula for calculating it:
Your price x 1.1 = Price including GST
For example, $45 x 1.1 = $49.50
You can also use MoneySmart's GST calculator to double-check your workings.
What is GST turnover?
Your GST turnover is your total business income (not your profit), minus:
GST included in sales to your customers
sales that aren't for payment and aren't taxable
sales not connected with an enterprise you run
input-taxed sales you make
sales not connected with Australia.
When to issue GST invoices
When you make a taxable sale of more than $82.50 (including GST), you have to give your customers a tax invoice so they can see the amount of tax being added to the total cost, and so they can claim GST credits if they're a GST-registered business too.
There are 9 key pieces of information you need to include in your invoices:
The words 'tax invoice' should be somewhere clear on the page
The buyer's identity or ABN (optional if the sale is less than $1000)
A brief description of the goods or services you've sold
Date invoice was issued
The seller's name
Your ABN
The pre-GST price
The amount of GST added
The total cost to your buyer
Your GST reporting obligations
You have to tell the ATO how much GST you've collected from your sales income by reporting your GST in your Business Activity Statement (BAS).
How often you report your GST depends on your annual turnover.
Monthly reporting
If your GST turnover is $20 million or more.
Quarterly reporting
If your GST turnover is less than $20 million, and the ATO hasn't told you that you must report monthly.
Annual reporting
If you've voluntarily registered for GST and your GST turnover is less than $75,000 ($150,000 for not-for-profit organisations).
In some instances, you can choose a different GST reporting and payment cycle. For more information about this, visit this ATO page.
How to claim GST credits
A GST credit is the GST amount included in the price of goods or services you purchase for the running of your business. GST-registered businesses can claim back GST credits if:
The purchase was made to help run your business (e.g. stationery, inventory or work tools)
The purchase doesn't relate to input-taxed supplies
The purchase price included GST
You paid for, or will be liable to pay for, the goods or services purchased
You have a tax invoice from the seller for purchases more than $82.50
A customer leaves you in bad debt when they don't pay for your goods or services
You claim GST credits in your Business Activity Statement (BAS).
Be sure to keep and store your invoices and receipts so you can claim all the GST credits you're entitled to.
For more information about claiming GST credits, visit this ATO page.
GST tips for small businesses
As a GST-registered business, issuing tax invoices, collecting GST from customers and sending information to the ATO alongside your BAS can be a bit of a handful.
Here are some tips to make things a little simpler:
Put aside the GST you collect
Store these funds in a separate bank account so you're not caught out when it comes to paying the ATO.
Digitise your business activities to make them easier
Use business accounting software for your business admin to increase efficiency and accuracy.
Keep your receipts
Make sure you're vigilant when it comes to keeping receipts from purchases that are eligible for GST credits. The MYOB Capture App is included in your MYOB Business subscription, allowing you to take photos of your receipts and capture their data in your accounting software.
Start your free trial with MYOB today.
Disclaimer: Information provided in this article is of a general nature and does not consider your personal situation. It does not constitute legal, financial, or other professional advice and should not be relied upon as a statement of law, policy or advice. You should consider whether this information is appropriate to your needs and, if necessary, seek independent advice. This information is only accurate at the time of publication. Although every effort has been made to verify the accuracy of the information contained on this webpage, MYOB disclaims, to the extent permitted by law, all liability for the information contained on this webpage or any loss or damage suffered by any person directly or indirectly through relying on this information.
MYOB is not a registered entity pursuant to the Tax Agent Services Act 2009 (TASA) and therefore cannot provide taxation advice to clients. If you have a query concerning taxation including filing your BAS return or annual tax statements then you should consult with your accountant or other registered tax adviser.