In this guide, you will learn when your sales are taxable and when to include GST in the price.
Overview of taxable sales
If you are a GST-registered business, you must charge GST on things you sell in Australia – unless that specific sale is GST-free or input-taxed. For a sale to be a taxable sale, here are three main conditions to be satisfied:
- You receive payment
- It is part of your business
- It is connected with Australia
Paying GST on taxable sales
If your business makes taxable sales, you are required to collect GST from your clients and report it to the ATO when you file your activity statement. For taxable sales, you must:
- Include GST in your prices where required.
- Provide a tax invoice to your customer.
- Report and pay the GST collected when you file your activity statement.
- Claim GST credit for eligible business purchases that included GST and were made in connection with your taxable sales.
Partly taxable sale
If your sale incorporates separate, identifiable components and some of those components are GST-free, the sale may be partly taxable. In this case, GST applies only to the taxable part of the sale. For more information, get in touch with the best accountant in Melbourne.
Capital assets
Sales of business assets such as motor vehicles and office equipment are taxable sales. You must report GST when you trade in or dispose of business assets by transferring ownership.
Sales for payment
For a sale to be taxable, it should be made for payment that can be monetary or another form of payment, including:
- Goods or services offered instead of money, such as barter transactions.
- Payment in the form of refraining from doing something.
Sales in the course of operating your business
For a sale to be taxable, you are required to offer the services or goods as part of running your business. Basically, it includes all sales of business assets, including items such as office plant and equipment and motor vehicles. Additionally, it includes things completed during setting up or winding down your business.
Sales connected with Australia
GST applies to sales connected with Australia, whether they are:
- Property
- Goods
- Things other than property or goods.
Property: A sale of the property is connected with Australia if the property is located in Australia. For GST, property includes:
- Land and buildings
- Land
- Interest in land
- Rights over land
- A licence to occupy land.
Goods: A sale of goods is connected with Australia if the goods are either:
- made available or delivered in Australia to the purchaser.
- removed from Australia.
- brought to Australia – given the seller either imports the goods or installs or assembles the goods in Australia.
- from 1 July 2018, supplies of low-value imported goods to a customer in Australia.
Exports of services or goods from Australia are usually GST-free, even if the sale is connected with Australia.
Things other than goods or property: A sale of something other than property or goods is connected with Australia if either the:
- Thing is done in Australia
- Seller makes the same through a business they run in Australia
- Sale is of a right or option to buy something that would be connected with Australia.
- Buyer of the sale is an Australian consumer.
Conclusion
Understanding when GST applies helps your business charge the correct amount and meet its tax obligations. While most taxable sales require GST, some may be GST-free, input-taxed, or partly taxable. If you are unsure about a sale, seek advice from reliable Melbourne accountants to ensure you get it right.