Goods and Services Tax is a tax of 10% on most goods, services, and other items used or sold in Australia. Goods that don’t have GST included are known as GST-free sales. In this blog, you will come to know how and when your business needs to be registered for GST.
How does GST Registration Work?
Not every business needs to be registered for GST, but if you fail to register when you have to do so, you may have to pay penalties. If your business meets certain conditions for registering for GST, then make sure to register your business for GST, and you have to be registered within 21 days. Before getting your business registered, you should have an Australian Business Number (ABN). If you choose accounting services for your business, you can be sure that your accountants will stay updated with the latest rules and regulations announced by the government to help you stay compliant.
You only need to register your business for GST once, even if you run more than one business. If you are no longer required to be registered, you are allowed to cancel your GST registration. If you are a non-resident, based on your business activities, you may be liable to register for GST.
When Does Your Business Need to Register for GST?
Your business needs to register for GST:
- When your company has a GST turnover of $75,000 or above.
- When you start a new company and expect that your turnover will reach the GST threshold in the first year of work.
- If you are already running a business and have reached the GST threshold.
- If your non-profit organisation has a GST turnover of $150,000 annually or more.
- When you offer limousine or taxi travel for passengers irrespective of your GST turnover – this applies to both owner-drivers and if you rent or lease a taxi.
- If you intend to claim fuel tax credits for your company.
Registering for GST is optional unless your business or enterprise falls into one of these categories. If you decide to register, you are typically required to remain registered for a minimum of 12 months. You must maintain records that document the income and expenses used to calculate and justify the amounts you report and claim for GST credits. For record-keeping, you can reach out to the Melbourne bookkeeper for accurate records to claim GST credits.
What If You Choose Not to Register?
If you’re not registered for GST, you should monitor your turnover each month to determine if you’ve reached or are likely to exceed the threshold. You must register within 21 days of surpassing the relevant threshold.
Failure to register for GST when required may result in you having to pay GST on sales made from the date you were obligated to register, even if you didn’t include GST in the price of those sales.
Backdating Your GST Registration
You may apply to backdate your GST registration. For tax periods starting on or after 1 July 2012, backdating is restricted to a maximum of 4 years. This means that unless there is fraud or evasion:
- The ATO cannot backdate your GST registration beyond 4 years.
- You are not obligated to be registered prior to that date.
How to Register for GST?
After obtaining your ABN, you can register for GST through the following methods:
- Online services for business
- Through your registered tax agent or BAS agent. You can also find a tax accountant near your area by searching for ‘tax accountant near me’, but make sure they are well-qualified.
- By completing the “Add a New Business Account” (NAT 2954) form. You can order the form via our publication ordering service.
Once registered, you will receive a written notification with your:
- GST registration details, including the effective date of registration
- ABN details, if not previously received
After GST registration, you must submit a business activity statement (BAS).
Conclusion
It’s essential to work out whether your business must register for GST because failure to register can lead to penalties from the government. To stay updated with the latest tax-related trends, you can reach out to Reliable Melbourne Accountants.