Goods and services tax (GST) is a broad-based tax of 10% on most goods, services and other items sold or consumed in Australia. Generally, businesses registered for GST will include GST in the price of sales to their customers, and claim credits for the GST included in the price of their business purchases.
You must register for GST if you run a business or other ‘enterprise’ and your GST turnover is $75,000 or more (for non-profit organisations the threshold is $150,000 or more). Taxi drivers must register for GST regardless of their turnover. If you are registered, the goods and services you sell in Australia are generally taxable under GST unless they are GST-free or input-taxed. If they are taxable, you include GST in the price.
GST-free sales include most basic foods, some education courses and some medical, health and care products and services. You can generally claim a credit for any GST included in the price you pay for things for your business. You may need a tax invoice from your supplier to claim the GST credit. As a GST-registered business, you need to issue tax invoices to your customers, collect GST and send it to us with your business activity statement (BAS). There are a few ways you can make this easier to manage:
– use business accounting software to produce tax invoices and automatically generate reports of your GST liabilities and credits at BAS time
– put the GST you collect in a separate bank account
– take advantage of the ‘cash accounting’ option to better align your GST liabilities with your business cash flow.
You report and pay GST amounts to the ATO, and claim GST credits, by lodging a business activity statement (BAS) or an annual GST return. You can lodge and pay your BAS electronically, by mail or in person, but you need to do it on time to avoid interest and penalties. You must ask us to cancel your GST registration (and your ABN registration) if your business has been closed down or sold.