Goods
and Services Tax (GST) is a broad based tax on the supply of most goods and
services consumed in Australia. The GST rate is 10%.
The
GST commenced on July 1, 2000. Basic foods, some health services and
export are granted GST free.
GST
is paid at each step in the supply channel. If your business is a
consumer of goods and services then you must pay a 10% tax on the product
you buy to operate your business.
If
you are registered for GST, the 10% tax paid (input tax credits) will normally
be able to claim back from The Australian Taxation Office (ATO). As a
business owner of goods and services you will need to charge your clients 10%
extra on top of your goods and services every time a customer buys from
you. This means that GST liability flows along the supply channel, and is
actually included in the price paid for by the consumer, who cannot claim the
input tax credits.
The
liability to pay GST rests on the supplier of the goods and services, not the
customer. Therefore, even if you do not include GST on the price of goods and
services you provide, you are still liable to pay the 10% tax to the ATO. In
other words you as a business owner will in fact be collecting tax on behalf of
the government.
The
amount of GST that you eventually pay to the ATO is the difference between what
you have paid in GST to buy goods and services, and what you have collected in
GST from your customers. This reports on a single form called The Business
Activity Statement (BAS). Most businesses do this quarterly.
There are many things to consider when you are starting a small
business. Not every business needs to register for GST. You must
register for GST if you fulfil both of the following criteria:
- You are carrying on an enterprise
- You’re annual turnover will exceed $75,000
Your turnover does not have to reach $75,000; you meet the turnover
threshold when it appears you will exceed $75,000. You must also
register for GST if you provide taxi travel as part of your business.
If your are a new start up it is best for you to consult with your accountant to see whether your business situation requires to register for GST.
1 comment:
Hello Ayesha,
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