How to know when to register for GST
GST (goods and services tax) is a broad-based tax of 10% on most products and services sold within Australia. As a business owner, it’s important to understand whether you’re obligated to charge GST to your customers.
Keep reading to know when you should register for GST.
When do you need to register GST?
The ATO (Australian Taxation Office) says you need to register GST when your business’s GST turnover meets or exceeds $75,000.
You must also register GST:
- If your turnover is more than $150,000 with a non-profit.
- If you want to claim fuel tax credits for your business.
- If you provide a passenger service like a taxi or limousine (including ride-sourcing like UBER).
- If you start a new business and expect your annual turnover to reach $75,000 or more in the first year.
If none of the above applies to your current business, then GST registration is optional.
How do I determine if I meet the threshold?
To determine if you need to register for GST, you’ll need to take your business’s annual GST turnover into account.
GST turnover is the sum of all the money that comes in and goes out of your business, minus any expenses or debts. This could include sales, fees, rent, capital investments and anything else that you’re using for your business.
To see if you meet the $75,0000 threshold to register for GST, examine your current GST turnover and your forecasted (predicted) GST turnover. If this months’ turnover plus the 11 months prior (or 11 months in the future) reaches or exceeds $75,000, you are obligated to pay GST.
What if I don’t register for GST?
Once your business reaches the threshold to start paying GST to the ATO, you have 21 days to register. If you fail to register within the 21-day window, you may be compelled to pay GST on every sale you’ve made since crossing the threshold, and if you didn’t compensate for GST in your pricing, you’d have to pay GST out-of-pocket.
Am I registered for GST?
You only ever need to register GST once, even if you operate multiple businesses. You can check your GST registration with the ATO by doing an ABN (Australian Business Number) lookup for your own business.
If you’re not registered for GST and meet the threshold requirements, you need to register.
How do you register for GST in Australia?
There’s more than one way of registering for GST in Australia:
- Use the ATO’s online portal.
- Call the ATO.
- Use a registered tax agent or BAS agent.
- Complete form NAT 2954 and mail it to the ATO (you can order the form here).
What are the benefits of registering GST?
Once you’re registered for GST, the following benefits will immediately apply to your business:
- You’ll be able to claim back GST credits on most of your business expenses. This means you’ll recover more on your tax return.
- You only need to provide GST accounting to the ATO once per year.
- You can claim GST concessions on purchases you make for business and personal use, such as a new vehicle.
How do I start charging GST?
Once you’re registered for GST, your customers will need to pay you 10% more than they previously would have. The easiest way to collect GST from your customers is to add 10% to the price tag of every product and service you sell.
If you’re providing services to your customers, you should factor in GST at the beginning of the service process.
How do I claim GST credits?
If you’re a GST registered business, then you can claim GST credit (also known as an input tax credit) for purchases:
- Where you plan to use the purchase solely or partly for your business.
- Where the purchase does not relate to making input-taxed supplies
- Where the purchase price included GST.
- Where you have obtained a tax invoice from a GST registered supplier (for purchases exceeding $82.50).
There is a four-year window of time you can claim GST credits. Learn more about claiming GST credits on the ATO website.
Frequently asked questions
How do I check my GST registration?
Head to the ABN Lookup website and enter your ABN to check your GST registration status.
What does it mean if you are registered for GST?
If you are registered for GST it means you need to charge an extra 10% on goods and services you sell to your customers and then report this to the ATO once a year.
Prepared by OnDeck Capital Australia Pty Ltd ABN 28 603 753 215 (“OnDeck”) for general information purposes only. Content may belong to or have originated from third parties and OnDeck takes no responsibility for the accuracy, validity, reliability or completeness of any information. Information current as at December 2021. You should not rely upon the material or information as a basis for making any business, financial or any other decisions. Loans issued in Australia are subject to the terms of a loan agreement issued by OnDeck. Loans are subject to lender approval. OnDeck® is a Registered Trademark. All rights reserved.