Are You a Melbourne Start up? Read the Small Business Accountant’s GST Guide!

Categories: Small Business, Tax
23 September 2019

Goods and Services Tax (GST) is an important consideration for anyone starting out, or currently operating in business. Not all businesses will choose to register for GST and thresholds determine whether it is compulsory or not. Any small business accountant in Melbourne will tell you that those who wish to create a professional trading impression or expect to have high start-up costs, should probably give GST registration some serious consideration.

Financial Thresholds

The financial threshold for compulsory GST registration is a turnover of $75,000 or more per annum, this is doubled for NFP’s. There is a 21 day grace period for registration for businesses that are approaching the threshold and a business that has registered for GST but which remains below the threshold is still required to report and pay GST.

To operate in business, an Australian Business Number (ABN) is needed and ABN registration is the gateway to becoming a company that is registered for GST. The ABN registration number and the GST registration number will be the same since they are both part of the same system.

Calculating GST

GST is a flat 10% addition to the price of most goods and services. For example, if you sell something with a value of $100, an additional $10 will be added and this represents the GST. It is the $10 from this sale that will be given to the Australian Tax Office (ATO). There are a number of online calculators which can assist you in determining the amount of GST, but the calculator provided by the Australian Securities and Investments Commission is among the best.

Claiming Back GST

Input Tax Credits is the name of the scheme which facilitates the claiming of all of the GST spent on purchases for your small business. This figure is offset against the GST you owe the ATO to result in a net payable amount. For example, if you purchased goods and services with a value of $22,000 you are able to reclaim $2,000 of this(assuming the supplier is registered and has charged GST on their invoice). If you sold services or goods to the value of $110,000 you owe the ATO $10,000, so the net amount the ATO is owed is $8,000.

Certain Items are Exempt from GST

There are a number of items which are exempt from GST. These include; most basic food, some medical products, many educational courses and exports. Here is a full list of products and services which are exempt.

GST Invoices

A tax invoice must be issued for any sale over $82.50 (including GST). This must include:

  • That the document is intended to be a tax invoice
  • The identity of the seller
  • The ABN of the seller
  • The date the invoice was issued
  • Description and quantity of goods
  • The GST amount payable where appropriate
  • The extent to which each sale includes GST

Broader GST Matters

This article has provided a brief overview of some of the most important aspects of administering GST. There is a huge amount of information available to you, however it is worthwhile seeking the advice of a professional who will be able to guide you through the process.

At Scott Partners, we specialise in small business accounting and can provide you with a range of GST advice and solutions. Contact us today for a consultation to iron out any GST related questions you have about your business!