gst goods and services tax

Thinking Taxation – How To Calculate & Register GST

The Goods and Services Tax is a tax applied to the vast majority of goods and services offered by businesses in Australia. The revenues that are collected through this tax form a large proportion of the government’s overall revenues. As such, the GST eventually funds essential public services and helps to improve the quality of life for all Australians.

If you operate a business in Australia, then you may need to register and calculate GST for the goods and services that you sell. While this process is straightforward, it may be confusing if you have never had to handle it before. Having some background into how the GST works on the business side of things will be helpful for staying in compliance with Australian tax legislation.

Let’s look at how you can calculate GST and complete your GST registration as a business in Australia.

Know Who Needs To Register For GST

Before taking the time to get your GST sorted out, make sure that your business actually needs to go through with the process. Depending on the nature of your business, you may not need to. GST registration needs to be done if your business makes more than $75,000 in annual turnover unless you are a taxi or ride-sharing driver. If you operate a non-profit business, then this limit is raised to $150,000.

For any level of annual turnover, your business will need to register for GST if you intend to claim fuel tax credits.

Alternatively, even if your business falls under the appropriate annual threshold for GST registration, you can still opt to voluntarily register for GST, which comes with some benefits.

How To Register

To register for GST in Australia, you must first apply for an Australian Business Number (ABN). Once you have your ABN, the process is straightforward. You can register for GST online with the Business Registration Service. Registration is completely free of charge. If you do not feel comfortable registering online, you can also call the Australian Taxation Office to complete the process. 

Calculating GST

Once you have registered for GST, you will need to calculate GST moving forward. This means that you will need to add GST to your prices, put the GST onto invoices that you distribute for your goods and services, and keep records of these charges for reporting with the ATO. 

When it comes to calculating the new prices in your business, this simply requires a simple multiplication of the base price of your product times the GST rate. This rate is currently set at 10%. This is the amount that you will need to add to your base price. If this seems overly complicated, a simple calculator will help you make the adjustments for GST.

Make sure that you do not accidentally add GST to goods that are not intended to have this tax applied to them. You can see a comprehensive list of these goods on the ATO’s website.

Moving Forward With GST

The process of registering for and calculating GST is straightforward with a bit of practice. If you are a small business owner registering for GST for the first time, it is helpful to use up to date accounting software to handle many of the calculations for you. It is also recommended that you choose the “cash accounting” method of handling your GST cash flows in order to have a better sense of the real-time financial situation of your company. Becoming familiar with the process takes some time, but with a bit of exposure and experience, it will quickly become second-nature.

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