|
GST is a goods and services tax levied currently
at the rate of 10% and wholly distributed to the State governments
in Australia. Most everything is subject to the tax with exemptions
for fresh foods and medical costs. The rate can be changed by the
Federal government at any time with out having it passed by an act
of parliament.
The economic cost of the tax is ultimately met by
the end user, hence, any business registered for GST can claim a
credit for GST if the tax is incurred on inputs used for creditable
purposes in the course of running a business but conversely the
registered entity is compelled to collect and remit the GST on goods
and services it supplies.
A GST free supply is where you have supplied an
exempt good or service yet you claim input tax credits. If a sale is
input taxed, e.g. residential rent, you do not collect GST and you
cannot claim input tax credits.
Reporting periods for GST can be quarterly or monthly. Quarterly tax
periods are periods of three months ending on 30 September, 31
December, 31 March and 30 June. Monthly tax periods end on the last
day of each calendar month. Reporting dates are at the
commissioners discretion and subject to whether you lodge yourself
or through a tax agent.
Entities with an annual turnover of less than $20
million as a rule have set quarterly tax periods. They are able to choose
to have monthly tax periods. Entities with an annual turnover
greater than $20 million are required to have monthly tax periods.
Monthly tax periods are also compulsory in certain other situations
outlined on the ATO
website.
The rules for attributing GST payable and input
tax credits to tax periods differ based on whether GST is accounted
for on a cash basis or an accrual basis. You can choose to account
for GST on a cash basis if:
- You are a charitable institution or a trustee
of a charitable fund;
- You are a deductible gift recipient;
- Your annual turnover is $2 million or less;
or
- You are properly accounting on a cash basis
for income tax purposes.
Entities carrying on an enterprise must register
for GST if their annual turnover is at or above the registration
turnover threshold of $75,000. This threshold is $100,000 for
non-profit organisations. Entities below this threshold may choose
voluntarily
to register for GST. If you choose to register, the registration
must continue for 12 months.
If you are not registered for GST, you cannot
include GST on anything you sell or provide. You are also unable to
claim back any GST included in the price you pay for goods or
services used in your business.
For more information see the
Guide to the Goods and Services Tax for Small Business.
|