Businesses are required to charge a Goods and Services Tax (GST) at the rate of 10% on nominated goods and services that they supply to customers. The GST payable is included in the price paid by the recipient of the goods and services, and the supplier must pass this amount on to the Tax Office. Not every business has to report GST monthly or quarterly. Eligible clients are able to lodge their GST report once a year. This date will be the same date your income tax return is due to be lodged. Normally this will be on 31 October, however if your returns are lodged by a tax agent, this deadline is extended until 28 February. If you are not required to lodge an income tax return, the due date will also be 28 February following the end of the annual tax period.
Your business may be eligible to report GST annually if:
• you are not required to register for GST
• you have not elected to pay GST by instalment amounts as advised by ATO
You must assess your eligibility to report GST annually as at 31 July each financial year. In order to report GST annually on 28 February, your business must not have registered for GST for some other reason, and your projected GST turnover must be less than the registration turnover threshold, that is:
• $75,000 for small businesses (and all other entities except non-profit organisations)
• $150,000 for non profit organisations
If you are no longer eligible to report GST annually you must inform the ATO. As a result your business’s GST reporting cycle will be changed to monthly or quarterly, with effect from 1 July.
If you have made voluntary payments towards your end of year liability, the ATO will offset your payments against any GST amount that you need to pay. You do not have to record the amount of these payments on your annual GST return. If your voluntary payments are more than you need to pay, you will be refunded any amount that is owed to your business.
A failure to lodge (FTL) penalty may be applied if you do not lodge your GST return on time. The amount of FTL penalty is calculated at the rate of 1 penalty unit (currently valued at $110) for each period of 28 days, or part thereof, which a document is overdue up to a maximum of 5 penalty units. Other things, such as the level of risk and the size of your entity are also taken into consideration. Size is determined as follows:
• A small entity is an entity that is neither a medium or large entity.
• A medium entity is either a ‘medium’ withholder for pay as you go (PAYG) income tax withholding purposes, or has assessable income or current annual turnover of more than $1million and less than $20million.
• A large entity is either a ‘large’ withholder for PAYG income tax withholding purposes, or has assessable income or current annual turnover of $20million or more.
If you have no activity to report for the period, you are still required to complete and lodge an annual GST return.
If you are unsure whether your business is eligible to report GST annually or you need help lodging your return, the experienced accountants and tax agents here at The Quinn Group can assist. For this, or for any other tax related queries submit an online enquiry or call us on 1300 QUINNS (784 667) or on +61 2 9223 9166.