Should you be charging GST on your business sales?
Goods and services tax (GST) is a broad-based tax of 10% on most goods, services and other items sold or consumed in Australia. Generally, registered businesses include GST in the price of sales to their customers and claim credits for the GST included in the price of their business purchases. So while GST is paid at each step in the supply chain, businesses do not actually bear the economic cost of the tax. The cost of GST is impacted on the final consumer, who cannot claim GST credits. Your business has GST obligations if it:
• has a GST turnover of $75,000 or more ($150,000 or more for non-profit organisations)
• has a GST turnover of less than $75,000 (less than $150,000 for non-profit organisations) but choose to register for GST
• provides taxi travel.
You must pay GST on taxable sales you make. You can claim GST credits for purchases you used to make these taxable sales. If your business is registered or required to be registered for GST, you must make a taxable sale when:
• you make the sale transaction for the purpose of receiving payment
• you make the sale in the course of operating your business
• the sale is connected with Australia.
A sale is not a taxable sale if it is a GST-free sale or an input taxed sale.
GST should not be included in the price of things you sell that are GST-free, but you can still claim credits for the GST included in the price of taxable purchases you use to make these GST-free sales. Some GST-free goods and services include:
• most basic food
• some medical and health care services
• some exports
• some childcare
• some religious services and charitable activities
• water, sewerage and drainage
• international mail.
INPUT TAXED SALES
Your business does not need to include GST in the price of input taxed sales you make and you cannot claim GST credits for purchases that you use to make input taxed sales.
The two most common input taxed sales for small businesses are financial supplies, and renting or selling certain supplies of residential premises.
You generally make a financial supply when you do any of the following:
• lend or borrow money
• grant credit to a customer
• buy or sell shares or other securities
• create, transfer, assign or receive an interest in, or a right under a superannuation fund
• provide or receive credit under a hire purchase agreement if the credit is provided for a separate charge that is disclosed to the purchaser.
If you rent out a residential premises for residential accommodation (that is, not a commercial residential premises), you do not include GST in the price of the rent. You cannot claim credits for the GST included in any costs relating to the rental, such as agent’s commission or repairs and maintenance on the premises.
There are many other things involved in meeting your business’ Goods and Services Tax obligations. Here at The Quinn Group our experienced team of accountants and tax agents can assist you and your business in meeting these obligations. For more information, please visit our dedicated website GST Solutions. Submit an online enquiry or call us on 1300 QUINNS (1300 784 667) or on +61 2 9223 9166 to book an appointment.