Goods and Services Tax (GST) was introduced on 1 July 2000 and is a tax charged on the sale of most goods and services in Australia.
Essentially, businesses do not bear the economic cost of the tax. Businesses registered for GST include GST in the price of sales to customers and claim back credits for the GST of their businesses purchases.
Know what GST means for your Business
If you carry on a business and your GST turnover is above the threshold, that is $75,000, you must register for GST. You can also choose to register for GST if you have an annual GST turnover of less than $75,000.
Cash vs Accruals Basis
How you keep your books, whether it is on a cash or non-cash basis, will depend greatly on the type of business you run. In order to choose the best method for your business, take into consideration the size of your business and plans for the future.
If you account for GST on a cash basis you account for the GST payable on your sales in the tax period you receive payment for them. If you only receive partial payment for a sale in a tax period, you only account for the GST that relates to the part payment in that tax period. Similarly, you only claim GST credits for your business in the tax period in which you pay for them.
Accounting for GST on a non-cash basis means you account for all GST payable and GST credits (GST refundable to you) when it has been earned, however it may not have actually been received. It also records expenses that have been incurred but not necessarily paid.
Reporting and Paying GST
If you are registered for GST, you are required to complete a Business Activity Statement (BAS) every month or quarter, or annual GST return to report and pay the GST on your sales, and to claim credits for any GST included in the price of the purchases for your business. Remember, you require a tax invoice to claim GST credits.
Here at The Quinn Group our experienced accountants can help you with your GST obligations and lodging your BAS. For more information regarding GST call us on 1300 QUINNS (784 667) or visit our website and submit an online enquiry.