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Goods and service tax (GST)

Goods and services tax (GST) is a wide based tax of 10% on most goods, services and other items sold or purchased in Australia. Generally, businesses are registered for GST which will include GST in price of sales to their customers, and claim credits for the GST included in the price of their business purchase.

Taxpayers are only registered once for GST, even if they operate more than one business. When taxpayers are registered for GST, they include GST in the price of goods which taxpayers sell and claim credits for GST in the price of products they buy for business. Taxpayers must register for GST if they run a business or enterprise and their GST turnover is $75,000 or more ($150,000 or more for non-profit organizations).

It is the responsibility of the taxpayer to register if their turnover exceeds the relevant threshold or is likely to exceed it. If they are not registered for GST, check each month to see whether they have reached the threshold. Taxpayer must register within 21 days of reaching the threshold.

You must also register for GST if you want to claim fuel tax credits for your business

When taxpayers make a taxable sale of greater than $82.5(including GST), taxpayers GST-registered customers need a tax invoice from taxpayers to be able to claim a credit. Tax invoices must include certain information. There are additional rules for sales of greater than $1000, and for invoices issued by agents or created by the recipient.

As a GST- registered business, taxpayers need to issue tax bills to their customers, collect GST and sent it to ATO with their business activity statement (BAS). There are some ways which taxpayers can choose their convenience:

• Use business accounting software to produce tax bills and automatically issue reports of their GST liabilities and credits at BAS time.
• Taxpayers need to put entire GST amount in separate bank account collected during the year.
• Take advantage of the cash accounting option to better align your GST obligation with taxpayers business cash flow.

If tax payers business changes or ceases taxpayers must cancel their GST registration when selling or closing their business. Taxpayers may also need to cancel their GST registration if their business is reconstructed. Taxpayers must cancel their registration within 21 days of sale or closure as cancellation is likely to affect their ABN and any registrations for fuel tax credits, luxury car tax and wine equalization tax.

If taxpayers have made voluntary payments towards their end of year obligations, ATO will offset their payments against any GST amount that taxpayers need to pay. Tax payers don’t have to record the amount of these payments on their annual GST return.

If taxpayers had made voluntary payments are more than they needed to pay, they will be refunded any amount that ATO owe them.

If taxpayers have no statement to report for the period, they can phone ATO business direct service on 137226 to record a ‘nil annual GST return ‘filing. This is an automated service that is available 24 hours a day.

Generally, businesses and other organizations registered for GST will

• Include GST in the price they charge for their goods and services.
• Claim credits for the GST included in the price of the goods and services taxpayers buy for their business.

So while GST is paid at each step in the supply chain, it follows through your business. The tax is borne by the final consumers, who can’t claim GST credits.

For more information on GST from ATO website by clicking here.

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