When to Register Your Business for GST

What new business owners need to consider about GST in order to meet their requirements.

The topic of GST frequently arises for business owners who are just starting out. In this article we discuss GST – what it is, whether you need to register for it, and how to register.

What is GST

Goods and Services Tax, often known as GST, is collected by registered businesses.

GST is a 10% tax levied on most goods and services sold or consumed in Australia. Usually, businesses who sell these products and services include the cost of GST in their prices.

Do I need to register for GST?

GST applies to most businesses across Australia and it’s highly likely that your business will be affected by the tax.

You must register for GST if:

your business has a turnover of $75 000 or more a year
your non-profit organisation has a turnover of $150 000 per year or more
you provide taxi or limousine travel or ridesharing services regardless of your GST turnover
you want to claim fuel tax credits for your business.

If your business doesn’t fit into one of the above categories, you don’t have to register for GST. Learn more about GST from the ATO here.

Note that GST turnover is your business’s gross income, not your business’s profit.

When do I need to register?

Your business must register for GST when it makes $75,000 income within a financial year (or $6,250 or more each month). If you haven’t registered for GST, and you become aware that your GST turnover will exceed the $75,000 per year threshold, you will have to register for GST within 21 days.

It’s a good idea to keep an eye on your turnover to help identify whether you need to register. You can quickly check your monthly turnover in your xero file or the online accounting system that you use. If you’re not yet using online accounting software, talk to us about your options, as this will make reporting and preparing for GST registration much easier.

Many business owners register their businesses from day one, regardless of income. If your GST turnover is below the threshold, registering for GST is optional. If you do register and your turnover is below the threshold you still must include GST in your fees and claim GST credits for your business purchases.

Many businesses don’t realise they have exceeded the income threshold. This can result in having to pay GST on sales to the ATO even if you haven’t included it in your prices – so you could lose one-eleventh of your income. You may also have to pay penalties and interest.

How do I register for GST?

You need an Australian Business Number (ABN) to register for GST, as the ABN is part of the GST system. Your ABN will also be your GST registration number.

You can register for GST and apply for your ABN at the same time.

Register online at the ATO here
Register through Balanced Beans or your registered tax agent
Contact the ATO by telephone on 13 28 66.

You can apply to backdate your GST registration.

What are GST credits?

If you’re registered for GST, you’re entitled to claim input tax credits for the GST paid on items you’ve bought for business use. If you’re not registered, you can’t claim input tax credits.

GST credits are a potential amount of money your business might be able to claim from the ATO. If at the end of the reporting period your GST credits are higher than the amount of GST you have to pay the ATO, you will be able to get a refund.

In order to receive GST credits, you must submit a Business Activity Statement or an Annual GST return which Balanced Beans can prepare on your behalf.