Understanding the Basics of GST

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GST MADE SIMPLE FOR BUSINESS OWNERS 

Understanding GST (Goods and Services Tax) is essential for every business owner in Australia. GST is a 10% tax on most goods and services sold in the country, and if your business earns more than $75,000 per year, you’re required to register for it. Below, we’ll break down the basics and help you manage GST with ease.

What Is GST?

GST is a value-added tax levied on most transactions in the Australian economy. When you sell goods or services, you add 10% to the price, which your customer pays. This GST is then paid to the ATO (Australian Taxation Office).

When Do You Need to Register?

You must register for GST if your business has a turnover of $75,000 or more annually. For not-for-profits, the threshold is $150,000. Even if your business makes less than these amounts, you can still choose to voluntarily register for GST.

How to Manage GST in Your Business:

  1. Issue Tax Invoices: Ensure every sale includes a tax invoice, which clearly states the GST component.
  2. Claim GST Credits: You can claim GST credits on purchases you make for your business, helping reduce your total payable GST.
  3. Regular Reporting: As part of the Business Activity Statement (BAS), you’ll need to report and pay GST to the ATO, either quarterly or annually.
  4. Keep Good Records: Maintain detailed records of all sales and purchases. Cloud-based accounting software like Xero or MYOB can make this much easier.

Example:

Let’s say you sell a product for $100. You’ll charge $110 to your customer (including $10 GST). At the end of your reporting period, you’ll need to pass that $10 GST to the ATO.

What Can You Claim?

If you purchase business supplies for $550 (including $50 GST), you can claim back that $50 GST as a credit when submitting your BAS.

Simplify your GST management with the help of cloud accounting software and professional advice. If you need help understanding GST obligations, managing BAS, or setting up your accounting system, Tax Accounting Adelaide is here to support you.

Need a hand with your GST or BAS? We’re here to help! Contact Tax Accounting Adelaide today, and let’s make managing your business finances easier together.

Contact us today for expert advice and ensure your business stays compliant while maximising your GST benefits.

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