Goods and services tax (GST)

What is GST?

Goods and services tax (GST) is a broad-based consumption tax charged at the rate of 10% on the sale of most goods and services and other things in Australia.

GST is charged at each step in the supply chain, with registered businesses including GST in the price of goods and services they sell.

For GST, a sale or supply includes a sale of goods, lease of premises, hire of equipment, giving advice, export of goods, and supply of other things. A purchase includes an acquisition of goods or services such as trading stock, a lease, consumables and other things.

Do I have to register for GST?

You must register for GST if you are in business and your annual turnover is at or above the registration turnover threshold of $75,000 per year.

You may choose to register if the turnover of your enterprise is below the registration turnover threshold.

How GST works

If your business is registered, GST is included in the price of most goods, services and other things you sell to others in the course of your business. These are called 'taxable sales'.

There are other types of sales where GST is not included in the price. These are either ‘input taxed’ sales or ‘GST-free’ sales.

GST may be included in the price of purchases (including importations) you make for your business, and it’s a good idea to allow for it when setting your prices, as your business will be liable for GST even if you forget to include it in the price.

The good news is that if you are registered for GST, you can generally claim a credit for any GST included in the price you pay for things for your business. This is called a GST credit.

The big exception is for input-taxed supplies, when you don’t charge customers GST and don’t claim a credit for things that you buy.

Accounting for GST

You are required to pay the GST you collect to the Tax Office on a regular basis The total amount you must pay the Tax Office is reduced by the amounts of GST credits you can claim for things you bought for your business. You report it on a Business activity statement.

You account for your GST obligations on the Business activity statement at the end of each tax period. As a small business you normally have quarterly tax periods (because your annual turnover is less than $20 million) but you can choose to have monthly tax periods.

GST and cash flow

If you report and pay your GST quarterly you may like to consider whether you would prefer to report and pay monthly instead. Monthly tax periods may suit you if you are likely to claim regular GST refunds or to help prevent you from spending GST you have already collected.

Tax invoices

A tax invoice is a document that records the sale of goods or services and complies with the GST law. The information that has to be included in a tax invoice is explained in the GST for small business (NAT 3014).

If you make taxable sales with a GST-exclusive value of more than $50 and you are asked to provide a tax invoice, you have to do so within 28 days of the request. For this reason you might prefer to issue all your invoices in a form that satisfies the requirements for a GST tax invoice.

You must have a tax invoice for a purchase before you claim a GST credit in an activity statement.

You do not need a tax invoice to claim a credit if the GST-exclusive value of the purchase is $50 or less. However, you should have some documentary evidence to support these GST credit claims, such as a cash register docket or other receipt. Remember, businesses that are not registered for GST cannot issue tax invoices or claim GST credits.

What to read/do next

For more information refer to GST for small business (NAT 3014).