GST is a tax of 10 per cent on most goods, services or anything else for consumption in Australia. If you are a registered business, GST will be payable by you on most goods, services or anything else you sell or supply in the course of your business.
Other registered businesses will include GST in the price of the things you purchase for your business. However, you may be entitled to claim input tax credits from the ATO if you are registered for GST and the acquisitions are acquired for the purpose of carrying on your enterprise. While the liability for paying the GST rests with GST-registered entities, the economic cost is borne by the end consumer.
GST-free supplies occur when you do not charge GST for sales but you are entitled to claim input tax credits for GST included in the price you paid for supplies. If a sale is input taxed, you don’t charge GST on the sale of the goods or services to your customers or clients, and you cannot claim input tax credits for the GST portion of your business expenses relating to the things acquired to make the supply.
The reporting periods for GST are called tax periods. These periods can be quarterly or monthly. Quarterly tax periods are periods of three months ending on 30 September, 31 December, 31 March and 30 June. Monthly tax periods end on the last day of each calendar month.
Entities with an annual turnover of less than $20 million generally have quarterly tax periods, but are able to choose to have monthly tax periods. Entities with an annual turnover greater than $20 million are required to have monthly tax periods. Monthly tax periods are also compulsory in certain other situations outlined on the ATO website.
The rules for attributing GST payable and input tax credits to tax periods differ based on whether GST is accounted for on a cash basis or an accrual basis. You can choose to account for GST on a cash basis if:
- You are a charitable institution or a trustee of a charitable fund;
- You are a deductible gift recipient;
- Your annual turnover is $1 million or less; or
- You are properly accounting on a cash basis for income tax purposes.
Entities carrying on an enterprise must register for GST if their annual turnover is at or above the registration turnover threshold of $50,000. This threshold is $100,000 for non-profit organisations. Entities below this threshold may choose to register for GST. If you choose to register, the registration must continue for 12 months.
If you are not registered for GST, you cannot include GST on anything you sell or provide. You are also unable to claim back any GST included in the price you pay for goods or services used in your business.
For more information see the Guide to the Goods and Services Tax for Small Business.