Background
Registering for Goods and Services Tax (GST) is mandatory for many companies. Generally speaking, companies registered for GST pay an extra 10% to the Australian Taxation Office (ATO) for goods or services sold. To account for this, companies registered for GST usually charge the amount to customers and include it in their sales prices. This article will explain the circumstances when it is mandatory for a company to register for GST, things to consider in order to make a decision on whether or not to voluntarily register for GST, and how to register for GST.
If you are considering registering for GST, consult an accountant and/or lawyer to help you make an informed decision.
When is it mandatory?
You need to register for GST if:
- Your company’s gross income excluding GST (GST turnover) is $75,000 or above (for new companies, if you expect your GST turnover to reach or exceed this amount)
- In the case of non-for-profit organisations, your GST turnover is $150,000 or above
- You provide taxi or limousine services
- You wish to claim fuel tax credits for your company
If you meet these categories, make sure to register for GST to avoid having to pay GST with extra penalties and interest, regardless of whether or not you charged the GST to your customers.
Should I voluntarily register?
If the above thresholds are not applicable to your company, you might still decide to voluntarily register for GST. There are many benefits that come with this, including reducing the risk of failing to register within 21 days as required, after reaching the GST turnover threshold. It can also elevate your company’s reputation by showing that your company is legitimate and proactive in following the law. This is especially important since many other companies are wary to purchase from companies that are not registered for GST.
On the other hand, registering for GST will require more administrative work, particularly to comply with ATO reporting obligations. Deciding not to register for GST also means that you have the flexibility to reduce your sales prices to a competitive rate.
How can I register?
If you decide to register, you will generally need to remain registered for a minimum of 12 months.
If you are yet to start your company, you can do so with us. Lawpath can assist you with, for example, registering for GST, an Australian Business Number (ABN) or Australian Company Number (ACN), and Tax File Number (TFN).
However, if your company is already established with an ABN, you can register for GST through the ATO on the Business Portal, by phone, through a registered tax or BAS agent or by filling in a written form. You can visit the ATO website for more information.
Conclusion
If your company fits within a category where it is mandatory to register for GST, you must do so. Otherwise, you will may still be required to pay GST with additional penalties and interest. If it is optional for your company to register for GST, there are many disadvantages and disadvantages to consider. Ultimately, you should consult an accountant and/or lawyer to help you make an informed decision.
