ATOEntrepreneurGoods & Service TaxGSTSmall BusinessTax

To GST or not GST ….that is the question?

“GST – sure you can google it, but is the answer accurate and are you even asking the right question?”

You see, in all my 17 year of working in accounting and finance I think I have seen every mistake or error under the sun, so nothing surprises me too much anymore. However it is since the introduction of GST in 2000 that I have seen some real doozies.

Sometimes Dr Google can not help you.  You need accurate and reliable advice.  Advice that answers the question you should have asked and not the question you did ask.

So in order to save you some time googling the wrong question and finding the wrong answer – here are some top GST mistakes I would like you to avoid:

  1. In order to charge GST on invoices to your customer you NEED to be registered for GST.  Just because you run a business, does not automatically mean you are registered for GST.  If you are not sure – ask your BAS agent or Tax agent to check for you.  Raising incorrect or invalid invoices can be quite embarrassing to fix up.
  2. If you are not registered for GST – then that is totally OK.  What is not OK is if you are not registered and yet you try to claim GST credits back on purchases.  You see if you are not registered for GST – you don’t get any GST credits back.  You simply claim the full cost as a total tax deduction as part of your tax return (or business tax return).
  3. You are not required to register until your sales reach $75,000.  So that is income alone…nothing to do with expenses.  So your income could be $75,000 and expenses could be $20,000…meaning you make a profit of $55,000 – and you would still NEED to register.
  4. If you decide to register (yay), then you can’t just pick and choose who you will charge GST to.  It is either all in or all out.  So once registered, you need to charge GST to all customers (well providing you are making taxable sales – but that is a conversation for a whole different day).
  5. If you register for GST – you actually need to pay any GST collected to the Tax office.  That is right….that GST collected is not your money…so best idea not to spend it.  Instead, my biggest tip is to setup a separate GST bank account.  Put money aside into that account so the chance of spending it is minimal.   Making your next GST payment will now be stress free.
  6. Not only do you need to pay the GST to the tax office, but you also need to lodge a Business Activity Statement (BAS).  I have even see business owners make a  payment to the tax office (but not lodging the corresponding BAS) – and the ATO actually has refunded the payment as they don’t know what it is for.  The business owner has then gotten a late lodgement fee AND has been charged late payment interest!

So GST is really not a “let’s ask Dr Google and get the answer” type of thing – as the consequences for getting it wrong are simply not worth it.

If you  have any questions around GST I suggest you speak to a qualified BAS Agent (like moi) – or speak to a qualified tax agent.  This is what we do – and we don’t need Dr Google to get the answer.