Registering For GST

"Should I register my business for GST?" could be a question of many small business owners. Registering for Goods and Services Tax (GST) can actually be a beneficial decision for some small businesses. While GST registration may not be obligatory for all businesses, it offers numerous advantages including enhanced cash inflow, heightened credibility, and the ability to claim input tax credits. 

What is GST? 

According to the Australian Taxation Office (ATO), GST is a comprehensive tax of 10% that applies to the majority of goods, services, and other items that are bought or used in Australia. 

How GST works? 

A business must register for GST only when: 

• Its turnover is $75,000 or more.

• Its turnover is $150,000 or more for not–for–profit organisations.

• Taxi and rideshare providers (such as Uber) need to register for GST regardless of their annual turnover.

However, businesses can register for GST even when they have not reached the GST thresholds above. 

Benefits of registering for GST: 

• GST credits or GST refund: You can claim GST credits or receive GST refund if  you are registered for GST. Moreover, if you have a significant amount of overseas sales or if you sell GST-free items, registering for GST could be a worthwhile choice, as it increases the likelihood of receiving a GST refund. 

• Improving cashflow in short-term: In the majority of situations, quarterly payment of GST is required. You retain the GST collected for a few months until the payment deadline arrives. While this can improve your cash flow, it is crucial to ensure that you have the sufficent funds when the payment is due. To address this concern, it is advisable to establish a dedicated savings account where you can manage the GST payment better. 

• Business-size perception: if a business has not been registered for GST, it may suggest that it is a small-scale enterprise. Registering for GST can contribute to upholding a professional reputation for your business and avoid any unfavorable assumptions about your capabilities and profession. 

• Meeting requirements for some government grants: Some government grants are only available for businesses that are registered for GST. One of the examples is JobKeeper during the pandemic. 

Challenges for GST Registered Businesses: 

• You need to add an extra 10% of GST on top of your price. Your pricing can appear less competitive compared to the similar businesses that are not registered for GST. 

• To ensure being compliant, you must lodge a Business Activity Statement (BAS) on a monthly, quarterly, or annually basis and record all GST received on sales and GST paid on purchases in the day-to-day operations of your business. 

• You might need a better understanding regarding GST to keep your accounts accurate. 

If these disadvantages are preventing you from registering for GST, Profit Tracking Advisory can be your reliable companion. Our comprehensive bookkeeping and taxation services will help you stay on top of all your obligations. Contact us today to learn more about our services.