Lyla Lindsey
If you sell goods or services in Australia, you may need to register for a goods and services tax (GST) number. GST is a consumption tax levied on most goods and services sold in the country. Businesses with a GST turnover of AUD 75,000 or more per year must register for GST. This is calculated based on business income, excluding certain sales and regardless of profit. Once registered, you must charge a GST rate of 10% on every sale to an Australian resident and pay this to the ATO. You can also claim GST credits back on purchases for your business.
| Characteristics | Values |
|---|---|
| GST Full Form | Goods and Services Tax |
| GST Registration Criteria | GST turnover of AUD 75,000 or more |
| GST Registration Number | Tracks business through the Australian tax system |
| GST Rate | 10% |
| GST Invoicing | Tax invoices are required for GST-registered businesses |
| GST Returns | Foreign businesses must file tax returns every quarter within 28 days |
| GST Accounting Methods | Cash basis or accruals basis; businesses with a turnover of less than AUD 10 million can choose their preferred method |
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What You'll Learn
When to register for a GST number
Businesses in Australia must register for GST if their annual turnover meets or exceeds the GST threshold of $75,000. This requirement applies regardless of the business type, including sole traders, companies, or partnerships. If your business has an overseas GST turnover of $75,000 or more, you must register for GST.
You should check each month to see if your turnover has reached the threshold. If it does, you must register within 21 days. For businesses under the threshold, it’s still possible to register voluntarily, allowing you to claim GST credits on your purchases.
To register your business for GST, you’ll need to apply for an ABN (Australian Business Number) first and possibly register a corresponding business name with the Australian Securities and Investments Commission (ASIC). Essential documents include proof of identity, details of your business or enterprise, and financial information.
After registering, you submit your GST via Business Activity Statements (BAS), which can be lodged online, by mail, or through a tax agent.
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GST thresholds
In Australia, the GST turnover threshold is AUD 75,000. This applies to the total sales in the country during any 12-month period. This can be calculated in two ways: the sales in the last twelve months or a prediction of sales in the next twelve months.
If your GST turnover is below the AUD 75,000 threshold, you are not required to register for GST. However, you may choose to do so. If you do register, you must include GST in the price of most goods and services you sell, claim GST credits for most business purchases, and lodge activity statements to report your total sales, GST on sales, and GST credits.
If your GST turnover is over the AUD 75,000 threshold, you must register for GST. Once registered, you will receive a GST registration number, which establishes your business in the Australian tax system. This number tracks your business through the system, including the taxes you pay, the tax credits you receive, and the tax you charge your customers.
If you are registered for GST, you must charge a 10% GST on every sale to an Australian resident. However, if your customer is a business and they have provided a valid GST number, you do not need to add tax, as the buyer will handle it via Australia's reverse-charge mechanism.
If your GST turnover exceeds the threshold, you must register within 21 days. If you do not register when required, you may have to pay GST on sales made since the date you were required to register, even if you didn't include GST in the price of those sales. You may also have to pay penalties and interest.
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$161.99
GST credits
A GST number, or Goods and Services Tax number, is used to establish a business in the Australian tax system. It is used to track the taxes a business pays, the tax credits it receives, and the tax it charges to customers.
To claim GST credits, a business must lodge a BAS (Business Activity Statement) or an annual GST return. This is used to report all periodic business tax obligations and entitlements. Businesses with a turnover of more than $20 million must complete a BAS on a monthly basis. Other businesses can also choose to do this, or they can complete a BAS quarterly.
There is a 4-year time limit for claiming GST credits. To claim a GST credit, a business must have a tax invoice. This is different from a regular invoice as it includes the GST amount for each item and some other specific details. If a business's GST credits are higher than the amount of GST it owes, it will be entitled to a refund.
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GST on digital products
GST, or Goods and Services Tax, is a consumption tax levied on almost everything sold in Australia. It is applied at a flat rate of 10% on the sale of most goods and services.
The Australian government has specific rules regarding the taxation of digital products. A digital product is any product that is stored, delivered, and used in an electronic format, including e-books, images, movies, and videos. If you sell digital products to a customer in Australia, you must charge the GST rate.
However, there are certain conditions that determine whether you need to add tax to every sale. It depends on the amount of sales you make in the country, whether the sales are B2B or B2C, and other factors. For B2C sales, the GST requirement only applies if your business passes the annual threshold turnover of $75,000. If your GST turnover is under $75,000, you are not required to register for GST and do not include GST in your prices.
Additionally, if you use an online marketplace to sell your products, the marketplace operator is typically responsible for GST, not you. In this case, you don't need to register for GST, as the operator of the electronic distribution platform is liable for these taxes.
It's important to note that as a foreign business selling digital products in Australia, you are expected to file tax returns every quarter and have 28 days to file and pay after each period.
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GST reporting and accounting
If you sell goods or services in Australia, you need to check if you need to register for GST. If your GST turnover is over the $75,000 threshold, you must register for GST. GST turnover is your business income, excluding certain sales, not your profit.
Once you are registered for GST, you must charge 10% GST on every sale to an Australian resident. If your customer is a business and they have provided a valid GST number, you do not need to add and collect tax. You can pay GST by instalments each quarter, based on an estimate of your GST liability. You can also vary this amount each quarter.
There are two methods of accounting for GST: cash basis and non-cash basis (accruals). The method you use will affect when you must report GST. Small businesses with a turnover of less than $10 million can choose to account for their GST using the cash accounting method. This means you account for GST on the business activity statement that covers the period in which you receive or make payment for your sales and purchases. You can also use the simplified accounting method, which uses pre-calculated business norms percentages for different types of food retailers.
Non-cash accounting is more complicated and may require assistance from a registered tax or BAS agent. This method is better suited to businesses that are not paid immediately and is a way to track your true financial position. Using this method, you account for GST on the business activity statement that covers the period in which you receive any payment, issue a tax invoice before receiving payment, receive the invoice from your supplier before making the payment, or make any payment for a purchase.
You can claim GST credits for the GST included in the price of things you have bought for your business. You must have a tax invoice for a purchase before you can claim a GST credit. It is advantageous to claim your GST credits in the reporting period in which you receive the tax invoice from your supplier or make a payment. However, you are not obliged to, and you have four years to claim credits.
Foreign businesses are expected to file tax returns every quarter and have 28 days to file and pay after the end of each period.
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Frequently asked questions
A GST number is a Goods and Services Tax registration number that establishes your business in the Australian tax system.
If your business has a GST turnover of A$75,000 or more, you must register for a GST number. You can do this through the ABR (Australian Business Registry), where you can also get an ABN (Australian Business Number) and a business tax file number (TFN).
The current GST rate in Australia is 10%. This means that if you charge a customer A$100 for your goods or services, you must pay A$10 to the ATO (Australian Taxation Office).
The Australian GST applies to most retail sales to Australian consumers of imported goods and services. If you have customers in Australia, you must follow Australian GST rules. It also applies to digital products sold to Australian customers.
