Australian GST 101: A Quick Guide

Being a small business owner, I know how important GST is and what is to my business. All business owners should have an idea as to what this is. So, what is GST and by what method does it work in Australia? Find out more about this tax type, the formulas you can use to charge your customers the necessary amounts.

What is GST?

GST is the abbreviation for goods and services tax and it’s basically the Australian version of the Value Added Tax used in other countries. It is added on to the sale of most services and goods.

How much is GST?

Currently in Australia a GST of 10% is imposed on businesses. This rate is usually updated regularly so it is important that you keep an eye out for the rate regularly.

What are the conditions to register for GST?

Not everyone needs to register for GST but usually most businesses have to.  If you meet any of the following requirements you must register for this tax,

1. Your GST turnover is over 75,000AUD

2. A non-profit organization has a GST turnover of over 150,000AUD

3. You want to claim credit for the fuel tax (turnover doesn’t matter)

3. You own a limousine or taxi service (turnover doesn’t matter)

How do you register for GST?

If you meet any of the above requirements you have to register for GST without delay. Not registering for GST might be considered tax evasion or fraud. However, the common practice is that if you are eligible for GST but haven’t registered, when you do register or when the authorities question you have to pay back GST for all the sales since the date you were eligible for GST. It doesn’t stop here; you have to pay additional interest and penalties as well.

To avoid all this simply register yourself because there is no hassle when it comes to the registration process. You can do it over the phone, online or through an agent who must be registered. Once the registration is done that’s it you never have to register again.

How and where do I charge GST?

After you are done registering you need to add GST to every product or service you sell unless that goods or services are considered GST free. When it comes to GST free, this applies to most of the basic food items, some educational and health/medical services.

There are online calculators and simple formulas to calculate the cost after GST. You do not need an accounting degree to know how to work out GST on calculator. The simple formula is as follows,

Price with GST = Original Price x 1.1

Now this can change according to rate. 1.1 is because the GST rate is 10% so therefore the original price is being multiplied by this to get the GST price.

This is probably the simplest explanation of GST and the quickest guide. We did not want to be too technical, so this is only a summary of what GST is. Refer to the government website for detailed information.