By law you are required to register for GST if:
- Your business or enterprise has a gross business income of $75 000 or more.
- Your non-profit organisation has a gross business income of $150 000 per year or more.
- You provide taxi or limousine services (both owner drivers or if you lease or rent a taxi) regardless of your gross business income.
- You want to claim fuel tax credits for your business or enterprise.
If your business income is under the legal threshold you’re not required to register for GST, however you may want to consider the following:
Advantages of registering for GST:
- You can claim back the GST on all your business expenses, this may be particularly helpful when purchasing expensive items such as computers or work vehicles.
- If the annual income of your business is less than $2 million you may be able to access GST concessions including:
- Accounting for GST on a cash basis, meaning you are only required to account for GST once payment is received.
- Paying GST by instalments, which you can vary on a quarterly basis.
- Annual apportionment of GST input tax credits, meaning if you are using some items for private use you can claim the full GST credits and make one single adjustment for the percentage of private use at the end of the financial year.
- GST registration can provide a small business with credibility and you may find that some businesses also prefer to purchase from GST-registered businesses because they can claim back the GST.
Considerations when registering for GST:
- GST registration results in more administrative tasks, including lodging Business Activity Statements (BAS) on a monthly or quarterly basis. Additional reporting can be time consuming and may outweigh the cost benefit.
- If your planned annual income is below the $75,000 threshold, not registering for GST means your prices will effectively be 10% cheaper than your GST-registered competitors. Conversely, if you charge the same as your GST-registered competitors, you may benefit from a greater profit margin.
Every business and their circumstances are different, talk to a YML Tax accountant today to find out whether registering for GST will suit your individual situation.