What Does GST Stands For?

Introduction

You’re probably familiar with the term “GST,” which stands for “goods and services tax.” This tax is included in the price of almost anything that can be purchased in Australia. You probably don’t give it a second thought because it is nearly always already included in the price that is shown on the shelf.

GST stands for “goods and services tax”. The rate for the GST is ten per cent. In Australia, it is added to the majority of transactions, but not each and every one. Businesses registered for GST are exempt from paying GST on any services or subscriptions purchased from foreign vendors. It’s time to determine whether or not your company is required to register for the Goods and Services Tax (GST).

How does GST work?

The GST on any item is designed to be paid by the consumer in the end, rather than by the businesses involved in its supply.

How can GST affect my business?

If you’re a business, you may be required to register for and collect GST. This means

  • you may need to add GST to your prices
  • you will need to send that extra money to the ATO
  • you can claim back any GST that you’re charged on business supplies and expenses

How much is GST?

10% is the GST rate. It’s charged on most sales in Australia, but not all of them.

When to register for GST

If you’ve started a new business, you should register if you expect your GST turnover to reach $75,000 in the first year.

You have to register for GST within 21 days of becoming aware that your GST turnover will go over the threshold. It’s a good idea to check each month to make sure you’re not likely to go over the limit.

If your GST turnover is below the $75,000 threshold, you may choose to register. But if you do, regardless of your turnover, you must:

  • include GST in the price of most goods and services you sell
  • claim GST credits for most business purchases you make
  • lodge activity statements to report your total sales, GST on sales and GST credits.

What GST credits are

You might be able to claim GST money back from the ATO.

If you’re registered for GST, you can generally claim back any GST included in the price of things you’ve bought for your business. These are GST credits.

If, for any tax period, your GST credits are higher than the amount of GST your business has to pay the ATO, you could get a refund.

Let’s take an example. Laura runs an accountancy firm and has just bought a new computer for the office. The computer cost Laura $1100, including GST. Because GST is one-eleventh of the sale price, Laura paid $100 GST.

Laura is registered for GST because her business’s GST turnover is more than $75,000. She is able to claim GST credits for the GST that was in the sale price of her computer ($100).

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