Warnocks November/December Newsletter - Goods and Services Tax (GST)

What is GST? GST is a flat, 10% tax, levied on most supplies of goods and services in Australia.

Generally, businesses and other organisations that are registered for GST will include GST in the price they charge to their customers for the supply of taxable goods and services; and claim credits for the GST included in the price of goods and services they buy for their businesses.

What is a taxable supply?
A taxable supply is:
- A *supply of goods and services in Australia,
- Made for consideration;
- In the course of furtherance of an *enterprise; and
- Where the supplier is registered, or required to be registered at the time the supply is made.

*These are defined terms; please contact us if you wish to have a more detailed explanation. When do I need to register for GST?
You need to register for GST if you run a business or other enterprise, or intend to carry on a business, and:
- You have a GST turnover of $75,000 or more ($150,000 or more for non-profit organisations) or
- Your projected GST turnover is $75,000 or more ($150,000 or more for non-profit organisations).
If your business does not fit into one of the above categories, registering for GST is optional. How do I register for GST?
Registration is easy:
1. You need an Australian Business Number (ABN) to register for GST.
2. Go to the Business Registration Service. You will be able to register for a GST and also an ABN, if you don’t have one.
Of course, we would be happy to assist you in registering for GST, should you wish for us to do so. What happens if I exceed the GST threshold during the year? Not to panic, you should register for GST within 21 days of your turnover exceeding the relevant threshold. To avoid missing the mark, it is advisable to check each month whether you’ve reached the threshold if you are already in business. That way, you will know when you need to register. What if I don’t register? If you are required to register, but have not yet registered for GST, you may have to pay GST on sales made from the date you were required to register, even if you did not include GST in the price of those sales. What are my reporting obligations once registered? You will have to report and pay GST collected to the ATO, and claim GST credits that you are entitled to, by lodging a Business Activity Statement (BAS) or an annual GST return. Your GST reporting and payment cycle will depend on your circumstances. What can I claim GST on? Provided that you are registered for GST, you can claim for GST included in the price of items purchased for business use. If your purchase is for both business and private use, you can only claim a GST credit for part of the purchase relating to your business use. You cannot claim GST on:
- GST-free items: such as basic food, land tax, council rates, water rates, ASIC filing fees, insurance stamp duty, donations, bank fees, interest, child care, exports, some health services and education.
- Input taxed items: These are sales of goods and services that don’t include GST in the price. The most common input taxed sales are financial supplies (such as bank fees and loan interest) and selling or renting out residential premises, and
- Purchases from a business that is not registered for GST. 75% Reduced Credit Acquisition: A reduced credit acquisition arises in relation to a specified type of purchase for which a reduced GST credit is allowed, when you use the purchase to make *financial supplies. For these purchases, you can only claim 75% of any GST included in the purchase price.

Examples of such purchases are investment management services for Self-Managed Super Funds (SMSFs), but sadly, this concession doesn’t extend to accounting fees for SMSFs. GST airport claims: Many people don’t know that they can get a full GST refund on most goods purchased before travelling overseas. The Tourist Refund Scheme (TRS) provides a full GST refund at any Australian International airport. The good news is, it was created for tourists but it is also available to locals!

There are 4 simple rules for claiming the TRS refund:
1. The goods have to be over $300 in value,
2. They have to be bought within 60 days of your departure,
3. You have to bring the goods to the airport as carry-on baggage, and
4. You have to bring the invoice with you. Exported goods are generally GST-free if they are exported from Australia within 60 days of the supplier receiving payment for the goods, or issuing an invoice for them, whichever occurs first. Other exports: These generally include supply of services such as various rights, and other professional services. Broadly, the supply of a service is GST-free if the recipient of the service is outside Australia. However, please note that there are specific rules that apply to each supply of services, to determine if the supply is GST-free. Imports of goods and services: From 1 July 2018, GST is charged on all goods imported into Australia. GST and the *Margin Scheme on property transactions: The margin scheme is an optional way of working out the GST you must pay when you sell property (real estate) as part of your business. Under the scheme, GST payable is calculated on the excess of the sale price over the purchase price, rather than the total sale proceeds. Importantly, the purchaser cannot claim credits for GST paid on the acquisition, if the margin scheme is applied. Therefore, the margin scheme brings benefits where the purchaser is not registered for GST, as the amount of the GST payable is significantly reduced. On the other hand, there may be little benefit in using the margin scheme if the purchaser is registered for GST and would otherwise be entitled to a full GST credit. *There are specific conditions to be eligible for the margin scheme. We can provide you with more detail if you would like to have this information.

Disclaimer: The information in this newsletter is provided for informational purposes only and should not be relied upon as specific advice. Warnocks Pty Ltd does not accept any liability in respect of this information.