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Understanding Australian Goods And Service Tax

Goods and and Services tax is part of the Australian taxation system. All products and services purchases are subjected to this tax, which is at a rate of 10% and it includes purchases between retailers, suppliers and manufacturers. Businesses are allowed to claim credits on purchases they make, but the end consumer is not able to reclaim payments that they make. With that said, read on to learn more about Goods and Services tax.

1. Registering- Before registering for Goods and Services tax, businesses have to meet certain criteria, with one being that they need to have a turnover that is in excess of $75,000 per financial year. Another criteria that a business needs to meet is that they need to act as an enterprise and they need to provide taxi service as part of the services they offer. Also, GST registrations have to be made via the Australian Tax Office.

2. Making Payments- Business Activity Statements are what business activity is recorded on, and these statements are sent to the ATO on a quarterly basis. That is unless the company earns more than $200,000 in a financial year. The statements are returned on a yearly basis if the company makes that much.

Businesses are required to pay the full tax amount when they make a business purchase. However, they can claim back credits on payments that they have made. Business Activity Statements highlight the tax paid on transactions and it highlights the amount being claimed back in credits.

3. Keeping Records- Keeping records, and doing it the right way, is an important part in managing tax payments, and you need to show invoices from your suppliers if you plan on claiming back tax credits, which you should if you’re entitled to do so. Individual products and services that cost less than $75 are what tax exemptions are applied to. The name of the supplier and their ABN number and the product’s price are included on a valid tax invoice, and so is any GST paid, so make sure you keep good records because if you don’t keep accurate records or properly keep them. then you may not get any tax credits that you are entitled to.

Businesses should keep invoices for five years after they lodge their statement, and the same invoices should be kept for the same length of time for tax return purposes. With that said, it’s important to have a good understanding of the basics of GST. This is because it can help you keep control on spending and help you get the credits you are entitled to, so make sure you keep the above information in mind if you run a business and want to claim tax credits.

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