GST may be three little letters, but it continues to baffle businesses and consultants who have to navigate these considerations come tax time. And doesn’t that time come around quickly when you are not prepared for it? As a business operator, you should take control of every facet of your business, including the hairy areas like GST calculation in Australia. Rather than dreading the inevitable, let’s learn about what you should be reporting and documenting ahead of June so that you are in an ideal position without the stress and misreporting consequences.
Firstly, what is GST?
GST, also known as the goods and service tax, operates in Australia with an additional 10% value added to most goods and services sales made by businesses and individuals. Now in its 20th year, GST reporting and practices have continued to enhance with each tax year as technology streamlines and reporting becomes easier to manage. GST will look different depending on the size of your business, so understand what you are obliged to report and when, and set these plans in motion. If you have not registered for GST yet or have been doing so incorrectly, you may be able to backdate your GST with the assistance of the ATO. Set up a comprehensive spreadsheet that tracks the GST that is being paid to you, and the GST you have paid on the goods and services you have spent money on in that tax year.
Getting to know BAS (Business Activity Statement)
When it comes to GST, your BAS statement is the documentation you provide at a quarterly, half-yearly or annual basis to show what income and subsequent GST you have accumulated. Businesses that generate less than $10 million a year are required to lodge a BAS. This BAS will include your total sales, your GST on those sales, and GST on any purchase made in that period. These purchases must be claimable and relevant to your business with supporting documentation passed over.
Simply put, the government wants to see what sort of tax you are charging and paying in a calendar year and balancing it in increments. If your annual business income exceeds $10 million, you will also need to lodge a GST worksheet and additions reports available through ATO. You may also be expected to lodge your BAS monthly. Failing to lodge a BAS can come with some hefty fines, so ensure you are complying.
Knowing when to engage an accountant or manage yourself
As a successful business operator, it can feel impossible to manage every facet of your business, and accounting is really no exception. Engaging an accountant will clear this responsibility from your mind, and will ensure that this part of your business compliance is managed by someone else. Having an accountant in your corner will also highlight any opportunities that you may not have considered or seen, allowing you to claim more than you had originally thought.
When the time comes, your accountant will look at your finances and issue you will a number to submit as part of your BAS and will lodge all paperwork from there. Before you choose your accountant, take the time to tell them more about your business and what growth plans you have for the future. Finding an accountant is incredibly personal, and so you shouldn’t feel obliged to proceed with the first one you call.
Hopefully, that has provided some insight into how GST works and what your expectations are. If any step in this process is unclear, you should seek counsel from the ATO of a financial consultant as there can be consequences for incorrect reporting.