In Australia, businesses that are engaged in the sales of goods and services are generally required to register for Goods and Services Tax or GST. This type of tax is imposed on a wide range of goods, services, and other items sold or consumed in Australia. If you are registered for GST, it’s important for you to determine whether your sales are taxable or subject to GST so that you can include GST in the price of your taxable sales.
When is a sale taxable?
A sale is considered taxable if it:
Involves payment of some kind;
Is made in the ordinary course of business, and
The transaction is connected with Australia.
If a sale is taxable, you can pass on GST to your buyers by including GST in the price. This also means that you must issue a tax invoice to the buyer and pay the GST collected when you lodge your activity statement.
As a GST-registered business, you can also claim credits for the GST that your suppliers have included in the price of purchases you made in connection with your taxable sales.
Specific goods and services are GST-free and thus not taxable. These include:
Some education courses;
Some medical, health, and care products and services;
Most basic foods;
Some child care services;
Water, sewerage and drainage;
International transport and related matters;
Sales of businesses as going concerns;
Some religious services and charitable activities.
Some transactions that do not include GST in the selling price of the goods and services are not subjected to GST. These are usually:
Financial supplies or activities involving the lending of money or provision of credit for a fee;
Sale and rental of residential premises.
Working out GST in your business can be tricky. Some transactions must meet specific conditions before they can be considered GST-free and therefore not subject to GST. An experienced tax accounting professional can take the stress out of your tax obligations by helping you determine when to charge GST and when not to.
In Western Sydney, ATP Tax Accountants Pty Ltd provides advisory services on the GST treatment of your business activities, purchases, sales, and other transactions. We work closely with clients to help them manage their Business Activity Statements and Income Activity Statement returns. Call us today at 1-300-829-484 or email rafiq@ATPtax.com to learn more about how we can help you