Do you need to register for GST?
Key points in this article
- What GST is
- Who must register
- Benefits of registering
GST is compulsory for many businesses, but not all. If you’re looking as though your business will have sales over $75,000 for the year, your business must register for GST. If your turnover is less than this amount, you can register for GST voluntarily – and there are some good reasons for doing so. Before deciding, seek professional advice and talk to your accountant and lawyer.
What is GST?
GST is a 10 per cent Goods and Services Tax imposed on the supply of nearly all goods and services in Australia. GST is mandatory for:
- Businesses with an annual turnover of $75,000 or more.
- Non-profits with an annual turnover of $150,000 or more.
- Taxi or limousine service providers who charge a fare to passengers, regardless of annual turnover.
- Businesses that intend to claim fuel tax credits.
GST is 10% tax applied to Australian goods and services.
You can register for GST at the time you form your business or wait until you’re required to do so. While you may be tempted to wait, there are many good reasons to register for GST before it’s required.
- Reducing risk by voluntarily registering for GST
Once you hit that $75,000 threshold, you’ll have just 21 days to register. If you don’t realise you’ve hit the mark and fail to register, you could be required to pay GST on all sales subject to GST – even if you did not collect GST from your customers. You might also have to pay penalties and interest.
- Early registration means that you’ll start collecting GST from your customers before it’s mandated. It also means that you’ll no longer have to monitor turnover to see if you've reached the threshold. Most importantly, you won’t have to pay GST out of pocket for failing to register in time.
- Collecting GST can boost your image
Registering for GST signals to others that you are serious about your business. Collecting GST shows that you expect to do well and that you understand, and are following, the law.
- How registering for GST affects vendor and B2B relationships
Voluntary registration is also beneficial when dealing with suppliers and other businesses. For example, your suppliers might assume you’re registered – and want your GST number. If you don’t have one, it may affect your credibility.
Most businesses are required to register for GST but even if you’re exempt, there are still good reasons to do so.
How registering for GST improves your business processes
Registering for GST has a side effect of improving other areas of your business. For example, it can help with:
- Keeping track of progress – submitting regular returns helps you keep tabs on your business’s progress. If you weren’t required to do so, you might not know where you stand as far as turnover to date goes.
- Record-keeping – you’ll become more efficient at administrative tasks, as you need to account for everything.
- Mastering your accounting software – it’s a good idea to use accounting software in any business. Registering for GST means you’ll actually learn to use it.
One of the main benefits is improving your business processes.
Do you need to register for GST?
The short answer is no, but you should. Even if your business is turning over less than $75,000 per annum, it’s still worth considering registering for GST. Before deciding, talk to your accountant and lawyer.
- Register for GST – the Australian Taxation Office and Business.gov.au websites have an overview on registering for GST.
- Visit the SBHub – ANZ’s Small Business Hub has a range of articles around financial planning for your business.
- Talk to an ANZ Small Business Specialist to discuss common issues that arise when starting a business.
- Discuss GST options with your accountant and lawyer.