How to calculate GST (goods and services tax)

If you’re a small business owner in Australia, it’s important to understand exactly what GST means for your business. But what is GST and how much is GST in Australia? Find out a little more about how to calculate GST, the current rate of GST in Australia, and the simple GST formula you can use to work out how much you need to charge customers.

What is GST?

GST stands for goods and services tax. It’s essentially the Australian version of VAT – a consumption tax imposed on the sale of most goods and services.

How much is GST in Australia?

So, how much is GST? For businesses in Australia, GST is a tax of 10%. It’s a good idea to check the GST rate on a regular basis, as the government has the power to increase or decrease it.

Does my business need to register for GST?

If any of the following conditions apply to your business, you will need to register for GST:

• You have a GST turnover of $75,000+

• Your non-profit organisation has a GST turnover of $150,000+

• You want to claim fuel tax credits (regardless of turnover)

• Your business provides taxi or limousine travel (regardless of turnover)

How do you register for GST?

If you meet the requirements for AUS GST, you’ll need to register as soon as possible. The registration process is simple: you can do it online, by phone, or through a registered agent, and you’ll only need to register for GST once. If you’re not registered for GST but are required to, you could end up having to back pay GST on all sales you’ve made since you needed to register. Plus, you may also need to pay penalties and interest. In short, it’s worth checking up on your registration status to avoid any needless slip ups.

When do you need to charge for GST?

If you’re registered for AUS GST, all goods and services you provide are taxable unless they’re GST-free or input taxed. Most basic food items, some medical/health services, and some educational courses are exempt from GST. For a full list of GST-free sales, see here. Input-taxed sales are essentially goods and services that don’t include GST in the price. Some of the most common input-taxed sales include selling/renting residential premises and financial supplies.

How do tax invoices work?

Tax invoices are used to tell your customers how much GST was paid on a purchase. It’s very important that these are provided, as your customers may be able to claim a portion of the amount back. You need to provide a tax invoice whenever you make a taxable sale that comes out to more than $82.50 (including GST). For taxable sales of less than $1,000, you must include the following information:

• Notation that the document is a tax invoice

• Seller’s identity

• Seller’s Australian business number (ABN)

• Date of issue

• Description of items sold (including quantity and price)

• GST amount payable (if any)

• Extent to which each sale on the invoice includes GST

Tax invoices for sales over $1,000 are a little different, as they require the buyer’s identity/ABN.

What’s the GST formula?

Want to know how to calculate GST? There’s a very simple GST formula that can help you do it:

For example, if the retail price for a t-shirt stands at around $50 but GST hasn’t been applied, you can work out the GST-inclusive price like so:

Although it’s a simple calculation, you don’t need to use the GST formula if you don’t want to. There are many free AUS GST calculators online that you can use – try this one provided by Moneysmart.gov.au.

We can help

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