When Do I Need to Register for GST?
Know when to register before the taxman comes knocking on your door.
If you’re planning on strong business growth, then you must know when to register for GST. Once your business has registered for GST, many aspects of your business will be affected. When you register a company with LawPath, you will have the option to register for GST during your ABN application.
If you need further assistance about when to register for GST, it’s advisable to speak to a business lawyer or an accountant.
When Do I need to Register for GST?
All business that have an annual turnover that exceeds $75,000 will need to register for GST. Non-profit organisations are required to register when exceeding a turnover of $150,000 per year. If you provide taxi travel or ridesharing services, you will also need to register for GST regardless of your turnover.
Some business owners will register for GST when they first register their business, register a company or at any later time through the ATO Business Portal. Before registering for GST, ensure you have read the information below about unnecessary registration.
If you’re quite confident that your new business will reach the GST turnover or more in the first year, you should register for GST. Sometimes it won’t be easy to predict whether a business will reach the threshold, and in this case it is a good idea to check each month to ensure you’re not likely to go over the limit. For turnover that exceeds the relevant threshold, you must register within 21 days.
What happens if I don’t register for GST?
If you are required to register for GST and fail to, you may have to pay GST on the sales you have made since the date you became required to register. This also includes the sales where you didn’t include GST in the price. In addition to this, you might have to pay penalties and interest.
What if my business has less than $75,000 turnover?
For GST turnover below $75,000 registering for GST is optional. Some businesses register for GST as soon as the business is registered, this is known as voluntary GST registration. Voluntary GST registration means that regardless of your turnover, businesses must include GST in their fees and can claim GST credits for their business purchases.
Unsure of whether voluntary GST registration is a good idea?
Whether voluntary GST registration is a good decision will vary from business to business.
An advantage of early registration is that your business can claim credits for any GST included in the price of things you buy for your business. This means that you can use these credits to offset any GST you owe from your income.
However, if you don’t register for GST, your selling prices will be 10% cheaper than those of your GST-registered competitors. A benefit that comes out of this is that you could charge the same price as your competition and enjoy a better profit margin. Despite the healthier profit margin, you won’t be able to claim the GST back on your expenses or on any goods you purchase for sale.
Once you are registered for GST, don’t forget to start charging GST on all your products and services. If you’re unsure of whether to sign up to voluntary GST registration, it pays to do your research instead of having to pay more later.
Unsure where to start? Contact a LawPath consultant on 1800 529 728 to learn more about customising legal documents, obtaining a fixed-fee quote from Australia’s largest legal marketplace or to get answers to your legal questions.
Tiana is a Paralegal, working in our content team, which aims to provide free legal guides to facilitate public access to legal resources. With a strong interest in commercial law, her research focuses on the revolutionising legal sphere and the implications for all involved.