What is GST?

Accounting, Australian Taxation Office, Taxation, Xero

The Goods and Services Tax (GST) is a broad-based tax of 10% on most goods, services, and other items sold or consumed in Australia. If your business has a GST turnover of $75,000 or more , it must be registered for GST with the Australian Taxation Office (ATO).

In essence, businesses collect GST on behalf of the government and then claim credits for the GST they pay on business-related purchases. The difference is then reported and paid (or refunded) through regular Business Activity Statements (BAS) which are lodged monthly, quarterly or annually.

Understanding GST Reporting

If your business is registered for Goods and Services Tax (GST), you’ve got a few key obligations to stay on top of. The good news? Once you understand the basics, GST compliance becomes second nature. Here’s what you need to know.

The GST Basics

If you’re GST-registered, your responsibilities include:

  • Charging 10% GST on most goods and services you sell (unless they’re GST-free, like certain foods or health-related items)
  • Collecting GST from your customers and reporting it as GST on Sales (Label 1A)
  • Paying GST on eligible business expenses and recording it as GST on Purchases (Label 1B)

Reporting Through BAS

Each business will have a set BAS period that will be either monthly, quarterly or annually.

Whichever is your BAS period you will submit a Business Activity Statement (BAS) to the ATO that includes:

  • 1A – Total GST collected on sales
  • 1B – GST paid on business-related purchases

Your net GST payable or refundable is the difference between the two.

Example:
If you collected $2,000 in GST (1A) and paid $1,200 in GST on expenses (1B), the ATO requires you to pay $800.

Top Tip

Be sure to correctly code GST-free sales in your accounting software—misclassification can lead to errors in reporting and overpayment.  Bas’s can and do have other inclusions such as tax on wages PAYG Withholding, PAYG Instalments, Diesel fuel rebates etc but this view above is for a simple business with GST obligations only.

Need a Hand?

GST can be confusing at times—but you don’t have to navigate it alone. If you have questions about your reporting requirements or BAS preparation, reach out. We’re here to help keep your numbers right where they belong, give us a call if you need assistance with your reporting or now need to be registered for GST, on 07 5494 9173.