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General GST question

Discussion in 'Accounting & Tax' started by dabbler, 28th Jan, 2016.

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  1. dabbler

    dabbler Well-Known Member

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    Hi everyone,

    If you are under the GST threshold and you invoice without GST, then if you want to deal with someone where you will be required to collect GST no matter what the income, I assume this means you no longer can invoice without GST once you register ?
     
  2. Scott No Mates

    Scott No Mates Well-Known Member

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    Once you register for GST then you are required to issue tax invoices regardless of turnover. You can always deregister at any time (AFAIK).

    If you are not registered for GST, then you can't add gst to your invoices however you can include the gst which you have paid from your suppliers without adding extra.

    Eg: Registered - Buy $20 (+gst) widget & sell for $44 incl gst, business collects $4 gst and remits $4-2 to the ATO. Gross Profit $44-20-2-2=$20
    Not registered - buy $20 (+ gst) widget & sell for $42 or however much you want. Remit $0 to ATO. Gross profit $42-22=$20
     
  3. RiMo

    RiMo Well-Known Member

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    If you are not registered for GST, you cannot collect GST. Your invoice will be just an invoice not a Tax Invoice. You might have to explain to your clients that you do not collect the 10% tax.

    Once you are registered for GST, you MUST collect GST but you are also able to claim GST credit on your purchases. You need to complete a BAS to do the periodical accounting. GST registration is optional for businesses under the threshold.
     
  4. dabbler

    dabbler Well-Known Member

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    Hi Scott, rightyo, .... yeah, I understand.

    The problem, or reason I am asking, is I do some work and it is at X dollars, now I get all that money, if I register for GST and must collect, I will have to take the GST component from X as I cannot invoice X + GST.....they do not care, it is flat amount, so I will lose.

    But what I have been thinking of doing is trying some work with someone where you must be registered for GST.

    Looks like I am snookered or have to decide one way or another. I thought that was the answer, but thought I will ask......cheers
     
  5. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Sorry lost you. If you are registered for GST you then impose GST on all supplies that are taxable from the date when you are required to be registered OR the actual date registered. If not registered as under threshold then no supplies are taxed. You don't wait until the $75K threshold is exceeded then register - That's a fatal error and you will end up owing GST even through customers didn't have it charged. + penalties.

    To understand the threshold tests read the heading "When To Register" here Registering for GST | Australian Taxation Office
     
  6. dabbler

    dabbler Well-Known Member

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    Yeah, it is a bit odd, and something they have not thought of (or care about). I will read more, but I could not see any answer, but I may have thought of a way to deal with it by getting my wife to invoice with non GST ABN and giving her that work/income.

    The main part is, I am nowhere near the GST threshold and not registered at the moment, and one place the rate is flat dollar rate, let's use $50 , so if invoiced for 50, I get $50 in my account.

    I am considering doing work for another company, and you MUST be GST registered even if way under the threshold, lets say combined invoices are $30k total for both.

    If registering to satisfy the second place, it will mean the $50 from the other place will no longer be $50, as that is all that can be invoiced, with or without GST. So $50 minus the GST sent to govt.

    So the effect would be lose 10% of income from one if also doing work with the other & on top of that, all the admin and extra accounting expenses.

    Will have to look closer at it all.
     
  7. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    It should work out the same for the supplier. Your payment would include GST and they would get a credit for that GST paid to you.
     
  8. dabbler

    dabbler Well-Known Member

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    I do not know the workings of the business - this is what they said, maybe the person speaking has it wrong - I will ask, I know many try and cut people down with all sorts of things and from all angles, just find it odd that GST collection that is not with the threshold would be required - this is really something I can do without if amount is low, I suppose it should not be that surprising as it was not applied to all goods and services, bit of a dogs breakfast all of it......as we come to expect I guess.
     
  9. Scott No Mates

    Scott No Mates Well-Known Member

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    The company has no legitimate reason to knock back paying you gst on top of the agreed rate (unless your contract states otherwise) however you may simply be able to rely on the GST act to enforce the change. If they pay you $50 without being registered, they cannot claim the gst on your work ie assuming 1/11th of the cost. If you start charging $50+gst they can then on-charge the $5 and also claim it (they would be adding 10% gst to your cost so it does not affect their end price or their cost).
     
  10. dabbler

    dabbler Well-Known Member

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    Thanks, I will speak to someone else in the company later and see what they say.
     
  11. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    It just makes it easier for them administratively. Otherwise they would need to work out 2 different systems for those registered and those not.
     
  12. dabbler

    dabbler Well-Known Member

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    Understand that point, but it would be even easier to stick to the threshold and not have any exceptions where you require it if under the threshold, not easier for the individual administratively !

    It also absorbs someones time elsewhere.