Self Employed Tutor GST Question

Hi all. I am a self employed tutor who earnt 90k this year and have just advised by my accountant that I need to pay GST.

Of course I knew it existed, however it just never crossed my mind. And now trying to figure out how to progress from here.

The expenses that I do have charge me an extremely minimal amount of GST compared to what I would need to charge my clients, so it doesn't seem right for me to even be passing on the GST. It seems crazy to me that because of my demand/success/providing a good service, I have to act as a tax collecter and increase the fee to long term loyal clients or otherwise take a pay cut for the same hours worked.

Increasing my fees, by charging GST would result in me losing clients/finding it harder to be referred. It almost seems my best option is to work less and earn under 75k as my take home is about the same as at 90k (with a lot more free time) and not having to worry about BAS Statements. This can't be what a growth orientated government wants me to do.

Any help would be appreciated. Thanks

 

I should add that it becomes increasingly difficult to add GST as clients won't be incentivised to reccomend me (my main source of new clients) as if I have less clients/earning less, they would be paying 10% less. So it would be in their best interest to not refer me and keep me under 75k.

 

Thank you for contributing to our roads, schools and hospitals.

 

You will need to pay GST for this financial year since you have already earned $90K. Actually, you probably should have been submitting BAS statements and payments.

It doesn’t matter if it makes sense to you or not, GST is applicable to your business as a tutor as well as to most businesses. GST has been around for many years, it is hard to see how your clients would not be aware of it.

It is your obligation to add GST to your charges and show it separately on your invoices. It is the client who pays the GST to the ATO, via you.
Marg

 

How do you think everyone else feels?

 

Would you work for an extra 15k for the privilege of being taxed 9k of it? Not to mention the hassle of BAS. I may as well not bother and put my time elsewhere.

 

Unfortunately many of us in the exact same position. That threshold jump initially hurts if you decide to wear it and not pass it on. Welcome to the world of business.

 

I'm curious how you deal with this if you don't expect to earn over the threshold but have an unexpectedly good year. Do you have to go back and reissue invoices showing gst to all your clients? What happens if you earn under the threshold the next year? I'm guessing bad luck, because you're already registered you have to pay gst from now on?

 

These are already incurred, so charging GST is an incremental increase not another 10% on top of your charge out rate.

How you decide to charge your clients is up to you, the lifespan of your clients is only a couple of years so you may decide to increase your rates marginally over a couple of years, just the new clients or all in one hit

 

I'm not sure what you mean sorry?

 

It's extremely confusing. It seems to be bad luck is the general sentiment. It's more prudent for me to just accept under $75k of work for the year and begin the transition into another field.

 

You can't charge 10% on top of your current rate, you need to consider the amount of GST that you already pay and deduct this from what you'll collect.

 

That is a choice for you to make.

 

So your clients don't see any value in your tutoring ? Seems like you should definitely transition into something else if you could never increase your fees. That's a bad business to be in.

My coffee shop recently increased their coffee prices by about 10%. Not sure it had anything to do with GST purposes but i didn't suddenly start looking for coffee shops elsewhere.

 

Its black letter law. What answer did you expect?

 

Not exactly. Education is GST exempt. And the wording around where tuition falls within that is certianly not black letter law.

 

You've not engaged with the content of that position at all.

 

I knew a brickie who had a 2 storey house, hot ute....blah blah blah....cashies.

 

How do you qualify for the exemption from charging GST? Do you need to be an RTO & incorporated?