GST - Goods and Services Tax

The Federal Government’s Goods and Services Tax (GST) legislation was effective from 1 July 2000.  The GST is a 10% tax that is added to the price of most goods and services.

 

Businesses and non-profit organisations may be able to claim an input tax credit from the Australian Taxation Office for the GST they have paid.  To be able to claim an input tax credit, businesses and non-profit organisations must be registered for GST purposes with the Australian Taxation Office.

 

 

You must register for GST in Australia if:

 

> you are carrying on an enterprise that makes supplies connected with Australia, and

 

> your projected annual turnover (Note1) meets or exceeds the registration turnover threshold of:

 

From 1 July 2007 – A$75,000 (ex. GST) and A$150,000 (ex. GST) if you are a non-profit body

 

Prior to 1 July 2007 - A$50,000 (ex. GST) or A$100,000 (ex. GST) if you are a non-profit body

 

> you provide taxi like travel (includes Uber) as part of your business, regardless of your annual turnover.

 

Note 1 – Exclude from projected turnover the proceeds of the sale of a capital asset

 

If you are registered for GST, or required to be registered for GST, you:

 

> are required to pay GST to the Tax Office if you make taxable supplies (that is, supplies that are subject to GST in Australia), and

 

> may be entitled to claim input tax credits equal to the GST paid on creditable acquisitions or creditable importations that you make.

 

It’s important to register for GST if you’re required to do so. Otherwise, you may have to pay GST on the sales you’ve made since the date you became required to register – even if you didn’t include GST in the price of those sales.  Not only will you be out of pocket for the amount of GST, but you may have to pay penalties and interest.

 

Section 188-10 is relevant for working out whether your annual turnover meets, or does not exceed, a turnover threshold.  In calculating the electronic lodgement, registration and tax period turnover thresholds, you have an annual turnover that meets a particular turnover threshold under subsection 188-10(1) when:

 

(a) your current annual turnover is at or above the turnover threshold, and the Commissioner is not satisfied that your projected annual turnover is below the turnover threshold; or

 

(b) your projected annual turnover is at or above the turnover threshold.

 

You must register for GST within 21 days of being required to register.

 

If you aren’t registered for GST, each month you need to look at your GST turnover to make sure it does not exceed the threshold.  Your GST exceeds the threshold if:

 

> your turnover for the current month and the previous 11 months exceeds the threshold; or

 

> your turnover for the current month and the next 11 months is likely to exceed the threshold.

 

 

You must report and pay GST:

 

> Monthly – if your annual turnover is $20 million or more.

 

> Quarterly – all other businesses unless:

 

·         they elect to pay monthly.

 

·         they are not required to be registered because their turnover is below the registration thresholds above, but have volunteered to do so, in which case they may report and pay annually.

 

·         their turnover is below $2 million and they have elected to pay an ATO determined GST instalment amount quarterly, in which case they are required to report annually.

 

 

The GDP (Gross Domestic Product) Adjustment is used to calculate PAYG and GST Instalments.

1 July 2024 - 30 June 2025	6%
1 July 2023 - 30 June 2024	6%
1 July 2022 – 30 June 2023	2%
1 July 2021 – 30 June 2022	0%
1 July 2020 – 30 June 2021	0%
1 July 2019 – 30 June 2020	5%
1 July 2018 – 30 June 2019	6%
1 July 2017 – 30 June 2018	4%
1 July 2016 – 30 June 2017	2%
1 July 2015 – 30 June 2016	3%
1 July 2014 – 30 June 2015	4%
1 July 2013 – 30 June 2014	3%
1 July 2012 – 30 June 2013	6%
1 July 2011 – 30 June 2012	4%
1 July 2010 – 30 June 2011	2%
1 July 2009 – 30 June 2010	2%
1 July 2008 – 30 June 2009	8%
1 July 2007 – 30 June 2008	7%

                    
The GDP adjustment factor for substituted accounting periods may be different to those recorded above.

 

There are two methods of accounting for GST – on a ‘cash basis’ or a ‘non-cash basis’.  The method of accounting for GST affects when you must account for GST to the Australian Taxation Office and when you are able to claim input tax credits. (Refer to the link below to GSTR 2000/13 for more details)

 

Accounting for GST on a cash basis

 

You may choose to account for GST on a cash basis if your annual turnover is less than $1,000,000 (From 1/7/2007 this was increased to $2 million); or you legitimately account for your income (for income tax purposes) on a receipts (that is, cash) basis; or you are a charitable institution; or your enterprise is of the kind that the Commissioner (of the Australian Taxation Office) determines, in writing, is the kind of enterprise that may use a cash basis.

 

 

GST on food/drink depends on where you buy it and what you buy and whether the vendor is registered for GST

Some food/drink items have GST added and some don’t. The docket will tell you.

E.g.

Coffee pods are GST free but ready to drink coffee is not

Bread and bread rolls (no filling) are GST free, but pastries are not 

But all food and drinks sold in restaurants/cafes or for consumption on the premises have GST added whether usually GST free or not.
But bakeries have a mix of GST and no GST items
This assumes the vendor sells enough to need to be registered for GST

FYI - re GST and food and drink

 Where food is sold and consumed affects GST

Even though an item may be in the GST-free food list, it may still be taxable under some circumstances.

All food and drinks sold in a café/restaurant or to be eaten or drunk at the place they are sold are taxable even if they are a GST‑free item.

This means, you must charge your customers GST and pay that GST to the ATO if food and drinks are sold at:

• a restaurant or cafe
• a snack bar or stand
• any venue associated with leisure, sport or entertainment such as:
   a sports ground – a golf course – a gym – a racecourse – a theatre – a museum – a gallery – a cinema – an amusement park.

 

Examples of GST-free food items are:

• Bread and bread rolls without icing or filling (with the intent that they will not be eaten on the premises)
• Cooking ingredients such as flour, sugar and cake mixes
• Fats and oils for cooking
• Milk, cream, cheese and eggs
• Spices and sauces
• Fruit juice containing at least 90% by volume of juice (unless it is to be consumed at an event, or on the premises)
• Bottled drinking water (unless it is to be consumed at an event, or on the premises)
• Tea and coffee (unless it’s ready to drink)
• Baby food and infant formula
• Meats for people to eat (except prepared meals or snacks)
• Fruit, vegetables, fish and soup
• Spreads, such as honey, jam and peanut butter
• Breakfast cereals
• Rice - cooked or uncooked (but not hot).

Examples of ‘taxable foods’

• Bakery products such as cakes, pastries and pies
• Biscuits, cones and wafers
• Savoury snacks such as potato chips
• Chocolates and lollies
• Ice cream
• Soft drinks and flavoured milks such as strawberry milk
• Food platters
• Food marketed as prepared meals such as sushi, curry and rice dishes
• Any food not for people to eat, such as pet food
• All food and drinks sold in restaurants/cafes or for consumption on the premises

 

 

You pay GST on taxable supplies that you make unless that supply is GST-free or input-taxed. If you make a supply that is GST-free, there is no GST payable on that supply (that is, you do not have to pay GST to the Australian Taxation Office when you make a GST-free supply).

 

In contrast to input-taxed supplies, an acquisition or importation that you make which relates to making those GST-free supplies may be a creditable acquisition or a creditable importation. This means you are entitled to claim an input tax credit if all the other requirements for making a creditable acquisition or creditable importation are met.

 

A supply that could be both input-taxed and GST-free is a GST-free supply.

 

Broadly, the following are examples of GST-free supplies:

 

> most health and medical care services

 

> most educational services

 

> most food for human consumption (other than prepared foods, confectionary, snacks, ice-cream, biscuits, alcohol, soft-drinks and certain other drinks)

 

> certain activities of charities and related bodies

 

> international travel and transport

 

> sales of ‘going concerns’

 

> certain dealings with land, and

 

> exports of goods or services or other things if certain requirements are met.

 

 

You pay GST on taxable supplies that you make unless that supply is GST-free or input-taxed. If you make a supply that is input-taxed, there is no GST payable on that supply (that is, you do not have to pay GST to the Australian Taxation Office when you make an input-taxed supply).

 

However, in contrast to taxable and GST-free supplies, an acquisition or importation that you make is not creditable to the extent that it relates to making those input-taxed supplies (other than input-taxed supplies made through an enterprise that you carry on outside Australia or certain financial supplies). To the extent that it is not creditable you are not entitled to an input tax credit for GST paid on the acquisition or importation.

 

A supply that could be both input-taxed and GST-free is a GST-free supply.

 

Broadly, the following are examples of supplies that are input-taxed:

 

> financial supplies

 

> supplies of private residential premises for rent (even if used as business premises)

 

> certain transactions involving precious metals, and

 

> certain other supplies where the supplier elects for those supplies to be treated as input-taxed.

 

 

 Tax Invoice Exemption

 

Generally you must hold a tax invoice to claim an input tax credit for a creditable acquisition in your business activity statement.

 

However, you do not need a tax invoice if the price of the taxable supply is:

From 1 July 2007 - $82.50 or less (including GST)

Prior to 1 July 2007 - $55.00 or less (including GST)

Or, you are claiming an input tax credit for a creditable importation.

 

Minimum information for tax invoice

 

A tax invoice is an invoice that contains certain information. To be a tax invoice the invoice must be issued by the supplier (unless it is a recipient created tax invoice).

 

$1,000 or more (including GST)

If the total amount, including GST, payable for the supply (or supplies) to which the tax invoice relates is $1,000 or more, the tax invoice must contain the following information:

 

> the Australian business number of the entity that issues it, and

 

> the price for the supply, and

 

> state the words ‘Tax Invoice’ prominently and include the date of issue of the tax invoice; the name of the supplier; the name of the recipient; the address or ABN of the recipient; a brief description of each thing supplied and for each description the quantity of goods or the extent of the services, and

 

> if the GST payable on the supply or supplies is exactly 1/11^th – the invoice must contain a statement to the effect that the total amount payable includes GST for the supply or supplies or must set out the total amount of GST payable, and

 

> if the GST payable on the supply or supplies is less than 1/11^th – the invoice must set out the amount, excluding GST payable, for the supply or supplies and separately show the amount of GST payable on the taxable supply or supplies.

 

Less than $1,000 (including GST)

If the total amount, including GST, payable for the supply (or supplies) to which the tax invoice relates is less than $1,000, you do not need to show the name or address of the recipient or the quantity of goods or the extent of the services.

 

Other Notes

> If you make taxable supplies, an entity to which you make a supply may request a tax invoice from you. If an entity requests a tax invoice, you must provide the entity with a tax invoice within 28 days unless it is a recipient created tax invoice.

 

> You may routinely provide tax invoices to your customers – that is, you don’t have to wait for a request to be made.

 

> From 1 July, 2010 the tax invoice requirements are less prescriptive.  As a result of these changes, documents will generally only fail to constitute a tax invoice where key information has not been provided, including :

           

            the supplier’s identity and Australian  business number (ABN)

            the nature of the supply

            the amount of GST payable

 

The amendments also allow an entity to treat a document it receives as a tax invoice even if it is missing key information.  The entity may treat the document as a tax invoice if:

 

            the document makes clear that it is intended as a tax invoice

            the missing information can be obtained from other documents issued by the supplier.

 

This concession can also apply to RCTIs.

           

 

> The Commissioner may treat, as a tax invoice, a particular document that is not a tax invoice. You will need to contact the Australian Taxation Office to determine if a document you have can be treated as a tax invoice. 

 

Please note that this list is not comprehensive.  If you are aware of any others that you come across commonly when preparing/reviewing BAS returns please let us know and we shall add them.  Thanks.

> Accommodation with a residential lease (exclusive occupancy rather than a mere right to use the premises)

> ASIC fees

> ATO annual levy for SMSF’s

> ATO tax payments

> Bank fees - monthly, annual, cheque books, dishonour, loan setup

> Body Corporate Levies (depends on whether they are registered for GST or not)

> Business sold as a going concern

> Coffee, coffee essence, chickory, chickory essence and malt to make a beverage

NB! GST is charged on Coffee, made ready to drink and coffee whitener

> Credit card annual fees (GSTR 2002/2)

> Credit card repayments

NB! GST is charged on Credit Card Merchant Fees

> Council Rates and Waste Collection Services

> Distributions by trusts to beneficiaries

> Dividends paid

> Donations to tax deductible gift recipients

> Education (most)

> Food for humans (fresh)

> Health insurance premiums

> Health services (most)

> Hire purchase repayments (new rules from 1 July 2012 – See links below)

> Insurance premiums - Business Expense Cover based on Life insured of key person

> Insurance premiums - Health

> Insurance Premiums - Income Protection

> Insurance premiums - Stamp Duty Component

> Interest paid

> International postage

> International travel and transport

> Land tax

> Loan repayments

> Local government rates (including water and sewerage rates and charges)

> MCIS levy paid as part of the compulsory 3rd party personal injury insurance component of motor vehicle registration fees

> Medical insurance premiums

> Medical services (most)

> Motor Vehicle Registration

> Motor Vehicles with a purchase price in excess of the luxury car limit have a cap on the GST that can be claimed

> Payments to suppliers who have not registered for GST (e.g. because they are below the turnover threshold)

> Prescription drugs

> Registration certificate for a motor vehicle

> Rent for private residential premises even if used as business premises (exclusive occupancy - lease) - excludes mere right to occupy. 

> Security deposit (see ATO definition of a security deposit below)

> Security deposits forfeited are subject to GST

   (Reliance Carpet case was overturned by High Court – May 2008)

> Stamp Duty - often insurance policies and leases have a stamp duty component.

> Strata levies (depends on whether they are registered for GST or not)

> Superannuation contributions

> Tax Agents Registration Fees (Tax Practitioner Board)

> Tea (bags, loose, instant)

NB! GST is charged on  Tea, made ready to drink and tea with a recommended dosage. It is considered a medicinal preparation.

> Travel Overseas from Australia

> Wages

> Water Rates