A question we frequently get asked is ‘When do I need to register my business for GST and is this the same as having an ABN?’
Generally you can have an ABN for your business and not be registered for GST.
Registering for GST is compulsory if:
1. Your turnover (sales or revenue) for the current month and the previous
11 months is $75,000 ($150,000 for non profits) or more
– current GST turnover, or
2. Your turnover for the current month and the next 11 months is likely to be $75,000 ($150,000 for non profits) or more
– projected GST turnover.
However, if your turnover is under $75,000 you can elect to voluntarily register for GST. Some items to consider if you are electing to register for GST are:
1. Can your customers claim back the GST i.e. if you were a hairdresser your clients could not claim the GST. Therefore, you would automatically be 10% cheaper than your competitors who were registered and required to charge customers GST.
2. Are you paying a lot of GST on your expenses in which case it would be beneficial to be able to claim the GST? I.e. if you are a café you might find that a large % of your expenses do not have GST on the purchase price so it may be easier from an administrative perspective to not be registered, as there would not be a significant GST refund on your purchases.
The key is to look at your personal situation and talk to your accountant as to what is most beneficial for you.