What is GST?
The Goods and Services Tax (GST) is a value-added tax on goods, products and services primarily utilised for domestic consumption. Businesses are responsible for collecting and remitting the GST to the government.
Business owners can always file for GST claims, provided that the business is GST-registered. Aside from accounting for GST in relation to the price of products and services, businesses can also claim GST credits for products and services they used.
Do I really need to register to make a GST claim?
There are certain conditions dictating whether or not a business must register to make a GST input tax claim.
As GST technically puts a 10 per cent tax on top of the price of goods and services sold by the business, a business must register for GST if:
- it wants to claim GST credits for fuel use
- it has a turnover of $75,000 or more
- it provides vehicle services for business patrons regardless of the GST turnover
A GST registration only becomes optional if the business doesn’t fit into any of the criterion stated above. However, once a business chooses to register, the registration must be maintained for 12 consecutive months.
Registrations can be made by accessing the Australian Taxation Office’s online portal or via their designated hotline. A tax agent can also do the registration on behalf of the business.
Foreign businesses who import their products and services to Australian consumers and earn over AU$75,000 are also required by law to register for GST before making a claim. The same law also applies to electronic distribution businesses and businesses selling imported services to the Australian market.
When can I claim a GST credit?
A GST credit can be claimed by a business if it satisfies the following provisions:
- The purchase price of the product/service includes GST
- The business has paid for the said item
- The business presents a tax invoice from suppliers for purchases over AU$82.50
- The business intends to use the purchase for the business and that the purchase is not related to any input-taxed purchases
Suppliers must also be registered for GST for businesses to claim GST credits for purchases made from these suppliers. The Australian Business Number (ABN) Lookup website has a search option allowing businesses to check whether or not a supplier is GST-registered.
If a business wants to claim a GST credit for purchases used for both personal and business-related purposes, the claim is only applicable to the portion of the purchase used for business. Claimed GST credits may also be adjusted if there is a considerable gap between the intended use and actual use of the product/service.
For purchases that exceed $82.50 plus GST, a tax invoice may be required before business owners can make a GST claim. Suppliers are given a 28-day window for invoice processing immediately after the business files for a request. Without a tax invoice for these purchases, the business cannot make any kind of GST claim.
For purchases that are less than $82.50 plus GST, business owners are required to present either a tax invoice, receipt, invoice or cash register docket. If none are applicable, businesses can still make a GST claim after identifying the supplier’s name, supplier’s ABN, purchase date, the amount total for the purchase and a detailed list of the items purchased (if applicable).
What items are not covered by GST claims?
GST-free purchases such as basic food products, purchases from a non-GST supplier and input-taxed items such as loan interest are not covered by GST claims.
In addition, purchases intended for private use, purchases for input-taxed supplies and land purchases under the margin scheme are not covered by a GST claim regardless of whether a GST is included in the price of the item.
For further clarifications regarding GST claims, business owners are advised to seek assistance from an accounting/tax/finance professional who can discuss everything from claims to GST adjustments calculations.