You’re not the only one who finds the GST concept confusing. Many Australian freelancers and single proprietors are unsure of whether they must register for GST tax return, how to compute it, or how to properly bill clients for it.
Let’s examine the GST return in more detail and discuss its implications for your freelance business. A disclaimer first: This information is only intended to serve as general advice and is not tailored to your unique situation. Before acting on anything you read here, we advise you to consult with a professional accountant or another knowledgeable financial advisor.
What is GST?
GST stands for goods and services tax, and it is therefore rather simple: It was initially implemented in July 2000 and is a tax on products and services bought and sold in Australia. GST is typically a 10% tax in most circumstances.
Customers ultimately pay GST, however, it is the responsibility of businesses that provide goods and services to tax consumers appropriately and then transfer the proceeds to the ATO.
Do I need to register for GST?
If you operate as a sole proprietor or independent contractor in Australia, you might need to register for GST. Depending on two things:
Meeting the $75,000 threshold
You must register for GST and start collecting GST to customers in Australia if your business’s gross annual revenue at any stage exceeds $75,000 in a single tax year.
Simply said, your gross income is your income before taxes and any deductions. An essential reminder for independent contractors who work many jobs: GST is only due if you make $75,000 or more from one firm.
For instance, you wouldn’t need to register for GST if you only made $35,000 from your side business but earned $50,000 from another employer.
Even if their annual income is less than $75,000, drivers for businesses like Uber and Ola, as well as taxi and limousine drivers, are required to register for GST return. Drivers must also submit a quarterly BAS tax return and have their own ABN (BAS). On the ATO website, you may get more information regarding this.
When to register for GST
You must register for GST because your income is getting close to the $75,000 threshold. This portion is really simple if you already use Rounded because you can always view your entire annual revenue on your dashboard. Once you hit the threshold, you have 21 days to notify the ATO and register for GST.