When you start a new business, one of the responsibilities you need to fulfil is registering for GST. Although GST registration is optional, there some businesses that automatically register for GST. If you have a turnover of $75,000 or more, you need to keep in mind that GST registration will be mandatory. However, if your turnover is less than this, the registration will be optional. Your decision to register will depend on its administrative and cash flow implications.
If you decide to not register for GST, its cash flow implication will mean selling prices that are 10% cheaper than the registered competitors if the turnover is below the $75,000 threshold. You may also enjoy a healthier profit margin by charging the same price as your competitor. However, there are businesses that may doubt buying from those that have not yet been registered for GST due to a questionable credibility. These doubts from customers can also affect your sales because there are businesses that will still prefer to buy from those that are GST-registered.
Aside from the cash flow implications, you should also take the administrative requirements into consideration. When you register for GST, this will also mean additional administration work. It is also necessary to report to the ATO on a quarterly basis. You will have two distinct roles to fulfil upon registration: acting as a tax collector for the ATO and running the business.
How do you register for GST?
For you to proceed with registering for GST, you will need an Australian Business Number (ABN). There are three ways you can register: online, by phone or through a registered tax agent or BAS agent. Once you have registered, you will be notified in writing of your details, which include the date of the registration.
Cancellation Of GST Registration
If you decide to sell or close your business, it is important to cancel your registration within 12 days. Another reason for cancelling your registration is when you change your business structure or changing your business from partnership to a company. You can also cancel the registration if your turnover is below the threshold for compulsory registration unless you belong to the following category:
- a taxi driver;
- a business that is in liquidation or registered for GST;
- an Australian resident who serves as an agent for a non-resident that is registered or required to be registered for GST;
- represent an individual who is bankrupt or registered.