Should you be registering for GST?
A common question that many accountants have faced since 2000 has been whether or not individuals need to register for GST. Most people have a vague idea of what GST is, but unless you work directly with GST on a regular basis, it can feel like a nebulous construct. Therefore, before we explain whether you need to register for GST, let's quickly go over what GST is, and why it's important to at least have a cursory understanding of it.
What exactly is GST, anyway?
GST is an initialism for "goods and services tax". Put simply, it is a government tax that is applied to goods and services that are sold in Australia. Whether you need to charge GST for your services or if you can claim GST credits on your expenses depends on several factors.
Do I need to register?
If, in a given year, you earn $75,000 or more in gross income (which is your total income, excluding expenses & deductions), then you need to register for GST. Thus, even sole operators with a successful business or freelance operation must register for GST. The second situation is a bit out of left field. If you provide a taxi services, you must apply for GST. While this has historically been something that only taxi drivers have needed to concern themselves with, the rapid uptake of ride-sharing services such as Uber have shaken up the game substantially. As of August 2015, Uber drivers must have their own ABN and be registered for GST; furthermore, they must submit a Business Activity Statement (BAS) on a quarterly basis.
How can I keep tabs on my earnings, and what can I do if I forgot to register
It's understandable that many people — especially sole contractors and some small business owners — are unaware that they need to register for GST. Additionally, those that are aware of it may forget about it once they reach the $75,000-per-year mark. Fortunately, though, there are ways of preventing the strife that can occur if you neglect to register. By keeping accurate financial records using spreadsheets, accounting software, or employing the services of a qualified accountant, you can prevent the ATO from sanctioning you. If you exceed the $75,000 threshold, you are given 3 weeks (21 days) to alert the ATO and sign up for GST. Failure to register can result in a fine that can accumulate interest.