How do I calculate my taxation obligations?
Question:
I’m thinking of starting a retail business and although I have an ABN, I have not registered for GST because I do not expect that I will earn the specified amount. However, as a retail business, I will be charging my customers GST on the products they buy. How do I calculate and put aside the GST portion for the Tax Office?
Answer:
If you are thinking of starting a retail business then you should register for the GST. GST is more than just 10% and a $50,000 threshold. Registering for the GST allows you to claim back input tax credits that are applied to the goods you are selling and any other goods you purchase for your business, such as stationery etc. Plus, if you are selling products which have GST added to them, you will need to give that tax back to the ATO.
To do this, you will fill out a Business Activity Statement which will help you calculate how much GST you will have to pay. You should have a separate bank account for your business which will help you keep track of your funds and work out how much GST and other tax you will need to pay. A good accounting software package will help with this too.
I suggest you talk to an accountant about how to ensure your business is set up correctly and what accounting records you will need to keep in order to comply with government regulations.
Go to http://www.ato.gov.au and search the site for calculating GST for a retail business or ring 132866 (Australian Taxation Office). They are always helpful when I ring them and have sent me booklets to help clarify things.
It works on 10% of your sale of course or /11 with figures inclusive of gst. I’ve found looking at other business invoices for purchases has helped me work out the procedure more. More complex calculations for the BAS period become involved when you are purchasing gst free goods for retail businesses. The taxation office shows you different methods for calculating your BAS at end of period for your situation. The GST I pay is subtracted from the GST I collect so it is important to register to get a discount. Find out from the taxation office the best date to put down for GST registration for your business because I registered for GST on the date I registered and when I wanted to backdate the date later by only 23 days (because most of my purchases were in that period), they told me it would be a $550 fine, so I had no choice but to leave the GST registration date as it was. Hope I helped.
February 16th, 2007 at 10:55 pm