There are many things to think about when deciding if you need to register for GST. One of the main considerations is the ability to pass on GST to customers. (You don’t need to register until your annual income reaches $75,000.)
Registering for GST could mean effectively taking a one eleventh price cut if the business deals with the public, and the price of its goods or services is set by market pressures. If your customers are other GST registered businesses, and they can claim any GST added to the current price charged, this could mean registering for GST is a good idea.
Q. I am on the cusp of having to register for GST as my income is almost at $75,000. Can you tell me if there are any advantages in registering for GST now before I have to? For example I am thinking about buying a new car, would I be able to claim the GST back on that? I have no problems charging my clients GST as they are all big companies and won’t care. I’m a bit frightened of the extra paperwork and may turn down business to remain under the threshold.
A. For a business like yours, where registering for GST will not mean a decrease in the actual sale proceeds received, it can make a lot of sense when high-priced assets such as motor vehicles need to be purchased. This is because you can claim the GST charged on the assets purchased, which helps reduce cash flow pressure.
The amount of GST you can claim on the purchase of the motor vehicle will depend on the method you use to claim your motor vehicle expenses. If you have not kept a log book and claim one third of the running costs of the vehicle, because you do more than 5000 business kilometres a year, you could only claim one third of the GST charged.
If you have a logbook that proves your business use is 100 per cent, or the vehicle being purchased is not primarily a passenger carrying vehicle and therefore will be classed as 100 per cent business use, you could claim all of the GST included in the purchase price.
Registering for GST does come at the cost of having to keep the records necessary to complete the quarterly BAS returns, but this could be a small price to pay to be able to claim the GST back on your business expenses.
If you don’t have a lot of business transactions there may not be a lot of work required and it would simply mean completing a cashbook. There are many of these available that have instructions on how to complete them. The actual work involved should not be too onerous. By keeping these records should also enable you to manage your business better, which can be another benefit of registering.
Questions on small business tax or other issues can be emailed to [email protected]南京夜网.au.
This story Administrator ready to work first appeared on Nanjing Night Net.