When starting a new business, you have the option to register for GST. Registering for GST is a separate registration process to creating your Company, Trust or Partnership. It does not happen automatically either. According to Div 23 of the GST Act, an entity is required to register for GST if it carries on an enterprise and its GST (annual) turnover exceeds $75,000 per annum. In the case of non-profit organisations, the registration threshold is set at $150,000 per year.
The ATO is clear that an entity above the GST registration thresholds must register for GST. However, if the thresholds are not met, GST registration is voluntary (s 23-10, GST Act). When we are working with startups, we find that is generally a good idea to register for GST early on when their expenses exceed their revenue, as they will often be in a position to receive GST refunds.
Entities can register online at:
abr.gov.au/For-Business,-Super-funds—Charities/Applying-for-an-ABN/Apply-for-an-ABN
According to s 25-1 of the GST Act, registration must be made within 21 days of becoming required to register. The ATO notifies the entity in writing that the registration has taken effect.
For those for-profit entities with a turnover of less than $75,000 (or not-for-profit entities with a turnover of less than $150,000), GST registration is not required. However, they must still register for an ABN from the ATO. The Australian Business Number (ABN) is a unique 11-digit number. Their ABN must be displayed on all invoices issued; however, they are not permitted to charge the customer the 10% GST (as only businesses registered for the GST can do so).
When an entity registers for GST, it is issued with an ABN. The ABN must be displayed on all tax invoices issued by the entity.
If you need a hand with the above, please don’t hesitate to reach out and we can take you through what this means for your situation.
