DISCLAIMER: Sherpa is not a registered tax advisor or accountant, all information in this article comes directly from the ATO. https://www.ato.gov.au/Business/GST/How-GST-works/ & https://www.business.gov.au/registrations/register-for-taxes/register-for-goods-and-services-tax-gst
We receive a lot of questions regarding GST and the benefits of registering for GST.
A common misconception about GST as a small business is that you don't have to pay GST if you are not registered. This is NOT true. If you are not registered for GST, you should not collect GST for the ATO. GST must be paid at some point in the value chain, but there are differences in how it is paid, based on your business being registered for GST or not.
Please watch the videos below about how GST works and when and how you have to register:
- if you are registered for GST, your business acts as a GST tax collector for the ATO. You will receive an additional 10% of the price displayed in the app, but you later have to report this (and likely pay) back to the ATO.
- if you are not registered for GST, you will receive the price displayed in the app. This price has already deducted the GST from the delivery price as your company is not required to collect GST for the ATO.
- Under some conditions, it is mandatory to be registered for GST. You can find those reasons here: https://www.ato.gov.au/Business/GST/Registering-for-GST/#Doyouneedtoregister1
- You can also register for GST if you are not required to do so. There are pros and cons for registering for GST if you are not required to do so. We advise you to do research and/or hire the help of a professional tax advisor in this case.