As a business operating in Australia, it is important to understand the goods and services tax (GST), and what this means for your business.
Goods and services tax (GST) is a 10% tax that is placed on most goods, services and other items sold and/or consumed in Australia. A business needs to register for GST if they have a GST turnover of $75,000+ ($150,000+ for non-profit organisations) or if they provide taxi travel, including ride sourcing/sharing services. As the requirement depends on GST turnover, it is important to note that GST is relevant to small businesses too.
Generally, most businesses include GST in the price they charge for the goods and services they offer, which is where you will see prices marked as ‘GST inclusive’. Think of the pair of jeans you just bought for $110 GST inclusive – the GST for this purchase totalled $10 but was included in the sale price.
On the other hand, it is common for people or businesses that offer a service to add GST on top of their service. Think of a plumber for example – they might charge $100 an hour, plus GST. As GST is 10%, the total cost of using the plumber for 1 hour would be $110.
When you consider how extensive a businesses’ inventory can be, it is clear that calculating the GST for each item would become quite a laborious task. Here it can be useful to have a POS system that calculates your GST automatically.
To learn more about GST, you can visit the Australian Government Business website. Additionally, we recommend consulting a professional for important financial matters like GST.