If you’re confused by the concept of GST, you’re not alone. Many freelancers and sole traders in Australia aren’t sure if they need to register for GST, or how to calculate it. Let’s break down exactly what GST is and who needs to register for GST.
GST stands for goods and services tax. It is a tax on goods and services sold in Australia, first introduced in July of 2000. In the vast majority of cases, GST is a 10% tax.
If you are a sole trader or freelancer doing business in Australia, there is a chance you need to register for GST. It depends on two factors:
- Meeting the $75,000 threshold
If any point your Gross Income from your business is $ 75,000 or more in a single tax year, you need to register for GST. Gross Income simply means the money you make before taxes and deductions. - GST for ride share and taxi drivers
Drivers for companies like Uber, Ola as well as taxicab and limousine drivers must also register for GST even if they are below the $75,000 threshold.
You can choose to register for GST even if you earn less than $75,000 per year or don’t provide ride share services. There are a few reasons: - BUSINESS PERCEPTION– If you don’t charge GST, you are telling people that your annual turnover is less than $75,000. It might not portray the right image.
- CLAIM GST CREDITS- You can claim GST credits for the goods and services you have purchased for your business.