Day one: your registration date
When you register you nominate the date it takes effect, and everything hinges on it. Sales before that date have no GST; sales from it do. If you crossed $75,000 and registered within 21 days, the date is the day you were required to register. If you registered late, the ATO can set the date back to when you should have registered, and you'll owe GST on the sales since then even though you never charged it.
Your invoices
From the registration date, every invoice for a taxable sale is a tax invoice:
- the heading Tax Invoice;
- your name and ABN;
- the date and an invoice number;
- what you sold, with quantity and price;
- the GST amount, or GST-inclusive prices with the words "Total price includes GST";
- for sales of $1,000 or more, the buyer's name or ABN.
Open quotes need re-issuing. To a business, add "plus GST" and the GST amount. To a household, show the GST-inclusive total as the prominent figure. A job that started before the date and finishes after it is one to ask your accountant about; the general rule is that the date of the sale decides.
Your prices
Business clients claim the GST back, so adding 10% costs them nothing and they expect it. Households pay the extra 10% in full, so this is a real pricing decision: add it, absorb it (one-eleventh of the old price is now GST), or something in between. Whatever you decide, price lists, booking pages and your website must show consumers a total that includes GST.
Your BAS
Registration puts you on a Business Activity Statement cycle, quarterly for almost every small business. On it you report your total sales, the GST you collected, and the GST you paid on business purchases; you pay the difference, or receive a refund if you bought more than you sold. The standard due dates are 28 October, 28 February, 28 April and 28 July; a registered agent gets longer.
You also choose an accounting basis. Cash means GST is reported when money changes hands, which suits most small businesses because you never pay GST on an invoice that hasn't been paid.
Your GST credits
From the registration date you can claim the GST in what you buy for the business: equipment, software, materials, a share of your phone and car. Two conditions: it's for the business, and you hold a tax invoice for anything over $82.50. Keep them. Purchases before the date don't qualify; if there's a big one, the backdating question above is the one to raise with your accountant.
Worked example
Mara's registration takes effect on 1 October. Two identical $2,000 logo jobs:
| Invoiced 28 September | Invoiced 3 October | |
|---|---|---|
| Heading | Invoice | Tax Invoice |
| Logo design | $2,000.00 | $2,000.00 |
| GST | — | $200.00 |
| Total | $2,000.00 | $2,200.00 |
Her first BAS covers October to December. She invoiced $24,000 plus $2,400 GST, and bought a $1,980 laptop that included $180 GST. She reports $2,400 collected, $180 paid, and pays the ATO $2,220.
Tell people
Your business clients first: they'll want tax invoices from now on and won't mind the 10%. Your accountant, who will set up the BAS lodgement. And every place your prices appear: the website, the booking page, the price list on the wall. The one thing that doesn't change is your ABN; the registration attaches to it.