Chances are, you’ve probably heard of GST. If you are starting a business, or already own one, it is important to have a good understanding of your obligations regarding GST. Most companies will be registered for GST, so it’s critical to understand what it entails and what your responsibilities are as a business owner. In this Business Kitz blog, we are going to explain what a GST is, how to calculate it and how you can add GST to a price.
What is a GST?
GST, or ‘Goods and Services Tax’, is a general tax applied to the majority of goods and services supplied or consumed in Australia. Some products, known as GST-free sales, are exempt.
In general, GST-registered businesses will include GST in the prices they charge for their goods and services and claim credits for the GST included in the prices of goods and services purchased for their business.
The current GST rate is 10%. It’s crucial to check with the Australian Taxation Office (ATO) frequently because the government has the authority to raise or lower it.
How do I know if GST has been included in the price?
GST is calculated on the purchase price of goods and services. You can find a GST advertised in two different ways.
The first way is the most common way we see prices, where GST is included in the final price. This indicates that the tax has already been computed and is reflected in the stated price.
The second indicator of GST is when products or services are labelled ‘Plus GST,’ indicating that the tax has not yet been applied.
How do I calculate GST?
Before adding GST on a product or service you will have to calculate the rate. The Australian government offers a GST calculator that may help you, which you can access through their website.
Alternatively, imply multiply the amount by 0.1 (or 10%) to add GST to the existing price of a good or service. This tells you how much to add. If you want the total cost, another alternative is to multiply the original price by 1.1 (110%).
If you have any queries or are unsure if your business is exempt from collecting GST tax, you should seek legal advice. Our Legal Kitz business specialists can assist with ensuring that your concerns are addressed, and can provide you with advice that is tailored to your situation. We offer a FREE 30-minute consultation for all your legal needs. Click here to book now.