GST, or Goods and Sales Tax brings in extra revenue for the government. It has been in place since the 1930′s (when it was known as WST) and eventually it will probably be replaced with VAT (Value Added Tax), which is not used across most of the world.
The general level of GST is 10% with some items at 0% or exempt. The most important thing to know is if you should be registered or not. Here are some of the criteria:
- If your turnover will exceed $75,000 or greater you must register
- If you think your turnover will exceed $75,000 you must register
- If you are a taxi driver or offer taxi services you must register
The benefits of registering are that you can claim back the GST on purchases. The downside is that you will need to:
- Charge GST on your sales (making you more expensive)
- Fill in the GST return (4 times a year plus the annual return)
Once registered you will need to charge GST on pretty much everything you do. There are exceptions though. For example financial institutions and sales of used residential premises, also things like tuck shop food. Read the GST manual for further details.
Working out GST is simple. To add on GST to a price multiply it by 1.1 (eg. if you sell something for 10 + GST, multiply 10 x 1.1 and you will get 11, which is the final price including GST).
To work out the GST on supplies inwards, divide it by 1.1 (eg. you buy something for 11 including GST, so divide 11 / 1.1 and you get 10, which is the NET price. Subtract the net price from the full price to see the net GST).