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The GST is a 10% tax on the sale or supply
of most goods, services, or other items sold or
consumed in Australia.
If a business is not registered for GST,
that business cannot include GST within the
price of anything it sells or provides, and it
cannot claim back (as input tax credits) any
GST it has paid for goods or services used in
the business. However, businesses not
registered for GST may still claim the entire
amount of the business expense, including the
GST component, as an income tax deduction.
With some exceptions, if a business is an
entity carrying on an enterprise and its annual
turnover is equal to or greater than the
turnover threshold of $50,000 ($100,000 for
non-profit organizations), it must register for
GST.
Businesses that are registered or required
to be registered for GST must include GST in
the price of goods and services they supply or
sell. These transactions are called
taxable sales. More specifically, a
taxable sale is made for consideration, in the
course or furtherance of an enterprise carried
on by the business, and is connected with
Australia.
If you are uncertain whether a sale is a
taxable sale, you should get legal advice.
There are other types of sales where GST is
not included in the price: GST-free sales
and input taxed sales. If a sale is
GST-free, GST is not included on the sale of
goods or services to customers or clients, but
the business is still entitled to claim input
tax credits for the GST portion of expenses
incurred in running the business.
Examples of GST-free sales include basic food
(such as fruit and vegetables, meats, breads
and plain milk), certain education courses,
exports, certain health services, registered or
eligible childcare, religious services and some
charitable activities.
There are also special rules for input taxed
sales. If a sale is input taxed, GST is
not charged on the sale of the goods or
services to customers or clients. The
business cannot claim input tax credits for the
GST portion of its business expenses relating
to the making of that sale. Financial
supplies are input taxed. Financial
supplies include bank accounts, credit
arrangements, loans, shares, superannuation,
life assurance and the credit component of
certain Hire Purchase agreements.
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