If you are thinking about or have started your very own e-commerce shop have you considered GST as part of your business planning?
Here is a few quick key points to consider when it comes to GST and online stores:
- GST is a sales tax you as a business may need to on-charge to your customers but it is also something you can claim back on some of your business purchases.
- It is compulsory to be registered for GST once your annualised income reaches $75,000. That means if in a single month you generate $6,250 of revenue ($75,000/12 months) you should be registering for GST with the ATO (ATO link). You can voluntarily register before reaching this threshold which could be beneficial if you have a large amount of purchases where you could be claiming the GST back.
- Life with GST becomes a whole lot simpler with a great system like Xero to auto-calculate GST amounts for all income and expense transactions.
- GST applies to most sales of goods in Australia. It is calculated as 10% on top of the sales value. For example if you wish to earn $100 from a product sale after GST, total charge to customer will be $110.
- If you are exporting goods to overseas customers they may be export sales and thus the treatment is different whereby GST may not be chargeable (ATO link).
- In terms of costs to your business many subscriptions and software applications you use will not be a GST claimable expense. This is because they are oversea suppliers where GST is not applicable.
- Your suppliers may be changing their GST requirements so we recommend regularly reviewing tax receipts provided as any GST portion will be disclosed there.
- Generally you report and pay or claim any GST quarterly to the ATO through a quarterly Business Activity Statement.
- Accepting cryptocurrency such as bitcoin could be an appropriate option for your shop however this doesn’t negate the need to consider the GST consequences on a transaction.
As you can see it is a complex topic so our advice is to always consult a professional to ensure you operate correctly. Reach out to team EASE now for a chat to get this right in your online business.