There are several types of taxes in Australia that can be required of a small business, such as:
- Income Tax
- GST (Goods and Services Tax)
- Payroll Taxes
- Other Taxes- Fringe Benefit, WET (Wine Equalisation Tax), Luxury Car tax, Fuel Tax (and credits)
In QuickBooks Online, we focus on GST, Payroll taxes and Other taxes.
Goods and Services Tax (GST)
Goods and Services Tax (GST) is a tax on goods and services provided or sold by an individual or small business entity.
Taxes are collected by the individual when goods are sold, and taxes are paid when they purchase goods and services from other individuals and businesses. This is an indirect tax.
GST in Australia is generally 10% and applies to almost all goods and services sold or traded in Australia.
Refer to the ATO website for more information on GST.
Small businesses can report and pay GST to the ATO annually, quarterly and monthly, largely determined by the ATO in addition to their overall turnover.
GST reporting for small business entities consists of 3 key values as of July 1, 2017:
- Total Sales (including GST collected)
- GST Collected
- GST Paid
The total GST owed and paid to the ATO will be GST Collected minus GST Paid.
This reduced reporting requirement is known as Simpler BAS.
Generally, the more money a business makes, the more frequently they lodge and pay (monthly filers have the highest incomes), but most small business entities file quarterly and annually.
GST figures are reported to the ATO using BAS (Business Activity Statement) forms or IAS (Installment Activity Statement) forms. The form type you lodge is determined by the tax liabilities being paid and the frequency.
BAS is the most frequently used term referencing the reporting and the paying of GST in Australia.
For more information about GST, the best resource is the ATO website.
Business Activity Statement (BAS)
The Business Activity Statement (BAS) is used for reporting and paying goods and services tax (GST), Pay As You Go (PAYG) Instalments, PAYG withholding tax and other tax obligations to the ATO.
It is usually filed monthly or quarterly, and for most QuickBooks users, it will be quarterly.
If you are registered for GST, the ATO will automatically send you a BAS when it is time to lodge, and all businesses registered for GST are required to lodge BAS by the due date, even if they have nothing to claim.
Lodging BAS with the ATO
You can lodge a BAS in 4 ways:
- After receiving a paper form in the mail, fill it in and mail it to the ATO.
- Log into the ATO portal and fill in an electronic form.
- Have a BAS agent lodge on your behalf.
- Lodge BAS electronically through QuickBooks Online.
Key Dates for GST Filings
There are 4 main filing deadlines determined by the ATO for lodging BAS - which are on a quarterly basis. The Australia tax year operates on a financial year basis running July 1 to June 30 of the next tax year. The BAS are typically due the month AFTER the previous period has ended.
For more information on due dates, visit the ATO website.
What's the difference between Inclusive and Exclusive of GST?
Inclusive pricing means that the GST of the 10% is INCLUDED in the price of a line item when the user inputs the price at the line item level.
For example, if a line item is listed as $10.00, that $10.00 includes the GST of 10% - so the business will be billing their customers $10.00 total receiving $9.09 of income + $1.01 GST.
The business is actually only receiving $9.09 and they will be paying $1.01 to the ATO.
Exclusive pricing means that the GST is calculated ON TOP of what is listed at the line item level.
For example, if a line item is listed as $10.00, that $10.00 excludes the GST of 10% - so the business will be billing their customers $11.00 total, receiving $10.00 income + $1.00 GST.
Inclusive or Exclusive can be set individually for each invoice, but we recommend users to pick one method and stick with it to keep it consistent.
Most small businesses in Australia price their services with GST included, which is why we set this as the recommended default. This can be changed in your QuickBooks Online Account and Settings page.
When should GST be charged?
The good news that generally everything should have GST charged on it - but there are certain goods like certain foods and financial charges that are considered GST-free.
For more information on GST-free items, visit the ATO website.
Note: We cannot advise businesses on whether or not they should charge GST on any line item in a QuickBooks transaction, as this is considered tax advice. If you would like to seek tax advice, please get in touch with a certified tax professional.
Ready to get started with setting up GST for your small business? Follow our quick-start guide.