The Australian Taxation Office (ATO) applies sales tax to businesses turning over a certain amount. Government bodies reinvest taxed funds into the country’s education, defence, maintenance, healthcare, aged care, and transportation sectors.
As a small business owner, understanding your sales tax liability ensures you meet your financial obligations and avoid damaging penalties.
Keep reading to understand which sales are taxable, identify your GST eligibility, and how to lodge sales tax returns.
What Is Sales Tax?
The ATO taxes the income from selling goods, services, and assets in Australia. Businesses registered or eligible for goods and services tax (GST) are liable for this bill. You must audit and record sales through a business activity statement (BAS) and balance sheet.
How Does GST Work?
You’ll need to register for GST if your entity earns the following:
- Business: If your registered business’ turnover is $75,000 or more.
- Non-profit organisation: Your NPO turns over $150,000 or more.
The ATO charges 10% GST on the total sale of all goods or services within the GST tax year.
Types of Taxable Sales
Businesses typically add the cost of GST to their bill. Learn which sales you should target:
Goods: The sale of physical items like garments, electronics, appliances, and vehicles. It includes those purchased directly and items delivered across Australia.
Property: Australian property sales are taxable. The sale includes the land, building structure, land interest, rights, and occupancy licence.
Capital assets: Selling capital assets like office equipment (computers and furniture, for example) and vehicles incur sales tax.
Services: Money exchanged for services such as cleaning and maintenance is taxable.
Which Sales Are Exempt From Tax?
Some sales are GST-free or have input tax–where the GST price isn’t included in the bill. These sales are typically charitable or have societal value. These items include:
- Basic food
- Educational courses
- Some childcare services
- Some medical services and medication
- Some menstrual products
- Some supplies and meals for aged care facilities like retirement homes
- Exports
- Duty-free shops
Let’s Collaborate On This One
As your small business scales, you’ll likely generate a higher income by selling goods and services. Contact us to prepare for the tax implications of a growing, financially viable business.