Registering for GST

[dima]

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Hi Guys,

I am just wondering if anyone can help with a question. ATO website is not 100% clear to me.

My company has not yet registered for GST as we have only just begun and not reached $75,000 turnover yet. I thought we should just hold off until we get close in order to save some headaches.

In that plan I didn’t foresee us administering some projects, we’ll basically be the middle man for cashflow between clients and other consultants. Does this mean that money counts towards out ‘turnover’ for GST purposes, or is it excluded?

e.g. We do a job where our fees are $10,000 but there are 3 other consultants all charging $10,000. We bill for $40,000 and pay the other 3 external consultants. Is our additional ‘GST turnover’ $10,000 or $40,000?

Thanks anyone who can help.

[MyGreatIdea]

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The $40K is your income/turnover and the $30K are your direct costs so yes, this contributes to your $75K turnover limit. The ATO doesn’t care how the income is derived and profit isn’t a factor.

Can you all invoice the client separately?

Wendy

[dima]

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Thanks Wendy,

I thought that might be the case. We normally invoice separately, however the occasional client wants it all wrapped up in the one fee.

I just wonder what the following bolded line from the ATO website would be referring to:

“Your GST turnover is your gross business income (not your profit), excluding any:

• GST you included in sales to your customers
• sales that are not for payment and are not taxable
• sales not connected with an enterprise you run
• input-taxed sales you make
• sales not connected with Australia.”

Edit: At the end of the day it really comes down to registering in the next few months or early-mid next year anyway, so I guess playing it safe would be best.

[MyGreatIdea]

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Can you have one of the other suppliers (who is registered for GST) invoice them?

Don’t forget that you need to register before you reach the $75K and it’s for the previous 12 months, not a calendar or financial year.

Wendy

[dima]

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We use consultants not suppliers, but that’s not really possible in our case unfortunately.

Appreciate the tips.

I guess setting up for GST is just one more of those little non-billable jobs that pop up.

[Taxopia]

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There is also the issue of agency in that you can in some cases collect monies from third parties and on charge them as disbursement type costs without them being a taxable supply from your business.

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