Reselling GST Exempt Goods

[jilamints]

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Hi Everyone,
Our business resells information & reports purchased from the Australian government and as such, the services they provide us do not attract GST. These are the only goods we purchase & resell. The resale of these reports by my business to the public are conducted entirely online, to Australian residents. Ultimately, when you hit the $75,000 GST registration limit you obviously have to add GST to the sale of those goods/services.

This is unavoidable, but my question is, how could we increase our GST credits to essentially offset or otherwise reduce our GST liability.

[Dave Gillen – Former FS Concierge]

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Welcome to the forums [USER=118111]@jilamints[/USER]!

I’m no expert on GST, but the most common approach would be to charge the GST to the customer on top of your sale price, so you don’t end up out of pocket.

Hopefully some accountants can chime in with their expertise.
Dave

Dave Gillen | LinkedIn

[jilamints]

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Thanks Dave, you’re certainly not wrong and by and large I suspect that’s the short answer, but I feel like I’m giving the government a free kick… I know, welcome to the wonderful world of taxation.

What frustrates me is this isn’t a “normal” situation; most businesses would for the most part deal in goods and services that equally attract GST.

[LucasArthur]

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Think I understand, wanting to basically try and offset gst collected with get paid – BUT you are not purchasing with GST levied and as a result are missing considerable write offs? Is that correct?

personally though, and taking into account what Dave says by charging +gst, having a gst bill could be seen as you doing well

we have large gst payables every quarter as our model has some high costs that also carry no GST components so can’t claim back – I can’t avoid it sadly.. although that being said, the GST component I collect during that period isn’t my money to count on anyways… we collect on behalf of the government (sad but true)…

only way to reduce is to claim expenses (relative to your business as I am not saying to extort the system) that carry GST trough your business.

Noting, not an accountant here

Jason

Jason Ramage | Lucas Arthur Pty Ltd | E: [email protected]   P: 61 3 8324 0344    M: 61 412 244 888

[bb1]

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jilamints, post: 270102, member: 118111 wrote:

but I feel like I’m giving the government a free kick…

No free kick at all, your client pays the GST, you pass on to the government, not as if you are coughing up any dollars yourself.

[jilamints]

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LucasArthur, post: 270106, member: 34537 wrote:

Think I understand, wanting to basically try and offset gst collected with get paid – BUT you are not purchasing with GST levied and as a result are missing considerable write offs? Is that correct?

Yes, that’s correct.

bb1, post: 270108, member: 53375 wrote:

No free kick at all, your client pays the GST, you pass on to the government, not as if you are coughing up any dollars yourself.

I understand the logic; at $9.90 you just attribute that 90 cents as the governments cut… But you have incurred costs, like merchant fees, in that GST inclusive amount plus the burden of accounting and saving that money each quarter – this is more or less the argument smaller, overseas suppliers made when the government introduced the same GST rules for offshore suppliers as it did local. Now I understand this was really designed to capture the likes of Apple, Netflix and Google, but the burden does exist when you’re in the unique position of literally having little to no GST expenses in your business… It adds a layer of complexity hence I use the phrase free kick!

[Paul – FS Concierge]

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Yes, you become the Government Tax Collector.

I use Accounting software so I spend less than 15 minutes every 3 months on GST.

It is not a huge burden to me.

[bb1]

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As Paul said less then 15 minutes for me as well, saving it is no hassle, you know that 10% (roughly) of all income is the governments, dont spend it, thats where most business’s stuff up, they spend it then don’t have it left at the end of the quarter..

I suspect and am no accountant, but the merchant fee is a direct deduction on income so really a zero impact, but open to correction on that one from an accountant.

I look at it the more GST I have to remit each quarter, the more profit I have made.

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