Home – New Forums Money matters Wasn’t registered for GST

  • This topic is empty.
Viewing 8 posts - 1 through 8 (of 8 total)
  • Author
    Posts
  • #983571
    jlbcine
    Member
    • Total posts: 3
    Up
    0
    ::

    Hey Guys,

    very novice question but i am just in a bit of a pickle.

    I am a freelance filmmaker and was behind in doing my tax, finally i got myself a bookkeeper and just did the 11-12 tax year. We discussed that my gross turnover was too high and i had not registered for GST, therefor i had not been charging it on my invoices.

    My accountant called me friday and said because i had not registered for gst but had had a turnover of about 120k i had to pay the gst on my operating profit, about 80k i believe.

    Anyway, i understand i should have registered but as it stands i havent been charging gst on any of my invoices and seems odd that it would be crushing small buisness like that.

    any help would be greatly appreciated.

    Thanks in advance.

    Cheers, james

    #1143103
    DME
    Member
    • Total posts: 24
    Up
    0
    ::

    Call the ATO and ask. They are very helpful and a very under utilised resource when it comes to tax questions.

    From memory if you don’t register for GST when required you are liable to pay GST on applicable sales above the $75,000 GST threshold which in your case would be on $45,000 resulting in $4090.91 in owing GST. Again call the ATO, they may well count your GST paid on purchases you have tax invoices for against it, wave what you owe or charge you a lesser amount as long as you actually register for GST now that it is required.

    jlbcine, post: 163674 wrote:
    Anyway, i understand i should have registered but as it stands i havent been charging gst on any of my invoices and seems odd that it would be crushing small buisness like that.You are the one at fault, the regulations are very clear and very available in regards to the requirement to be registered if your GST turnover is over $75,000 or is projected (likely) to be. The issue is that you should have been charging GST and you are liable for the GST even if you didn’t charge it. I know I can be harsh but rather than feeling sorry for yourself take it as the price of a valuable lesson in business on the importance of knowing your responsibilities and liabilities.

    EDIT: Backpaying the GST owing for the 11-12 FY isn’t a big deal, the thing you should be concerned about is that you should have been registered for GST and charging GST this financial year. If your current FY performance is similar or better to your previous year you would already be liable for over $5,000 in GST against your GST paid on purchases. You really need to call the ATO asap and get this sorted out. They are very helpful and easy to deal with.

    #1143104
    KellyB
    Member
    • Total posts: 65
    Up
    0
    ::

    As suggested, contact the ATO and explain the situation.

    I understand your frustrations, however it is important to keep all small businesses on a level playing field, and your business has effectively been able to be 10% cheaper (or make 10% extra profit) than your competitors.

    #1143105
    jlbcine
    Member
    • Total posts: 3
    Up
    0
    ::
    KellyB, post: 163730 wrote:
    As suggested, contact the ATO and explain the situation.

    I understand your frustrations, however it is important to keep all small businesses on a level playing field, and your business has effectively been able to be 10% cheaper (or make 10% extra profit) than your competitors.

    Hi Kelly,

    I understand, but that makes no sense. If you dont charge for GST how am i running at a 10 percent profit. I’m just not collecting it for the government in the first place.

    cheers, james

    #1143106
    jlbcine
    Member
    • Total posts: 3
    Up
    0
    ::
    DME, post: 163728 wrote:
    EDIT: Backpaying the GST owing for the 11-12 FY isn’t a big deal, the thing you should be concerned about is that you should have been registered for GST and charging GST this financial year. If your current FY performance is similar or better to your previous year you would already be liable for over $5,000 in GST against your GST paid on purchases. You really need to call the ATO asap and get this sorted out. They are very helpful and easy to deal with.

    Thankyou, that’s very helpful. I am absolutely in the wrong. I was naive with the turnover and obviously will pay a hefty price for the last two years.
    I guess im just intrigued by ‘projected income’ and surely that word would get a lot of people from startup businesses into problems when you are unsure of who you/your business is worth in turnover.

    Hard thing is i only ended up with a taxable income of 45k but my accountant is saying that i owe 8k for gst from the operating profit.

    this all happened on thursday. thanks for your help. much appreciated. will get onto ATO asap.

    cheers, james

    #1143107
    Past-Member
    Member
    • Total posts: 1,815
    Up
    0
    ::

    James – the GST is worked on TURNOVER, not your profit for tax. That’s the bit that can be confusing. So, even though your taxable income may have been $45K, the turnover was way over the $75K and GST is worked on your sales, not your nett profit.

    #1143108
    The Copy Chick
    Member
    • Total posts: 963
    Up
    0
    ::
    jlbcine, post: 163737 wrote:
    I guess im just intrigued by ‘projected income’ and surely that word would get a lot of people from startup businesses into problems when you are unsure of who you/your business is worth in turnover.

    Businesses can register for GST at any point throughout the year, so if sales are going well, they need to keep an eye on their turnover. If they start getting close to the $75k mark, they should register (and are required to register within 21 days of reaching $75k). Once registered, they can start charging and paying GST (I believe sales prior to that don’t require GST to be back-paid).

    You can elect to be registered for GST even if you don’t make $75k turnover a year, which means you can also claim GST credits for your business.

    If you’re running your own small business without a bookkeeper or accountant, then you really do need to make sure you know your tax obligations beforehand. The ATO offer free visits with their small business consultants to help you understand everything you should know.

    All the best!

    #1143109
    DME
    Member
    • Total posts: 24
    Up
    0
    ::

    Just to add on to The Copy Chick’s comment regarding the ATO offering free visits with small business consultants they also have several free tax and book keeping seminars covering general business tax liabilities, GST – filing BAS, Income tax, deductions, employing staff – super liability, FBT, PAYG and basic book keeping. Each only goes for around 2 hours from memory and they provide you with hard copy information outlining each as well as workbooks and examples. They also provide ample opportunity to ask questions and usually have several people on hand for larger groups.

    I am interested to hear what the outcome of your situation is. The ATO provide plenty of information on the regulations but little on the actual resolution of issues and any penalties etc though from the few first hand experiences I have heard they seem to be relatively lenient as long as you work with them to sort it out.

Viewing 8 posts - 1 through 8 (of 8 total)
  • You must be logged in to reply to this topic.