Home – New Forums Money matters What to do now I’m under the GST turnover threshold

  • This topic is empty.
Viewing 5 posts - 1 through 5 (of 5 total)
  • Author
    Posts
  • #982841
    ptero5
    Member
    • Total posts: 1
    Up
    0
    ::

    Hi there

    I’ve been registered for GST for some years now, but have been advised by my accountant that as I now fall below the GST threshold I should cancel my GST registration.

    I am unsure about the impacts to my business if I do this, especially on invoicing existing clients.

    Does anyone have any advice they can share?
    Thanks.

    #1139116
    MyGreatIdea
    Member
    • Total posts: 2,278
    Up
    0
    ::

    Did your accountant give a reason? I can’t understand the logic behind cancelling unless you’ve fallen so far below the threshold and are unlikely to ever get back up there again. :confused:

    If that’s the case, I’d be more concerned about the future of the business than anything else.

    Wendy :)

    #1139117
    Past-Member
    Member
    • Total posts: 1,815
    Up
    0
    ::

    I agree with Wendy – you don’t know if you will go back over it again, so it’s better to just keep it. And your customers won’t get confused.
    Business clients expect GST and do you really want them to know that you are below the threshold?

    #1139118
    Rhys
    Member
    • Total posts: 325
    Up
    0
    ::
    ptero5, post: 158797 wrote:
    Hi there

    I’ve been registered for GST for some years now, but have been advised by my accountant that as I now fall below the GST threshold I should cancel my GST registration.

    I am unsure about the impacts to my business if I do this, especially on invoicing existing clients.

    Does anyone have any advice they can share?
    Thanks.

    Hi Ptero5,

    I don’t agree with the previous 2 replies, I think there are a couple of scenarios. You need to consider who your clients are and what their response is to you charging them GST.

    If your clients are mainly businesses they don’t see GST as a cost, because to them it isn’t. If you were to charge my business $110 (inc GST) the cost to me is $100, the $10 I pay to you as GST goes on to my BAS & I get it back (or at least it reduces the GST I have to pay that I have collected on my sales).

    But if your clients are mainly individuals they wear the cost of the GST you charge them. So your $110 invoice is the real cost to them.

    OK, so what does this mean?

      If your customers are businesses and you de-register for GST your revenue stays the same you just don’t collect any GST. At the same time you can no longer claim back any GST on business expenses, such as your phone bill, web hosting, etc. But if your revenue is under $75k I am guessing these expenses will be quite low.

      Net outcome of this is that your revenue doesn’t change, your expenses go up by 10% (the phone bill, etc), but against this you avoid the cost (and hassle) of having to lodge a BAS. Probably about break even (that’s a guess).

      You also have to consider whether not being registered for GST would change the your (business) clients’ perception of your business?

      All up if your clients are businesses it is a 50/50 call whether or not to keep your GST registration.

      Now let’s look at this if your business has mainly personal clients. The day you de-register for GST you get a 10% increase in your revenue. Why? Because to someone who cannot claim back the GST your invoice for $110 is identical whether it is $100 + GST, or $110 no GST. You still invoice them the same total, but now you keep all of it rather than having to give 1/11th to the ATO.

      All the other points above about your expenses / lodging a BAS etc remain unchanged.

      You don’t say what your revenue is, but let’s say $60k + GST. Immediately you de-register that revenue to you becomes $66k.

      If your clients are mainly domestic / individuals you should almost certainly de-register, it will leave you much better off.

    Usual disclaimer about this post being general in nature, so please don’t rely solely on this for advice.

    Cheers, Rhys

    #1139119
    Burgo
    Participant
    • Total posts: 2,104
    Up
    0
    ::

    A lovely subject to start the day
    Once upon a time my accountand told me that I was under the GST radar
    but suggested I keep charging and paying GST until I either sold the business or retired.
    As the business was still operating GST can work to your advantage as I was still buying detergents.
    twice a year I would get a refund of GST, twice a year I paid GST and at the end of the financial year I didnt have any tax to pay.
    Today I am trying to build a small specialist type business, which has been registered to pay GST, some times I pay GST and sometimes I dont but at the end of the year I dont have to pay any tax.
    My thoughts are it is better to pay taxes quarterly rather than once a year.

Viewing 5 posts - 1 through 5 (of 5 total)
  • You must be logged in to reply to this topic.