Dealing with GST on imports and exports in your BAS
In Australia, businesses are required to report taxes through the Business Activity Statement (BAS). The GST system in Australia is designed to be a neutral and efficient way for businesses to collect and report taxes. Still, it can be complex for some companies to understand. This blog post will provide an overview of BAS and GST, including what they are, how they work, and any implications for Australian business owners.
What is GST?
GST is a tax on value-added applied to most products and services sold in Australia. The Current GST amount is 10 per cent, which means companies must add 10 per cent of the cost of tax-deductible items and services they offer. GST is intended to function as a consumer tax, which means the final buyer of the product or service ultimately pays it. Businesses are a vital part of settling and reporting GST for ATO.
When a business can make a sale, it is tax-deductible and charges GST to its customers. They must pay their suppliers GST when they make a tax-deductible purchase. But, businesses that have registered GST can take back the GST they’ve spent in the form of credit (also called the input tax credit) if they file their BAS. That means GST effectively serves as a “tax upon consumption” and is intended to be non-responsible for businesses since they shouldn’t be in debt due to the charging and payment of GST.
What is BAS?
GST-registered businesses must file a Business Activity Statement (BAS) with the Australian Taxation Office regularly (usually every four months) to report their GST payments and pay other taxes, such as PAYG withholding and fringe benefits tax. The BAS form is used to inform the total value of sales and purchases (including GST) for the reporting period. Once businesses have calculated their liability for GST, they can subtract any input tax credits received from the amount charged for goods/services sold to calculate their net taxable income. The difference between these two amounts is the GST liability that a business must pay to the ATO.
Businesses can lodge their BAS via the ATO’s online services or use accounting software that integrates with the ATO’s system. When a company lodges their BAS, it must also pay any outstanding GST liability and other taxes reported on the form. Businesses that do not accommodate their BAS on time or do not pay the taxes they owe may be subject to penalties and fines. BAS preparation takes time, but it should have to manage in a very effective way.
Who needs to register for GST?
Generally, you will only need to register for GST if your turnover (the value of all your sales) is over $75,000 annually. However, even if your turnover is below this threshold, you can still register for GST voluntarily.
In addition, businesses must be aware of specific rules and requirements for GST registration, reporting, and compliance. Failure to comply with these rules and conditions can result in penalties and fines, so companies must be well-informed and stay up-to-date with any changes to GST and BAS laws and regulations.
GST and imports and exports
Importers of goods into Australia are also required to pay GST on their imported goods when they enter the country. This is known as “GST on imports” and is similar to the GST charged on domestic sales. Importers can claim back the GST they have paid on imports as input tax credits when they lodge their BAS.
GST on imports
Importers of goods into Australia must pay GST on their imported goods when they enter the country. This is known as “GST on imports” and is similar to the GST charged on domestic sales. The GST on imports is generally calculated at 10% of the value of the goods and must be paid to the Australian Customs and Border Protection Service (ACBPS) at the time of importation.
To claim back the GST paid on imports, importers must be registered for GST, and they can claim the GST as an input tax credit (ITC) when they lodge their Business Activity Statement (BAS). It’s important to note that GST on imports is a liability of the importer, not the supplier or the consignee.
GST on exports
Exporters of goods from Australia are not required to charge GST on their exports, as GST does not apply to goods exported from Australia. However, businesses can choose to charge GST on their exports if they wish, but they must get prior approval from the ATO, and they can’t claim back GST on their exports as an input tax credit.
Documentation requirements
It’s essential for businesses engaged in international trade to have proper documentation in place to support their GST claims. For example, importers must have a valid tax invoice or an import declaration that shows the GST amount paid, and exporters must have evidence of the export, such as a bill of lading or airway bill.
Conclusion
It’s essential to understand how GST applies to imports and exports in your business activity statement. By registering for GST, keeping accurate records, reporting GST on imports, claiming GST on exports, and lodging your BAS, you can ensure that you correctly report and pay GST on your imports and exports. If you have questions or need further assistance, you should speak with a tax professional or the Australian Taxation Office (ATO). We provide BAS accounting services that help you to manage your business operations. For more information, kindly mail us at info@airanglobal.com, and our team will contact you.
