Should I Register for GST?
Firstly, if you meet the GST turnover threshold, or you are a tax driver, you must register. If you don’t you could be liable for 1/11th of your income (plus penalties) if you are audited. For those under the turnover threshold, whether or not you register is a question for your accountant.
But here are some of the costs and benefits of registering for your information…
You will be able to claim back the GST on all your business purchases. This is often helpful for new businesses when their expenses are high and their income is low. It is especially helpful if you want to purchase big ticket items like computers or motor vehicles to be used for your business.
You will have to charge GST to your customersOne of the benefits of non-registered businesses is they don’t have to charge GST to their customers, and so can be a little more competitive in the marketplace (or increase their profit margins!). It won’t really make a difference if your customers are other businesses, because they could claim the GST back anyway.
You will have to fill out and lodge a BASIf you voluntarily register for GST, you can elect to lodge your BAS annually. The BAS can be a little complicated for first timers, and you might need a bookkeeper or Tax Agent to help you. Essentially, by voluntarily registering, you’re signing up for more compliance work on your end. So that may be something you’ll want to weigh up.
To Register or Not to Register
Whether or not you’re better off registering (when you don’t have to) depends on your individual circumstances. Compliance is probably the biggest drawback from being in the GST system. many find preparing their annual tax returns is work enough already, without having to prepare four annual BAS statements.