Phone service helps answer questions about GST

THE GST Assist 13 3088 helpline is a federally funded initiative assisting small and medium-sized enterprises, charities and the education sector prepare for the introduction of GST.

The helpline’s small business service is managed by the Australian Society of CPAs. Following are several commonly asked questions with responses.

• Do I need to apply for an Australian Business Number if I am not registering for GST?

If your yearly turnover is $50,000 or more, you must register for GST and will need an ABN. Non-profit organisations with a yearly turnover of $100,000 or more, must register for GST too – and, therefore, need an ABN.

When the ABN is fully introduced, businesses will be able to use one number to identify themselves in their dealings with the Common-wealth Government.

The system will also be available to State, Territory and local governments, so that the ABN will eventually reduce the number of government registration and reporting requirements.

While it is not compulsory to apply for an ABN if you are not registering for GST, many businesses may nevertheless wish to apply.

The reason for this is that where a business without an ABN supplies goods or services to another business, the purchaser will be required to withhold the maximum marginal rate of tax plus Medicare levy from any payment that it makes to the supplier.

It should be noted that you are only entitled to an ABN if you are carrying on commercial activities with an expectation of profit. Accordingly, employees, people conducting a hobby and, in most cases, self-funded retirees, will not be entitled to an ABN.

You can register for an ABN electronically at the business entry point at, by mail, or with the assistance of your professional accountant.

• I run a small retail business. How do I display prices for GST?

As retailers will be at the frontline of the GST, it is important that prices are displayed correctly to avoid confusing customers.

The government has stipulated that anyone selling goods to the retail public must display a GST inclusive price.

You can do this by showing a GST inclusive price or you can show a price plus GST with a total. However, you cannot just show a price plus tax.

Customers must be able to see the total price plus GST. For example, a television set could be displayed as $792 (GST inclusive), or $720 + $72 GST = $792.

All prices must also take into account the removal of sales tax.

Pricing is an issue that you should look at as early as possible, particularly if you operate with certain price points for marketing purposes.

• Many of my suppliers are also small businesses. What do I do if they do not have an Australian Business Number?

All businesses, regardless of their size and turnover need to register for an Australian Business Number. This ABN needs to be quoted on their tax invoice.

If a supplier cannot quote an ABN you are required to withhold 48.5 per cent of the payment and remit this amount to the tax office.

These withholding rules do not apply where the unregistered business is supplying goods or services to non-business customers, the value of the supply is less than $50, or the supplier gives a written declaration that the supply is not being made in the course of his/her business (e.g. it is merely a hobby).

The penalties are harsh for businesses that fail to withhold tax from unregistered suppliers.

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