I operate a merchandise business in Australia where I produce and sell merchandise (e.g. clothing and accessories) for bands and artists.
Currently, my business is not registered for GST as turnover is below the $75,000 threshold. However, many of the bands I work with are GST registered.
The structure is as follows:
- I handle production, sales (via Square), and fulfilment
- Items are sold directly to customers by my business (e.g. $30 per item)
- Costs are deducted (e.g. $2 per item)
- The remaining profit is split 50/50 between my business and the band
My questions are:
- In this structure, where my business makes the sale and is not GST registered, is the band required to account for GST on their share of the profit?
- Is the band’s share considered:
- a share of business profit (no GST applicable), or
- consideration for a taxable supply (therefore subject to GST if the band is registered)?
- If my POS system (Square) displays prices as “GST inclusive” for customer-facing purposes, but I am not registered for GST, does this create any GST obligations or compliance issues?
- Would the GST treatment change if the arrangement was structured so that the band is considered the supplier of the goods, and my business provides a service instead?
I want to ensure the arrangement is compliant and correctly structured for GST purposes both now and as the business grows.
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