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Very lost about GST, BAS, and TAX...please be gentle...

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Initiate

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Replies 4

Hello Community,

 

I'm glad to have found this forum, I'm wondering if I could get some advice here on things that I am totally clueless about, so please forgive me naivety on some of these questions!

 

I began freelancing late June this year (the 26th of June was my FIRST invoice ever, to be exact! : )

 

Prior to this, I took the following steps.

 

I registered for an ABN and am currently operating as a 'Sole Trader'.

 

As far as my research has indicated, this is the correct way to go - at least when starting up small.

 

So I hope this step so far is correct?

 

Secondly, after registering my ABN, I also registered for GST and was told that I report as 'BAS' yearly. To be honest, I don't even remember registering for GST, but I must of when following the steps after my ABN register.

 

I've come to realise that I've probably rushed a bit into registering for GST which is the main basis of my query here...

 

I'm taking my freelancing slow to start with, and, after talking amongst others within the freelance community, I've been told that I shouldn't have really bothered with registering for GST just yet since I am unlikely to reach the $75,000 turnover in this first year, and that also because I am very new and starting small.

 

Another thing that has me worried over this GST confusion, is that I haven't been charging GST onto my invoices thus far, again because of the slow rate of freelancing at the moment and because I didn't really think about it!

 

My questions (more like worries!) is, have I made a mistake and done something wrong by:

 

1) Incorrectly registering for BAS and GST? (Can, and should, I cancel it somehow??)
2) not charging my few clients at the moment with GST
3) I have no idea how this all fits in with filing my tax!
3) what do I do now???

 

As you can see, I am totally lost here, this is all new to me and I am trying my best to do the right thing and perform my work correctly.

 

There is not much info on 'freelancing' guidelines on the ATO website, and I can understand since the shift in work trends towards the 'gig economy' is one that has emerged rapidly. I also understand that freelancing is a form of 'Sole Trader'...but I do think it would be helpful to have dedicated resources and terminology for this fast-emerging work trend.

 

I'd appreciate ANY advice and some MUCH needed direction!

 

And thank you in advance to anyone who can help!

 

 

 

1 ACCEPTED SOLUTION

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Best answer

Initiate

Replies 2

Hello MCA_Accountants

 

I thank you sincerely for your reply. Upon reading it I rang the ATO immediately and explained the whole situations, mentioned your suggestion of cancellation coupled with the backdating request...and it all got sorted.

 

The lady on the phone was very helpful, patient, and went further to check If I was eligible to bypass the GST registration (at least for my first year), which I am, as long as I do not reach the threshold, which I am then obligated to register.

 

Your reply gave me the guidance I needed and I feel a whole weight lifted off my shoulders, so I cannot thank you enough.

 

Smiley Happy

 

Thanking you kindly for your time & advice,
Nova

4 REPLIES 4
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Megastar

Replies 3

Hi Nova,

 

You are obligated to charge GST and remit it to the ATO if registered for GST. If you haven't recouped it from customers then you may be able to re-issue those invoices with GST and try to get your customers to pay it - but I dare say that's not going to fly. You have an obligation to invoice your customer for the full amount at the time, so can't see any way that you can enforce customers to pay that extra now.

 

You can cancel your GST registration. I would suggest calling the ATO to discuss backdating a cancellation as there are limits on how far back you can go.

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Best answer

Initiate

Replies 2

Hello MCA_Accountants

 

I thank you sincerely for your reply. Upon reading it I rang the ATO immediately and explained the whole situations, mentioned your suggestion of cancellation coupled with the backdating request...and it all got sorted.

 

The lady on the phone was very helpful, patient, and went further to check If I was eligible to bypass the GST registration (at least for my first year), which I am, as long as I do not reach the threshold, which I am then obligated to register.

 

Your reply gave me the guidance I needed and I feel a whole weight lifted off my shoulders, so I cannot thank you enough.

 

Smiley Happy

 

Thanking you kindly for your time & advice,
Nova

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Devotee Registered Tax Practitioner

Replies 1

@Nova @MCA_Accountants 

 

Nova,

 

It is good that you followed the advice from MCA Accountants and were successful in have your GST registration cancelled.

 

A entity that is not registered for GST issues a Invoice.

A entity that is registetred for GST issues a Tax Invoice.

A ABN is included on both a Invoice/Tax Invoice.

 

The $75,000 threshold is forward looking (and not calculated at the end of a FY).

 

You should develop a Record Keeping System that regularly tracks your Income and Expenses.

There are a number of recent posts on the ATO Community about lodging a Tax Return following the first FY of a business.

 

Duncan 

 

 

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Initiate

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@DuncanS 

Hello Duncan,

 

This is wonderful information so clearly explained in its simplicity.

 

It's really helpful. Thank you for taking the time to comment and share the advice here.

 

It's really hard when starting out on your own, and this forum is excellent.

 

The advice on record-keeping is something I certainly take notice of and am using software to help with the process.

 

And I'll definitely be browsing these forums for tax return advice too!

 

Thank you again.

 

Warm regards

Nova