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I'm a new sole trader and only recently aquired an ABN.
I'm expecting to make above $75K, meaning I'll have to register for GST - but I'm just wondering if I'm supposed to charge for GST on the income I'm making under 75K?
Meaning: for my very first invoice, do I charge GST from my employer; or, do I not start charging GST from my employer until I hit that 75K mark?
I'm just concious that the onus is on me to pay the GST and I don't want to not charge for it when I'm supposed to... and then be hit with a big tax bill!
Any advice would be appreciated!
You will still need to lodge BAS every quarter because you registered and charged for GST.
Remember that your tax return doesn't include the GST in income or expenses.
If you stop using your abn and become an employee then you can cancel your GST registration and back date it to the last invoice.
If you continue on using an ABN in another job you will still need to be registered and pay GST.
If at any time you believe that your total income from any ABN job will be below $75,000 for the fincial year then you can cancel the GST registration and stop charging GST.
Basically my question is: Do you pay your GST before you've earned over that 75K threshold?
Does that mean someone earning $76,000 is charging for and paying $7,600 in GST, but someone earning $74,000 would charge for and pay no GST at all?
Exactly, there has to be a limit and that limit is $75,000
If you think that you may be close, then you can register for GST voluntary and then only be liable for an Annual BAS.
But once it is proven that you will be earning more than $75,000 then the ATO can put you (correctly) on 1/4 BAS.
Also, if you are registered for GST, charged GST and earned a total of $76,000 you would pay $6,909.09 in GST
$76,000 / 11 = $6,909.09
So if you earn $75,500 unexpectedly - (when you were expecting to hit $73,000) - does that mean you have to pay $7,550 in GST that year - even if you haven't charged for GST all year?
If you are registered for GST then you must do the following:
(1) Submit BAS every month, 3 months or annually - as you specified when you registered.
(2) Charge GST where appropriate and then submit this to the ATO. - via BAS.
(3) Claim GST on any expenses where appropriate - via BAS.
Best to speak to a tax professional.