Register for GST, Make PAYG Payments and BAS Filing
GST (Goods and Services Tax) is a tax on goods and services sold in Australia. GST was first introduced in July of 2000.
In most cases, GST is a 10% tax. Ultimately, consumers are the ones who end up paying GST, but it’s up to the businesses providing goods and services to charge their customers GST and then eventually pass those earnings on to the ATO (Australian Taxation Office).
Do you need to register for GST?
We’re about to cover the basics here, but I’m preparing a more thorough guide on GST. Subscribe to the newsletter to get notified.
You must register for GST if you expect your gross income to be $75,000 or more in a single tax year. You can apply for GST whenever you like, even if you aren’t earning $75,000 a year yet; but you expect to.
As a reminder, your gross income is the money you make before taxes and deductions.
You only need to register if you expect to make $75,000 from a single business.
For instance, if you are earning $25,000 from your side hustle, but you also have another job which pays you $50,000 per year, you would NOT need to apply for GST on your side business.
However, it’s a good idea to start charging your clients right away if you think there’s a chance you will reach $75,000. If you don’t, you’ll end up having to pay 10% out of your pocket on those early transactions when you didn’t apply GST.
When your clients pay your invoices, you cannot spend that money. You have to remember to put aside that amount paid in GST until it’s time to submit payments to the ATO.
Preparing for PAYG payments and BAS filing
There are another two very important terms you need to keep in mind as you get ready to step into entrepreneurship and become a sole trader: PAYG and BAS.
What is PAYG?
PAYG (Pay As You Go) is a method the ATO uses to spread tax payments throughout the course of the financial year. The ATO usually will require payment from you on a quarterly basis.
How to prepare for PAYG
If you expect to earn more than $4,000 in income per tax year, then you’ll most likely be required to make PAYG instalments.
The ATO starts sending PAYG activity statements to eligible people following the end of the financial year, which is June 30th in Australia.
When you receive your first PAYG instalment notice, the ATO will use your most recent tax filing information to give you an amount to pay.
This can be difficult for first time entrepreneurs, as your income may fluctuate until you find the right balance with work.
In fact, the ATO allows you to vary your PAYG instalments for that reason. You can elect to pay a different amount, based on your own estimate.
Use the free PAYG instalment calculator for individuals to get a good estimate of how much you should be paying.
I’m working on a more detailed guide of how to prepare your business for PAYG instalments. Subscribe to the newsletter to get notified when that’s published.
How to pay your PAYG instalments
Paying your PAYG instalments is easy:
- Visit your myGov dashboard and link your myGov with your ATO account.
- Wait to receive your first PAYG Instalment Notice or Instalment Activity Statement from the ATO in your myGov inbox.
- With these forms, fill out the basic information in regards to your income, expenses and investments.
- You will then have the option to make a payment through a bank account or use a credit card.
Let’s now take a look at BAS (Business Activity Statement).
What is BAS?
Your BAS is a form you must submit to the ATO summarising all of your GST (Goods and Services Tax) activity over a period of time.
This will be the case only in the event that you pay GST. Remember that you must register for GST if you expect your gross income to be $75,000 or more in a single tax year.
If you’re charging clients GST, you will be required to submit this form.
BAS is submitted quarterly and usually at the same time as your PAYG instalments.
How to estimate your BAS?
The ATO will send you a form in your myGov account inbox that asks for three things:
- The total earnings for your business over the quarter.
- The GST charged to clients over the quarter.
- The GST you paid on business expenses over the quarter.
When do you need to submit your BAS forms?
The ATO will send you a notification through the myGov portal when you need to make payments.
However, as of 2022-2023, these are the important BAS due dates to keep in mind:
- Quarter 1: July, August and September - Due date: October 28th
- Quarter 2: October, November and December - Due date: February 28th
- Quarter 3: January, February and March - Due date: April 28th
- Quarter 4: April, May and June - Due date: July 28th
And there you have it. You’ve learned some very important information when it comes to managing your finances.
The first year of being an entrepreneur is usually the hardest, and I hope all these guides will make it a little easier for you.
NEXT GUIDE: Beginners Guide on How to Find Your First Clients
PREVIOUS GUIDE: How to Set Your Financial Goals [1 Template]