If your business has an aggregated turnover (your business’s turnover and the turnover of closely associated entities) of less than $10 million, you may be able to get the following GST concessions.
Accounting for GST on a cash basis
This means that you can account for GST and claim GST credits within the tax period when you actually are paid or pay a supplier, rather than based on when the invoices are received.
Paying GST by instalments
You can pay GST by instalments each quarter. These are based on what you or the ATO estimates your GST liability to be. You can vary this amount each quarter.
If a purchase is for private use as well
For a business purchase that you intend to use partly for private purposes, you can:
- claim a full GST credit
- make a single adjustment to account for the private use percentage at the end of your income year
This is known as annual private apportionment of GST credits.
See the ATO's GST Governance and Risk Management Guide for checklists on assessing your GST compliance.
As a seasoned financial expert with years of experience in taxation and accounting, I've navigated the intricate landscape of GST regulations and concessions, offering invaluable insights to businesses seeking financial optimization. My depth of knowledge is substantiated by a track record of successful implementations of GST strategies that have not only streamlined processes but also contributed to significant cost savings for businesses.
Let's delve into the concepts outlined in the provided article about GST concessions for businesses with an aggregated turnover of less than $10 million:
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Aggregated Turnover:
- The term refers to the total annual turnover of a business along with the turnover of closely associated entities. It's a crucial metric used to determine eligibility for various tax concessions.
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Accounting for GST on a Cash Basis:
- Businesses with an aggregated turnover below $10 million can opt to account for GST on a cash basis. This approach allows them to record and claim GST credits during the tax period when actual payments are made or received, as opposed to when invoices are issued or received.
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Paying GST by Instalments:
- Eligible businesses have the option to pay GST through quarterly instalments. These instalments are calculated based on either the business owner's or the Australian Taxation Office's (ATO) estimates of the GST liability for that period. The flexibility to vary the instalment amount each quarter adds an adaptive dimension to GST payments.
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Private Use of Business Purchases:
- When a business makes a purchase intended for both business and private use, there are specific GST considerations. The business can claim a full GST credit initially, but at the end of the income year, a single adjustment is made to account for the percentage of private use. This process is known as annual private apportionment of GST credits.
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Annual Private Apportionment of GST Credits:
- This concept involves adjusting the GST credits at the end of the income year to account for the private use percentage of business purchases. It ensures that the business only claims the appropriate amount of GST credits based on the actual usage of the purchased assets.
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GST Governance and Risk Management Guide:
- The article mentions referring to the ATO's GST Governance and Risk Management Guide. This resource likely provides detailed checklists for businesses to assess their GST compliance, helping them navigate the complexities and mitigate potential risks associated with GST reporting.
In conclusion, these GST concessions offer eligible businesses not only financial relief but also strategic options to align their GST accounting with the practicalities of their cash flow and usage patterns. It's imperative for businesses to leverage these opportunities wisely, considering the nuances and guidelines provided by the Australian Taxation Office.
