I would like to make sales of about $140k per year however my business model will not be viable if I need to register for GST and hence charge GST.
Can I run essentially the same business as a sole trader less than $75k and the same business as a company/trust less than $75k to avoid the GST implications. They are two separate legal entities so hopefully this is a compliant plan.
sml wrote:I would like to make sales of about $140k per year however my business model will not be viable if I need to register for GST and hence charge GST.Can I run essentially the same business as a sole trader less than $75k and the same business as a company/trust less than $75k to avoid the GST implications. They are two separate legal entities so hopefully this is a compliant plan.
Why won’t the business be viable if you need to charge GST?
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Hi James,
a) The bulk of my costs (COGS) are GST free so I cannot claim any COGS GST component.
b) I cannot simply increase the price to charge the extra 10% as my sales will drop significantly.
c) I sell items for about $300 with about $100 profit per item. So approximately …. less tax it is about $70, then if I lose another 10% for GST, the profit is only $40 per item and is almost at the point where the effort is not worth the profit.
sml wrote:a) The bulk of my costs (COGS) are GST free so I cannot claim any COGS GST component.
GST-free allows claiming input tax credits.
Do you mean input taxed ? Even these may have some service component you might be able to claim.
Anyway, anti-avoidance provisions prevent you splitting your enterprises between entities if they are acting in concert.
Cheers,
Rob
Hi Rob,
I am buying my stock from overseas so there is no GST included in my purchase costs.
I have just changed from a sole trader to a discretionary trust. Any chance my $75k threshold would be refreshed with the transition?
Is there some sort of annual threshold with GST? If my sales were $85k for the past 12 mths but for the 10/11 financial year, i only sell $70k would this be acceptable not to register? From the ATO definition below, it looks like a problem but my accountant said it was really financial year based and everything would be ok? Is my accountant incorrect?
ATO defintion … Your 'current GST turnover' is the value of all supplies that you make, or are likely to make in the current month, plus all the supplies that you have made in the previous 11 months.
sml wrote:I am buying my stock from overseas so there is no GST included in my purchase costs.
You didn't specify if your imported stock is GST-free, input taxed or otherwise eligible for customs concessions.
The importer is normally liable for GST regardless of whether registered or carrying on an enterprise.
The threshold test is based on both 'current turnover' (last 12 months to the end of this month) and 'projected turnover' (12 months starting this month).
If your current trunover is >= $75k but you can satisfy the ATO that your projected is below then you don't need to register.
BUT if your projected turnover is >=$75k then you need to register. The ATO would be interested in what your projections were a year ago based on the fact that your actual is $85k.
Cheers,
Rob
Thanks for the tips.
Do you know any good accountants in Adelaide to help sort out this mess?Sorry, don't know anybody.
You might not have a mess … you just have not provided sufficient information to know really what is happening.
But it can't hurt to get a second opinion from another Accountant in Adelaide.
Cheers,
Rob
Hi SMH, can you explain it to me like I was a 5 year old?
sml wrote:c) I sell items for about $300 with about $100 profit per item. So approximately …. less tax it is about $70, then if I lose another 10% for GST, the profit is only $40 per item and is almost at the point where the effort is not worth the profit.$300 (retail) – $27 gst = $273. What tax is $30? If you have imported over $1000 of products, you will pay gst anyway. By importing in larger quantities, you will get quantity discounts & cheaper freight as well.
Is there any limit to the number of under $1000 transactions that may be imported duty & tax free?
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