Institute of Certified Bookkeepers
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September 2015 Question of the Month - GST Registration

  • 123 posts
  • # 110208

A client has just registered for GST, but instead of registering from the start of the quarter, she has registered from 1st May.  How do I treat the mid-quarter registration for the first BAS, should I include all of April’s transactions in the BAS?

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  • 172 posts
  • # 110312

admin@ICB said:

A client has just registered for GST, but instead of registering from the start of the quarter, she has registered from 1st May.  How do I treat the mid-quarter registration for the first BAS, should I include all of April’s transactions in the BAS?


 

I would either :

 

1. treat April as non-GST registered, and only include May-Jun in the BAS, or

2. consider advantages of amending registration to include April



Edited at 03 Nov 2015 11:12 AM GMT

  • 123 posts
  • # 111407

It is unusual that a business would register mid-quarter but no problem.

You only need to report transactions from the date of registration on the first BAS. So in this instance, April’s transactions are not reportable on the BAS. You only need to report the figures from 1st May.

Once a business has reached the threshold of registration they need to register within 21 days. This is $75,000 for businesses and enterprises, and $150,000 for not-for-profit entities.  You can back date the registration but it would be more usual to start the registration from the next quarter to allow the business owner time to plan for the impact on their business process and cashflow of having to report GST to the ATO.

On a related note, we hear that many business owners are reluctant to put prices up by 10% when they register for GST, yet this is exactly what should happen.  It is a legitimate business necessity and invoices should be issued accordingly, with GST added to existing product or service prices. If they do not add 10% to invoices, they will have to forfeit 10% from their existing charges and this can have a significant impact on cashflow, particularly for a sole trader who is used to thinking of everything that hits their bank account as “theirs”.

If the business has an overdraft account, the owner may prefer to keep ATO funds in the account to keep the overdraft down, however, they would need to be diligent in managing the ATO liabilities and overdraft.

If you are working with a business owner who is facing GST registration, encourage them to open a separate bank account that they transfer 10% of income into, and encourage them not to think of it as “their money”!

For a business that is not yet registered for GST, it is good practice to monitor the turnover each quarter. This means that if the business income is getting to $18,000 per quarter on a regular basis you should monitor the turnover monthly.

For a business that is under the relevant threshold, registration is voluntary.  A business can still be registered for GST and therefore charge and claim accordingly, even if they are earning less than the threshold.  A business that is voluntarily registered is still required to submit a BAS, and may be eligible for annual GST reporting rather than quarterly. Some new businesses elect to register for GST regardless of turnover so that they are seen to be operating in the same sphere of competition and professionalism as other businesses.

Related References

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