Need Advice on GST for Sole Trader

LAbhi007 on 13/05/2019 - 10:57
Last edited 13/05/2019 - 11:13 by 1 other user

Hi All,

I have started working in Sydney from April 2019 as a Sole trader for an IT company. My monthly salary is approx 4k only.
As per Aus law, if I am a sole trader and earning 75k or more in a financial year, I have to register and pay GST.

My question is for this current Financial year, my GST amount which I will get from the company is only 1000 AUD. What should I do with that amount?

Should I tell my company to not pay for GST for this financial year?

Should I register for GST now? Even If I register, Am I eligible to pay GST?

Financial GST

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Comments

  • 87percent on 13/05/2019 - 10:57
    +4

    Speak to an accountant.. It's not that hard

  • Aussie89 on 13/05/2019 - 11:01
    +2

    The $75,000 is the annual turnover, not based on your salary/profit.
    https://www.business.gov.au/change-and-growth/restructuring/…

  • manlol on 13/05/2019 - 11:04
    +2

    From my understanding, if you're not GST registered, you shouldn't be charging/being paid GST. Have you been sending invoices?

    • apsilon on 13/05/2019 - 11:19
      +3

      Correct, should not be issuing a tax invoice with a GST component if not registered for GST.

      • Abhi007 on 13/05/2019 - 13:18

        Hi, I have taken from the company in my first salary. From now on, I can ask my company not to give GST as I have not registered.

        What should I do with the amount which I got in my April salary?

        • MrHyde on 13/05/2019 - 16:18

          If you are working as a sole trader; you should not be getting a salary. You should be invoicing the company for services provided and as part of the invoice - clearly list out how that amount is arrived at and because you are not registered for GST; specify the GST amount as 0.

  • Baysew on 13/05/2019 - 11:19
    -2

    Register for GST now. Your first reporting quarter is not until the end of June.

    • poboy on 13/05/2019 - 15:22
      +2

      Nah. Do not register for GST unless you have to. It's a pain in the butt. Don't add any more headache until you need to.

      Just make sure you issue invoices as 'Invoice', rather than 'Tax invoice'. And ofcourse don't collect the GST. Note No GST payable on your invoice.

      • Baysew on 13/05/2019 - 15:41
        +2

        Yes, don't register for GST. Income works out to only $4,000 x 12 = $48,000. So don't bother. (I must have thought it was going to be $75k+ in the next financial year)

        Not much income, once you consider, no sick leave, no holiday pay, no LSL, no workers compensation, no overtime. (And is the income $48,000 less GST)

      • nith265 on 13/05/2019 - 15:56

        A major consideration for registering in my experience is not having to explain to people you earn under $75k so you dont have to charge it! Many assume if you're in business with an ABN you have to charge GST.

        When I freelanced a couple days a week I was under the threshhold, admin staff who received my invoices would frequently send them back or call me helpfully explaining that I'd neglected to include GST and it didnt say "Tax invoice"…

        Small thing but the conversations always ended with me feeling that they thought I was trying to do something dodgy and evade tax

  • JimmyF on 13/05/2019 - 11:45
    +2

    My question is for this current Financial year, my GST amount which I will get from the company is only 1000 AUD. What should I do with that amount?

    What GST? You're not registered for GST, do you can't charge GST on your invoices nor can you claim GST input credits from the deductions you have fr your business.

    • Abhi007 on 13/05/2019 - 13:19

      Hi, I have taken from the company in my first salary. From now on, I can ask my company not to give GST as I have not registered.

      What should I do with the amount which I got in my April salary?

  • brad1-8tsi on 13/05/2019 - 13:14

    You shouldn't be invoicing with GST.

    Also, as a sole trader you should be earning all your income from a single source.

    • Abhi007 on 13/05/2019 - 13:19

      Hi, I have taken from the company in my first salary. From now on, I can ask my company not to give GST as I have not registered.

      What should I do with the amount which I got in my April salary?

      • foxmulder on 13/05/2019 - 13:27
        +1

        Gosh you repeat this same responses 3 times. If you are not collecting GST and don't want to do the hassle of paying government, refund the GST amount to the company and reissue one invoice without GST.

        • Abhi007 on 13/05/2019 - 14:04

          My bad.

          Thanks, I will ask my company to regenerate the new invoice for me

          • nith265 on 13/05/2019 - 14:11
            +2

            @Abhi007: You generate the invoice not the company…

            This all sounds distressingly like a company trying to get out of their minimum wage obligations by making employees independent contractors

    • Amaris on 13/05/2019 - 14:16

      as a sole trader you should be earning all your income from a single source

      What do you mean by that? the 'sole' is sole trader indicates there's only one person earning the money for the ABN and not that there's only one source of income.

  • nith265 on 13/05/2019 - 14:06

    If I understand the situation correctly:

    • You have invoiced the company $11,000 ($10,000 + 1000gst)

    • You are not registered to charge GST

    • The company thinks you are registered for GST and will take your invoice and claim back the $1000 GST you charged them from the government (or it will reduce their GST bill by $1000)

    • If the ATO check up on this they will see that your ABN is not registered to charge GST.

    • The police will come and put you in jail (not really but you’ll at least get a letter/warning from the ATO saying it seems you’re breaking the law)

    • Contact company explain, pay back $1000

    • Reissue invoice for $10,000. Use the word “Invoice” not “Tax invoice” on it.

    A few observations:

    • You keep using the term salary – it’s not salary it’s an invoice.

    • If you are turning over less than $75,000 you don’t need to be registered for GST. It often seems that you need to be because many businesses will never/rarely encounter a supplier who is not registered. You don't need to be registered but you need to make it clear that this is a non-tax invoice.

    • If you do register for GST you can get back some money from the GST you spend on your business expenses. If you purchased a $55 printer that is 100% for business use you could claim back $5 GST

    • Abhi007 on 13/05/2019 - 14:11

      Hi,

      I know the complications that are why I want to avoid the same.

  • Abhi007 on 13/05/2019 - 14:11

    Thanks all for your valuable inputs

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