Thread: ABN registration and GST?

Originally Posted by Sir Stinkalot

Does the ABN need to be related to Bunnies and M10 activities?
I have an ABN but it doesn't relate to the products sold by Bunnies.

Stinky The one ABN will get em all done. Even places like Cornells even if your not in business you just tell them your a sole trader, give them your ABN and you can deal with them. Their are alot of companys like that and with bunnies next time your their you get a phone number and ring for an application for non credit trade account. M10 will give you a form on the spot

my accountant said 20k before you pay tax, declare income or register. but you cant claim tools or training either. bummer.

Its definetly 50k. Anything under that and you dont have to register for GST


To clarify any uncertany just go here



http://www.ato.gov.au/businesses/default.asp


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Originally Posted by Zed

my accountant said 20k before you pay tax, declare income or register. but you cant claim tools or training either. bummer.

Sort of Zed, It is actually non claimable if you make a loss but if it is in fact a profit then you are taxable. Read Sturdees post about what you can claim in most cases with woodwork I would have thought by the time you add in materials, depreciation, travel etc there is probably no taxable profit.

Quoting an ABN attached to your tax file number to fill out an application for an account is not an issue. Providing you do not try to make a claim for the GST on the BAS. Thinking about it logically if you are a builder you will claim GST on suitable tools of trade but not on the kitchen fridge. As to the issue of ABN's they only issue one per TFN, if a sole trader has multiple businesses he will only need the one ABN for the lot. It is actually a seperate issue to normal income tax.

John.

Originally Posted by Sir Stinkalot

Does the ABN need to be related to Bunnies and M10 activities?
I have an ABN but it doesn't relate to the products sold by Bunnies.

Bunnies want yoiu to spend $500 minium per month to keep you account

BBC were much more liberal, alas

Originally Posted by johnc

Quoting an ABN attached to your tax file number to fill out an application for an account is not an issue.
John.

John, not supposed to be an issue But its very handy if you want to obtain your "tradies discount" some companies wont deal with you if you havnt one. A thread a few days back a member wanted a certain type of cam lock and he found what he wanted at Cornels but they wouldnt sell it to him. Thats why i suggested the ABN

Originally Posted by Ashore

Bunnies want yoiu to spend $500 minium per month to keep you account

They do sux in that department. M10 is better (but sell less quality stuff though ) they are like most companies that you nominate the ceiling figure and you just can not go over it.

Originally Posted by Lignum

John, not supposed to be an issue But its very handy if you want to obtain your "tradies discount" some companies wont deal with you if you havnt one. A thread a few days back a member wanted a certain type of cam lock and he found what he wanted at Cornels but they wouldnt sell it to him. Thats why i suggested the ABN

Quite right Lignum,

I have no problems quoting my own ABN for wodies stuff if the supplier will only deal with another business (in my case totally unrelated), and if they want to throw in a discount all the better. Most seem to have a turnover threshold before you qualify but every now and again you get lucky. Those 20K and 50K limits, one applies for claiming a business loss and the second is the GST threshold. Under 50K turnover and in business you need an ABN regardless of either of those two limits. The 20K limit is a bit confusing because there are a couple of outs if not in business for a full year or if there have been previous profitable years and a few others as well, essentially go see an accountant as the answer to Auld is the correct one.

John

Once you have decided to register for an ABN

the choice about registering for GST, assuming you are under the threshold, is about inputs.

If you have significant input costs and therfore significant GST to be claimed back then it is worth registering for GST

If the vast majority of your turnover is your own labour and profit there is less reason to register.

If you havn't turned over much and don't make any significant profit ( real and documented) and you are not seeking to sell to " registered individuals" who require a tax invoice its probably not worth registering.

check this out with your bean counter.

cheers

Originally Posted by Lignum

They do sux in that department. M10 is better (but sell less quality stuff though ) they are like most companies that you nominate the ceiling figure and you just can not go over it.

I had no option as to nominating the ceiling but was told I had to spend in excess of $500 per month
My account was a carry over from BBC 10 years and I hate to think what I spent before I fully retired, I was more than off and still am

calm, calm another red

Originally Posted by Ashore

I had no option as to nominating the ceiling but was told I had to spend in excess of $500 per month
calm, calm another red

I dont blame you. I just tore mine up and didnt bother. They make zillions as it is, so why make you spend a minimum. I have nine various accounts all wood related and all those companies (m10 included) only wanted a celing figure and NO minimun.

If you are going to sell your work the vast majority of galleries/shops will not deal with you if you don't have an ABN.
Cheers
Barry

We seem to have slipped off the track a bit here, but that isn't unusal aroud this place.

1. AB has already said he is getting an ABN so it's not the question.

2. If the enterprise produces an income stream of over 50K, it must register for GST.

3. If that is the case, GST paid on purchased goods can be claimed back. GST is then charged to buyers, be they registered or not - no exceptions. If they are registered businesses, they in turn will claim it back. (The GST is paid once and that is by the end user. Others claim it back along the chain).

4. If you don't register for GST (and remember this is entirely different to having an ABN) then you don't charge GST on your sales. You can't. You will be the end user and the GST paid on your purchases is part of your costs and therefore goes on to the expense side of the final P&L. It is therefore tax deductable.

The bottom line is that if you don't register for GST, you have higher purchase costs (by 10%). The goods you are selling are GST free and therefore cheaper by that amount.
If you do register, your purchase costs are cheaper by 10% (because you can claim the GST back) but your end price must have GST added. Either way, it probably doesn't make much difference in the end.

I'm in a business where we collect a lot more GST than we pay each quarter. This means that we have a big GST bill but we have had the advantage of using the GST money for all that time - interest free.

As I said before Steve, if it falls under the 50K limit - don't bother.

Look at it like this...
If you aren't registered:
Your raw materials cost $50 plus GST= $55
you need to make $50 on the item so you sell for $105. (no GST component)

If you are registered:
Your raw materials cost $55 but you can claim $5 back later so that makes the cost $50
Add the profit required , $50 and the final price is $100 which you then have to charge GST on so it sells for $110. (i.e. $5 more expensive than before)

Your BAS statement shows GST Collected $10, less the $5 already paid - you owe the government $5.

Originally Posted by Two-Words

This means that we have a big GST bill but we have had the advantage of using the GST money for all that time - interest free.

G'day Two-Words,

That I think is a big pit fall that some businesses fall into. Spending the GST which they know they have to pay back and because it's been spent having to scrape and save and find it from somewhere else.

I also run a business but the GST I collect and the tax I have to pay all go into a separate bank accont each week and there it stays until BAS comes around.

Makes it much simpler, for me at least.