As a sub-contractor, it is essential to understand your tax obligations and responsibilities. One of the most common questions that sub-contractors ask is whether they need to pay Goods and Services Tax (GST). In this article, we will explain what GST is and whether sub-contractors need to pay it.

What is GST?

GST stands for Goods and Services Tax, and it is a tax that is paid on the value of goods and services consumed in Australia. GST is a federal tax that was introduced in Australia on 1 July 2000, and it is currently set at a rate of 10%.

Do Sub-Contractors Need to Pay GST?

Whether or not a sub-contractor needs to pay GST depends on their annual turnover. If your annual turnover is less than $75,000, you are not required to register for GST. However, if your annual turnover is $75,000 or more, you are required to register for GST and start paying it.

It is important to note that if you are registered for GST, you will need to include GST in your invoices to clients. This means that if you charge a client $1,000 for your services, you will need to charge an additional $100 for GST. You will then need to pay the $100 to the Australian Taxation Office (ATO) when you lodge your Business Activity Statement (BAS).

If you are unsure whether you need to register for GST or how to register, it is advisable to seek advice from a qualified accountant or tax professional.

What Happens if I Don`t Register for GST?

If you are required to register for GST but fail to do so, you will be liable to pay penalties and interest on any outstanding amounts. The ATO may also audit your business to ensure that you have paid the correct amount of GST.

Conclusion

In conclusion, as a sub-contractor, it is essential to understand your tax obligations and responsibilities, including whether you need to pay GST. If your annual turnover is less than $75,000, you are not required to register for GST. However, if your annual turnover is $75,000 or more, you must register for GST and start paying it. Make sure to seek advice from a qualified accountant or tax professional if you are unsure about your tax obligations.