Let’s talk more about GST on commercial property after we have a good understanding of how to purchase commercial property with your super account. If you own a commercial property that makes more than $75,000 a year, you will be obliged to register an SMSF for GST. Even though not all businesses are required to register for GST, failing to do so might result in financial penalties.
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How do I know registration for GST on commercial property is mandatory for me?
If you own commercial property, you can use it to determine if you need to register your SMSF for GST by meeting the following criteria:
- I own a non-profit-organization that has a GST turnover of $150,000 per year or more
- I expect my turnover to reach the GST threshold (or more) within the first year of operation
- My business provides ride-sourcing services
- I aim to claim fuel tax credits for my business or enterprise.
If you don’t sign up, you’ll have to pay GST on any sales you’ve made since the date you were supposed to sign up. The ATO will give you 14 days to pay the amount you owe after they tell you why you are being penalised and the amount due.
If it is not required of me, should I still register?
If you decide to sign up for GST early, it will definitely help you in the long run. But it’s important to know that keeping records and reporting will take more time and cost more money. You will, however, have the chance to claim GST credits. Keep in mind though, you will be required to maintain your registration for a minimum of a year.
Where should I register?
It is highly recommended that you already possess an active ABN number before proceeding with the registration process. Doing so will ensure you are eligible to register through the online portal provided by the ATO. Once everything is finished, the ATO will email you additional information, such as when your GST registration will become active.
Claiming GST credits
After you have registered for the GST, the following types of transactions will immediately qualify you to make a claim for a Tax credit:
- you plan to use your purchase entirely or partly for your business, and the purchase has nothing to do with making input-taxed supplies.
- GST was included in the price.
- you paid for the item you bought or are expected to pay for it.
- you have a tax invoice from your supplier (for purchases more than A$82.50).
There is a time limit on getting a GST credit, which is also named “period of review.” You have four years and one day from the date you filed your activity statement to get your credit. Ensure you have all the documents you need, like a tax invoice from your supplier, who should give you one within 28 days of asking for one.
If you’re interested in claiming GST credit with purchases less than A$82.5 you will have to provide one of the followings:
- a tax invoice
- a cash register docket
- a receipt
- an invoice.
If not, keep a record of the purchase, like a note in your diary, that says:
- the supplier’s name and ABN
- the date of purchase
- a list of the things you bought
- amount paid.
Why claim GST credits?
It offers the chance to get refunds and tax deductions; good for making money! Perhaps a scenario to provide a mental imagery.
Lisa, the owner of a dentist office that was registered for GST, bought a new steriliser for $8,999 plus GST of $899.9. Lisa can put $899.9 back on their GST statement.
Lisa can also claim a deduction for the steriliser’s loss in value on their tax return. To do this, they subtract the GST credit from the purchase price ($8,999 – $899.90 GST = $8099.1) and use this number to figure out the deduction they are entitled to.
For more information
Get in touch with mint super audit right away if you’re looking for an independent super fund auditor that specialises in guiding customers through the intricate world of SMSFs and offering personalised solutions tailored to your specific needs.
Feel free to step into our office in Cheltenham or set up an online smsf audit service through our page.