Quoting without GST & What is exempt from GST? 

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We hear all about goods being charged with GST at the checkout, but what is it? It’s pretty simple, the Goods and Services Tax (GST) is an additional 10% tax which applies to most goods and services. Businesses may face some confusion when dealing with GST, as it is generally included in invoices, but in certain instances, businesses do not have to include it in quotes.

Key points:

  • Quotes made exclusively for businesses do not require GST to be included 
  • GST applies to most goods and services, but not all
  • Companies that meet the threshold for GST must register with the ATO

What is a quote? 

A quote is a formal promise to a potential supplier to supply goods or services needed by the buyer including when they are needed and the price to be paid. Previously, businesses were able to quote prices without GST included. This was only made on the condition that there was a clear and unmistakable notice that GST would be added to the quoted price.

The Australian Competition & Consumer Commission (ACCC) requires businesses to include any taxes in the price displayed by goods or services when dealing with consumers. Businesses must ensure they do not deceive or mislead consumers, as the consequences of doing so can be serious and crippling to a business due to legal expenses. The total price of goods or services should be shown as a single figure that includes tax or other additional charges, such as GST.

The requirements of the ACCC vary in relation to transactions between businesses. Generally, if a quote is made exclusively for businesses, GST is not required to be in the quote (business-to-business exemption). However, there are conditions that must be satisfied for businesses to provide a quote without GST.

What are the conditions for quoting without GST?

It is important for you as a consumer and a business owner to know that quotes must be exclusive to businesses. A common misconception is that quotes published or advertised on company websites will fall within the business-to-business exemption, as the company is intending to quote towards other businesses. However, this is not the case. Because the quote on the website is open to the public to view, the possible audience could include individuals as well as corporations. As such, it is not ‘exclusive’ to businesses, and businesses will be required to quote a GST-inclusive price in this circumstance. 

As a business, you are still required to make it clear that the price that you are quoting is GST exclusive (GST is not included in the total cost). If GST is not included in the quote, there still must be reasonable notice given to the other business clarifying this.

The business-to-business exemption cannot always be relied upon as not all businesses operate using a corporate structure. Before providing a quote, businesses should be able to determine if the business they intend to provide a quote for operates as a sole trader, partnership or corporation.  For sole traders and partnerships, the business-to-business exemption does not apply, meaning businesses are still required to quote GST-inclusive prices.

You should also know about certain goods and services that are exempt from GST. If a business sells goods or services that are classified as a GST exemption, they do not have to register or add the tax to the prices. There are various exemptions, including:

–    Most basic food

–    Certain education courses and materials

–    Certain medical, health and care services

–    Certain medical aids and appliances

–    Certain medicines

–    Certain childcare services

The full list can be found on the Australia Taxation Office (ATO) website

Registering GST

Companies with income before tax of $75,000 or more are required to register for GST with the Australian Taxation Office (ATO). You need to do this within 21 days of meeting the GST turnover threshold (the $75,000 pointed out to you before). A company is only required to register once for GST if they operate multiple businesses under the same entity.

The process for registering for GST is relatively simple, and the ATO’s website outlines multiple alternative ways for you to do this. 

How companies can register

Companies that are incorporated and have an Australian Business Number (ABN) can register online through the ATO Business Portal, written form or phone. More info can be found by calling 13 28 66 or visiting the ATO website, here.

Benefits

For companies under the GST threshold, while not mandatory it may still be a good idea to register GST. This is especially relevant to companies that are likely to surpass the $75, 000 threshold within the first 12 months of operation.

If you’re still a bit unsure about where you stand in relation to GST, and whether you are exempt from certain requirements of GST, Legal Kitz’ experienced team of solicitors are here to help. Book a FREE 30 minute consultation with Legal Kitz now!

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