There has been a bit of talk lately about whether the Australian Government might consider increasing the GST, but what is the GST and how does it affect the average Australian?
What is GST?
GST stands for Goods and Services Tax. In Australia, we have a broad-based GST on products and services. The GST is currently 10%, which means that we pay an extra 10% on our goods and services. The extra money doesn’t go to the company you are paying, but straight to the government.
Who has to pay GST?
Because GST is applied to the goods or services that you buy, the tax is built into the price of that product or service. Then the money is passed on to the company, who must pay it to the government.
Why do we have a GST in Australia?
Australia implemented the GST on 1 July 2000. The reason for the GST was to cancel out a range of other unequal taxes and levies across the states of Australia.
There are many arguments for and against the GST. For example, some people say it is the fairest way of taxing people, as it is applied to everyone in the same way, and you pay more tax the more you buy. On the other hand, some believe that it is an unfair tax as it is applied without consideration of income.
- Not all goods and services have a GST, but most do. For example, medical supplies don’t incur the tax, and neither do some fresh fruit and vegetables.
- Businesses must complete the administrative task of paying GST. However, the tax is ultimately paid for by the end-user (the person who buys the goods or services).
- Some real estate (such as an established family home) is not subject to GST, while some other real estate (such as commercial real estate) is.
- Not all businesses have to pay GST. Some businesses, such as those earning less than $75,000 revenue per annum, don’t have to pay GST. This means they don’t charge people for GST.