Do I Need To Register for GST for a Lawn Mowing Business?

Do I Need To Register for GST for a Lawn Mowing Business?

Let me guess… you want to start or buy a mowing business but you hate red tape, so you’re not sure if you need to register for GST for a lawn mowing business here in Australia?

We hear you. We hate red tape too. But love it or hate it, Australia has a GST system. So as a business owner, you really do need to know about it.

Here are the basics…

What is GST?

GST stands for Goods and Services Tax. At the time of writing, GST is a 10% tax on most goods, services and other items sold or consumed in Australia.

Who charges GST?

Businesses registered for GST charge GST.

How do you register for GST?

You can register for GST with the Australian Tax Office here. You need an Australian business number (ABN) to be part of the GST system, so if you don’t already have an ABN you can register for that and the GST in the same application.

Who gets to keep the GST charged?

The Australian Tax Office (ATO) keeps the GST charged. So, if you are registered for GST, you are in effect collecting tax for the ATO on top of every service you provide.

Do I need to register for GST for my lawn mowing business?

The ATO says that if your business(es) need to register for GST if their annual turnover is (or is projected to be) $75,000 or more (we’re told that this is across two financial years, so be careful). When you are registered for GST, you include GST in the price of the products you sell, and you claim credits for GST in the price of products you buy for your business. But please check the ATO website for confirmation of the latest rules.

What happens if I provide services through a third party like GreenSocks?

GreenSocks is an example of a company that is registered for GST and must collect the 10% GST on every service charged to customers, regardless of whether you (our mowing provider) is registered for GST. We don’t like it, but hey, we also don’t like legal action either, so we’d prefer to do the right thing from day one.

Can you give an example of how GST would work with GreenSocks?

Sure. At GreenSocks, our payment structure looks like this:
80% goes into your bank account (you deserve the most, of course!)
15% pays our bills (marketing, website, admin and everything else we’ll do to get customers)
5% pays for your insurance cover for that job, plus Stripe payment processing
Note: These figures are from the base job value (before GST)

So, for a customer job where the customer pays $110, the base job value is $100 and the GST is $10. You would receive $80 (80% of the base job value of $100). Whether you receive more (to cover the GST) depends on if you are registered for GST or not.

Example 1: If you are registered for GST
You’ll receive $80 (plus $8 GST that you’ll need to pay to the tax office)
GreenSocks pays the other $2 GST to the tax office
The tax office is happy because they collect their $10 GST

Example 2: If you are not registered for GST
You’ll receive $80 (but no GST because you’re not registered to pay GST to the tax office)
GreenSocks pays the full $10 GST to the tax office
The tax office is happy because they collect their $10 GST

Either way, you’ll keep 80% of the base job value (not 80% of what the customer pays). Our commissions are calculated on the base job value as well. GST is separate completely.

Got more questions about GST?

This article is intended for give a general overview only. For more questions or clarifications, please visit the Australian Tax Office’s GST page here.

Want to read our FAQ for Lawn Mowing Providers?

Too easy. Click here and you should find the answers to all of your questions.

Want to mow lawns for money?

Awesome. Jump straight here. We’d love to hear from you!
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1 Comment

  1. Richard Eastes

    Tax is so boring. You made it easy for me. Thanks.

    Reply

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  1. What is a BAS (Business Activity Statement)? - GreenSocks - […] Do I Need To Register for GST for a Lawn Mowing Business? […]
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