Goods and services tax (GST) is a type of consumption tax used on invoices in Australia, Canada, India, Jersey, Malaysia, New Zealand, Samoa, and Singapore.
Goods and services tax is a type of tax that businesses, freelancers, and contractors have to add to their invoices if they operate in these countries and they’re registered for tax. In other countries this type of tax is called value-added tax (VAT).
GST is included on most things you pay for in these countries as well, such as a cup of coffee, a haircut, or goods that you purchase from your suppliers.
Do I have to register for GST?
The rules will vary from country to country, but usually you’re required to register for this tax once you earn above a certain threshold. It’s usually also possible to register voluntarily.
Once you’re registered, you have to include GST on all the invoices you send to your clients.
How does it work?
The GST is added to the price of the product or service. What rate you should use, depends on which country you’re operating in, and what you’re selling. There are also products and services which are exempt or excepted from consumption tax.
You also have to report GST to the tax authorities: Specifically, how much GST you’ve paid your suppliers and how much GST you’ve collected from your clients. If you’ve paid more than you’ve collected, you’ll get a refund. If you’ve collected more than you’ve claimed, you’ll have to pay the surplus to the tax authorities.
How often you have to report tax, depends on what country you’re operating in.
Pro-tip: Manage GST with invoice software
With free invoice software, you can easily add tax to your invoices. Just add your products and services to the invoice and choose the right rate. The invoice software will work out the total tax for you and clearly display it on your invoice.