Firstly you should consult your accountant, and this shouldn’t be taken as financial advice.
Quick GST Refresher
Having said that, here are some basic things about GST.
If your business entity has revenue over $75k AUD in any tax year (July 1st – June 30th) then you will have to pay GST to the ATO in most cases.
More details on the fun subject that is GST here.
Should you add GST to the retail price?
With that out of that way, how should display charging GST to your eCommerce customers?
A mistake we often see here at Boom Ecommerce is eCommerce stores adding GST to the displayed price of a product. For example…
When a business is selling to another business (aka B2B) that is expected, because the business can often claim it back.
However, when selling directly to a consumer, they can’t claim it back. Therefore $99.00 becomes $108.90.
Even though you have been upfront with your customer the price is plus GST and not everyone buying from you understands GST.
Therefore if you’re selling directly to a consumer (i.e. not a business) always quote your prices including GST.
It will save your customer service head aches later on.
Why do eCommerce businesses quote prices plus GST?
Many business owners are used to dealing with GST.
They are essentially collecting a 10% tax on everything sold in Australia then passing it straight to the tax office minus any GST they have paid for things they need to run their business.
Because of that, they never like to include GST in their revenue and charge it on top of the product price.
The issue is, end consumers don’t understand GST as well as them and it leads to confusion.
Long and short of it, if you’re selling to consumers include GST in your pricing to avoid annoying your customers.