Ok guys can you explain this to me?GST in Australia?

Question

For example you buy a fridge and you have to pay 10% as GST as tax?????!!!! so what does that mean?why you should pay this 10%?on top?I mean why when a plumber comes to your house he has to charge you for GST?is that because he has to pay tax for his earnings and this is the way he can get that back????or why when a fridge has been made the person who sells it asks for GST?is it because he has to pay something and this way he requests for that money?

Answer 1

it stands for Goods and Services Tax. its a compulsory tax by the government on all products and services in australia. the person like the plumber isnt doing it because he gets it back, it goes to the government. it was introduced by the liberal government under howard- blame him! thats why sometimes we are charged on items we buy overseas if they are duty free, cause the government loses profit from GST- you can get fined!

Answer 2

GST is heaps simplier than the old system.  If the person had quoted you ex-GST then you'll have to add the GST.  Most people won't do this but some will if they sell mostly to the government or businesses.

If you were a business and you buy something with GST and you charge your customer GST, the GST that you spend is subtracted from the GST you charge.  So if you were charging your customers more than you were spending it's like you hadn't paid any GST for the things that you have brought.

Some naughty people may take cash and give you a discount, these guys might not be paying their GST.

Answer 3

The GST replaced a whole bunch of taxes, including a bunch of them on bank savings.   The biggest tax it replaced was wholesale tax.   The main thing that the GST taxed that had not been taxed before were the service industries.  This is why tradespeople like plumbers, electricians etc now charge more.   Any supermarket product that has been modified in someway also gets taxed.   Bare essentials like bread, milk, fruits and vege (and womens hygiene products - thank the Aust. Democrats for that one) are all GST free.

GST is generally included within the purchase price and the tax charged is usually in small print just before the receipt total.   GST is a 10% blanket charge.  In someways this is a vast improvement over the old wholesale tax where there were all kinds of rates depending on the kind of product being charged.   In the old days consumers were clueless to exactly how much tax they were paying.  It was all hidden behind the purchase price.  Now at least everyone knows that 10% of whatever you buy is tax and its pretty open to scrutiny.

The other good thing about the GST (if there is one) is that in years past the states and territories had to go to Canberra with hats out begging for their share of the National tax pie.   All of the GST is divided up by a guaranteed percentage for each of them.  This is good for the States as they can now make long term plans based on how the economy is going and not on how the winds of politics are blowing for whichever party was in power in federal government at the time.   It brought a lot more stability in State funding arrangements.  Remembering that in Australia most of the funding for schools, hospitals, police etc are all handled at a state level.   The Feds can make grants for special projects but the States control where the bulk of the funds go.

Answer 4

good question dont we pay enough fuchen taxes

Answer 5

We have that in Canada too.. but it's only 5% now.

It sucks man.. it's criminal if you ask me.  

Basically it's Goods and Services tax.  So yes, those guys who sell you the fridge have to pay GST to the government for their "service", hence why they charge you GST.  They  have to file that with their taxes at years end.  You see how it goes?

10% is pretty steep.. that sucks.  Do alot of states in Australia have a state tax on anything?  Or is it mostly just income taxes where they get their money from?

Answer 6

GST is a tax on consumers, not businesses. They way it works is that each time a business buys goods or services, they have GST of 10% added to the invoice (as you would expect). When the business sells its good or services, they also charge GST (also as you would expect), however, the business is able to claim back the GST they paid on their purchases. Complicated? Yes, but an example should make it clear.

Say a business buys raw material for $1000 plus $100 GST for a total of $1100.

Say the same business sells some goods or services (toasters, televisions, plumbing services or whatever) for $1000 plus $100 GST for a total of $1100.

They collected the $100 GST for that transaction on behalf of the taxation department, but instead of having to pay it to the tax office, they are allowed to 'offset' it against the $100 GST they paid when they purchased their raw materials and they get to keep the whole $1100. In effect, they end up paying no GST. If the sale of their finished goods was to an end consumer, it is the consumer who ends up paying the GST.

There can actually be many steps between the original and final sale with each business charging and then offsetting any GST payments. The only one in the chain who can't claim it back is the end consumer.

GST replaced a whole raft of wholesale taxes that were always there, but we didn't see them. I hate the GST because prices on many things that were previously (wholesale) taxed at a lot more than 10% and should therefore have gone down in price, either stayed the same or increased, but it's a fact of life now and we have to live with it (unfortunately). At least the federal government which collects GST, gives it all back to the states which is said to increase the services they can provide to us and in turn, should decrease the  number and level of non-GST state taxes (bullsh!t, but we're stuck with it now).

Hope this helps. If you're still confused, add some additional details and we'll try a different explanation.

And cc_of_Oz

Womens hygiene products which are essentials in much the same way as food is an essential, were TAX FREE prior to GST and GST is now charged on them! They are categorically not GST exempt!

EDIT:

GST is the only sales tax levied in Australia. The states have some other revenue raising avenues such as stamp duties on contracts, but there are no state sales taxes.

Answer 7

When GST came in, at 10%,  I remember that the previous tax, called Sales Tax, was 33% on computers and things like that.

Almost all countries around the world have similar taxes to our GST.  

The UK has a VAT at 17.5%, Philippines is either 7% or 12% (Different goods attract different rates), Netherlands is 19%, Russia is 10% or 18%, Vietnam is 10%, Denmark is 25%.