We can’t tell you how many Shopify eCommerce stores we onboard that do not have their GST set up for their store correctly.
Lets start with the basics:
First things first. If your Australian business (no matter how it is structured – if it has an ABN it is a business) expects to sell more than $75,000 in gross turnover over the NEXT twelve months, even if all the sales will be to overseas customers, it must register for GST here in Australia. GST registration is voluntary under this threshold. Our rule of thumb, is that the first month your business achieves monthly sales of over $6,000 and the business is growing, then it is time to register.
Check with your local bookkeeper or accountant to find out how to register for GST. Once this is done, it is time to set up your Shopify store.
Pro Tip: Looking to get your accounting and finances in order at the same time? Check out this detailed Shopify accounting guide.
GST can be set up at three levels in Shopify. If you charge GST on most of our products, the best practice is to set GST on for all products. You can then exclude groups of products, or specific products.
- Turn GST on for all products:
Go to settings | taxes | and ensure you have ticked “collecting” for Australia. If you are an Australian registered business, and selling to overseas customers, generally speaking you will only have to collect GST for sales made to customers in Australia. This will change however if you are selling in large volumes to other countries, such as NZ and USA. Read these articles to obtain more information. When you click on edit – ensure your set up looks like the following image. There is no additional tax added to the federal tax and there should be no overrides.
2. Shipping and GST
Please remember to tick the box here in relation to shipping rates – so many of our clients forget this step!
If all of your products include GST, this is the end of your set up. Shopify will only collect GST to those customers with Australian addresses, and not collect GST on orders sent to other locations.
3. Exclude GST from products that do not have to charge GST.
If you have products that you sell that are GST free, there are additional steps.
We won’t cover excluding a group of products from tax, although this can be done. However if you wish to exclude a specific product from GST you can do this by clicking on Products | click on the specific product | click on the variant (if needed) and untick the box that says ‘charge tax on this variant’
We hope this article helps you set up your Shopify store for GST. Please do get in touch if you wish to chat about how to automate the guts out of your Shopify bookkeeping by using Shopify + A2x + Xero.
And remember, an eCommerce business needs an eCommerce accountant 🙂