By Christopher Raynal www.masteraccountants.co.nz

________________________________________ One of decisions that all businesses have to make not long after starting up is when and if to register for GST.

The first consideration is do you have to register? In New Zealand, threshold is turnover or sales of $40 000, while it is $50 000 in Australia. However, that does not have to be end of story.

If business is profitable, and it registers for GST, it will be likely to pay GST to taxation authority. Being profitable is not a bad thing. Quite to contrary. However, it does change scenario from a loss-making business, where you might choose to register for GST in order to claim GST refunds. This provides another source of capital for a growing, loss-making business. This was subject of an earlier article.

Your business competes with other businesses. If your turnover or sales are close to threshold, or not far past it, you might consider not registering for GST. In case of being over threshold of $40 000 for New Zealand, or $50 000 for Australia, you might consider breaking up your business into two discrete business units.

If your business is competing with larger businesses that have to pay GST, imagine benefit to your business if you can offer a price that does not include GST? Or imagine if you charge same price as other businesses but do not pay GST. The unpaid GST component represents increased profit.

Service can be described as a “performance” of some kind involving two parties whereby one party is benefactor and other party is performing party receiving some type of monetary payment. The value of Service depends on personal experience of benefactor. When I looked it up in Webster’s, there it was #11 out of 31 definitions. The payment part was not included, but key word mentioned was “performance.” As I relate this to restaurants, it’s so easy to see why dining room service is excellent training for actors, since they’re performing all of time. There might be days when their energy level is low, yet they are still expected to perform on show stage at night. It is not much different for dining room service staff whose livelihood depends quite a bit on how they look and act before many people per night. The word “performance” makes a lot of sense when relating it to other Service fields such as medical, legal, financial and armed, even in religion they’re called prayer services.