A Value Added Tax Identification Number or VAT Identification Number (VATIN) is an identifier used in many countries for value added tax purposes. Mainly in the European Union, a VAT Identification Number can be verified online at the official EU VAT Information Exchange System (VIES) website. You can also use this website to confirm that the number is currently valid and to view the name or other identifying details of the organization that was assigned the number.
This VAT number – or VAT registration number – is a unique code issued to companies which are registered to pay VAT. Businesses can always find their own number on the VAT registration certificate issued by HMRC, while the numbers for other businesses should be stated on any invoice they issue.
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Is VAT Number Different from GST?
VAT number in Australia is referred to as GST and it stands for Goods and Services Tax. It is a form of Value Added Tax that is charged in countries like Australia, India, Canada, New Zealand, Singapore, and Hong Kong. GST works in the same way as VAT in that it is a consumption tax that is imposed upon the cost of goods and services.
Note that if you don’t check a VAT number and you end up entering an invalid number on your return, then you could invalidate your invoice and HMRC could disallow your tax input claim – leaving you counting the cost and facing a big paperwork headache. Most times, errors with VAT numbers come from innocent mistakes but there are instances in which some people try to fraudulently use someone else’s VAT Number. Luckily, it is not difficult to perform a quick check.
Although there are some items that are exempt from VAT or are charged at a zero rate (meaning that the government does not currently charge VAT for these items but could in the future), the price of most goods/ services is affected by VAT. Although VAT is a type of tax, it is an indirect tax, meaning that the government doesn’t collect it directly from customers. Instead, businesses collect the tax themselves before repaying it to the government.
As with VAT, you will be expected to register for GST and the penalties for failing to do so can be significant, so it is best not to put off registration once you become aware that GST applies to your business. Although VAT is a type of tax, it is an indirect tax, meaning that the government doesn’t collect it directly from customers. Instead, businesses collect the tax themselves before repaying it to the government.
How to Get a VAT / GST Number
In Australia, you can register for goods and services tax (GST) online, by phone or through your registered tax or BAS agent when you first register your business or at any later time. This is called ‘standard GST’ registration. You only need to register for GST once, even if you operate more than one business.
If you are liable for goods and services tax (GST) you are expected to register within 21 days of meeting the eligibility requirements. To register for GST you will need an Australian Business Number (ABN). It is simple to register for GST yourself and it costs nothing.
- You can get your CAN, ABN and register for GST with the Business Registration Service.
- You can also register for GST through the ATO business portal.
The business portal is the primary way for businesses to communicate with the ATO. It is also where you will submit your business activity statements (BAS). You can also submit your BAS via online accounting software.
Other Ways to Register
- Use form NAT 2954
- Call the ATO
When to Register for VAT/GST Number
If you are not registered for GST, check each month to see if you have reached the threshold, or are likely to exceed it. You need to register within 21 days of your GST turnover exceeding the relevant threshold. You are expected to register for GST:
- Once your business or enterprise has a GST turnover (gross income minus GST) of $75,000 or more (see Working out your GST turnover)
- Once you start a new business and expect your turnover to reach the GST threshold (or more) in the first year of operation
- If you are already in business and have reached the GST threshold
- If your non – profit organisation has a GST turnover of $150,000 per year or more
- Once you provide taxi or limousine travel for passengers (including ride – sourcing) regardless of your GST turnover – this applies to both owner drivers and if you lease or rent a taxi
- If you want to claim fuel tax credits for your business or enterprise.
After Registering for VAT/GST Number in Australia
After registering for goods and services tax (GST) you are expected to:
- Include GST in your fees and sale prices (except for GST – free sales)
- Make your invoices tax invoices (for sales over $82.50 including GST)
- Choose your GST reporting method
- Lodge your business activity statement (BAS) or GST return to the Australian Taxation Office (ATO)
- Meet the ATO payment and record – keeping requirements
- Can claim GST credits for business purchases.
VAT/GST Credits in Australia
Goods and services tax (GST) credits, also referred to as tax input credits, can be claimed for business purchases made that included GST in the price. Have it in mind that GST paid for in these expenses becomes the GST credit amount. GST credits are claimed in your business activity statement (BAS).
Also note that the total amount of your GST credits can be offset against the GST you are liable to pay the Australian Taxation Office (ATO). If your GST credits are greater than the amount of GST you are liable to pay, you are entitled to a refund. To claim GST credits you are expected to:
- Be registered for GST
- Claim credits for business purchases. For purchases that are used both for business and private purposes, you can claim a GST credit for the portion used for business.
- Have purchased the item in the past four years
- Have a tax invoice for purchases over $82.50 (including GST)
- Have a form of receipt for purchases under $82.50 (including GST)
- Check your suppliers are registered for GST with the Australian Business Register’s ABN Lookup tool.
You can register for goods and services tax (GST) online, by phone or through your registered tax or BAS agent when you first register your business or at any later time. This is called ‘standard GST’ registration. However, you only need to register for GST once, even if you operate more than one business.
If you don’t register for GST and are required to, you may have to pay GST on sales made since the date you were required to register. This could happen even if you didn’t include GST in the price of those sales.