Financing, tax rates, and accounting
Under Store Details it says "GST will be applied to your Shopify invoices at a rate of 10%. If you’re registered for GST, add your Australian Business Number (ABN) so you don’t get charged."
I'm a little confused by this as i'm not GST registered so I don't want to charge customers GST. If I don't add my ABN will Shopify add GST onto the cost? What should I do here if I have an ABN but not GST registered?
You pay the GST they add. GST is a tax on the consumer and any businesses not registered for GST.
The line about if registered for GST to not be charged GST is because it's a waste of time for those registered for GST.
Here's a simple example, only focus on the transaction between customer that is registered for GST and Shopify and ignore any other activity.
1. Customer wants to buy $100 of stuff. Shopify charges the customer $10 GST. Receives $110 from customer, sends the $10 GST to ATO. Left with $100 sales.
2. Customer pays $110 incluing $10 GST. When doing their GST or BAS, $10 refund from ATO. Left with $100 expense.
EDIT: Net result is Government didn't receive any GST.
If customer not registered for GST or a consumer, there would be no refund in step 2 so Government receives $10 GST.
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