Many small business owners treat GST as part of their revenue, but this is a dangerous financial mistake. GST is not your money—it belongs to the ATO.
Why GST Is Not Yours?
When you sell a product or service for $1,000, you don’t just charge $1,000—you add 10% GST, bringing the total to $1,100. The extra $100 GST is not part of your revenue—it’s collected on behalf of the government and must be paid to the ATO. If you spend that extra money, you’ll have trouble covering your tax obligations.
So when you are paying the $100 to the ATO, you are not paying out of your pocket—you are simply handing over the extra amount you charged for GST. Try not to feel bad about it—this was never your money to begin with! We all need to shift our mindset and treat GST as a pass-through obligation, not extra income.
What Happens When You Spend GST?
- You might struggle to pay your BAS when it’s due.
- It disrupts your cash flow and can lead to penalties.
- The ATO will still expect full payment, whether you have the funds or not.
How to Avoid a GST Cash Flow Crisis
✅ Open a separate GST savings account – Transfer collected GST immediately.
✅ Calculate GST on every sale – Keep track so you don’t overspend.
✅ Plan for your BAS payment – Set reminders to lodge and pay on time.
💡 Tip: Treat GST like superannuation—it’s an obligation, not extra profit!