It is human nature for business owners to compare and the moment you hear what someone else paid on their BAS, you cannot help wondering how yours stacks up. You might see another business making similar money, maybe even boasting about record sales, yet somehow their GST bill is half of yours. Before long, you start second guessing your accountant, your coding and sometimes your entire setup.
Of course, there are always a few creative reasons for smaller GST bills, some less legal than others. But for most businesses, there is nothing mysterious about it and the reasons are simple, predictable and entirely normal (aka boring) once you understand how the system works.
If your GST bill is higher, it usually means your business is doing well. The ATO is not targeting you but it is simply doing the maths. When sales rise, so does the GST you collect, because the system only cares about what you sell, not how hard you worked to sell it. It does not consider the effort, the hours or the chaos behind those numbers. It just counts the sales, applies the rate, and moves on. The more you sell, the more you collect and the more you remit. You are not being penalized but are simply doing your job as the government’s cashier.
It often stings more when your profit margins are healthy. The fewer expenses you have, the less GST you can claim back. That is why consultants, brokers, accountants and designers often pay more GST than builders or retailers. You run lean, you spend less to earn more and that efficiency makes your BAS look heavier.
Wages add another layer to the story. You can pay your team generously but wages never include GST, which means there is no credit to claim. Service businesses and manufacturing business with a substantial labor cost feel it most because their biggest cost is people and there is simply no GST offset for human effort.
The kind of business you run also plays a part. A cafe pays GST on every coffee, a GP pays none on consultations and a builder adds it to a new home but not to a resale. Even supermarkets with enormous turnover, sell so many GST free items that their liability looks small beside their revenue. It is not a trick or clever accounting but simply how the system works.
When a business begins to grow, income often increases faster than expenses, which makes the BAS look inflated and sometimes alarming. But that rise is not a mistake or a warning sign but simply what growth looks like when the ATO does the maths.
So next time someone says their GST was lower, do not lose sleep. They might be selling GST free groceries, relying heavily on material costs or simply earning less than you. And if they insist it is legitimately lower, fine, let us call it that.
The only thing worse than paying too much GST is having none to pay at all because you are not making money…