How GST works…

I know we’ve had the GST (Goods and Services Tax) in Australia for over 17 years…but everyday I come across examples of businesses and community members who are a little perplexed about where the GST goes.

I’m not talking about the actual numbers today, but this diagram from the ATO (Australian Taxation Office) is a great summary of the flow of funds.

Importers pay the GST on imported goods to the Department of Immigration and Border Protection and it is combined with the total GST collected overall.

Manufacturers, wholesalers and retailers or service providers pay their net GST (ie: GST collected less GST paid) to the ATO and it too is combined with the total GST collected overall.

The Australian Government then distribute GST to the States and Territories where it flows back to us as consumers by way of roads, housing, public transport and emergency services.

Take a look and let me know if this helps to clear things up for you.


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