The SiteRoot team6 min read
You are looking at two website subscriptions. One says A$15 a month, the other says A$16.50, and after a minute you realise they might be the same price written two ways. Then a slightly worse thought: which number is the one that actually leaves your account.
Here is the short version for ours, and the same logic applies to anybody else's. SiteRoot is A$15 a month plus GST. GST in Australia is 10 per cent, so the amount charged to your card is A$16.50, and A$1.50 of that is the GST. If your business is registered for GST you can generally claim that A$1.50 back, which makes your real cost A$15. If you are not registered, nothing comes back and your real cost is A$16.50.
That is the whole thing. The rest of this is the detail that trips people up.
Why prices are written both ways
Between businesses, quoting without GST is the normal convention, because the buyer usually claims it back and so it is not a real part of the cost to them. To a consumer, the GST is simply part of the price, which is why prices in shops include it.
Software sold to small businesses lands awkwardly in the middle of those two worlds, which is why you see both conventions on the same comparison page. If you advertise to consumers yourself, note that the total price including GST has to be there and has to be prominent. That is an ACCC matter and it applies to your prices as much as to ours.
We write both numbers everywhere we quote, for one reason: the two audiences for that line are a registered business that cares about A$15 and a sole trader under the threshold who is going to be charged A$16.50. Showing one and hiding the other misleads one of them.
What the A$1.50 actually is
It is not our money. It is a tax we collect on the sale and pass to the Australian Taxation Office.
Innoveta Pty Ltd is the operating entity behind SiteRoot, and it is registered for GST, so it has to charge GST on what it sells in Australia and remit it. That is not a choice a business makes for flavour. Once you are required to register, you charge it.
The number moving between us is the same either way. What differs is who ends up bearing the A$1.50, and that comes down to whether you are registered.
If your business is registered for GST
You generally claim the GST on your business purchases back as a credit when you lodge your activity statement. So the subscription costs you A$15 in substance, and the A$1.50 is a wash: you paid it to us, you claim it from the ATO.
Two practical notes.
- You need a valid tax invoice to claim it. Keep them, month by month, the same way you keep everything else.
- Because the amount is identical every month, it is one of the easiest lines in your accounts. Same figure, same date, same category, nothing to reconcile. Compared with a one off A$4,000 build that has to be classified and possibly spread over several years, a subscription is a very quiet entry.
If you are not registered for GST
Plenty of one person businesses are not, and there is nothing wrong with that. Registration is generally required once your turnover reaches the threshold, which has sat at A$75,000 for some years, and it is optional below it.
If you are not registered, you cannot claim the A$1.50, so your cost is simply A$16.50 a month. Budget the inclusive number. This is the case people get wrong when comparing tools: two businesses looking at the same page have genuinely different real prices, and neither of them is being misled.
What a tax invoice needs on it
Worth knowing generally, because it applies to every supplier you buy from, not just us. A tax invoice is expected to show the seller's identity and their ABN, the date it was issued, a description of what was sold, and either the GST amount or a statement that the total includes GST. Once a sale is A$1,000 or more, the buyer's identity or ABN is expected on it as well.
If a supplier sends you something with no ABN on it, that is worth chasing rather than filing. The ATO publishes the current requirements and your bookkeeper will have opinions about the format, which are usually worth following.
Can I claim my website as a tax deduction?
We are a software company, not tax advisers, so take this as the shape of the question rather than as advice, and put it to your accountant or a registered tax agent with your actual circumstances in front of them.
The shape is this. An ongoing subscription for something you use to run the business is normally treated as a regular operating expense in the year you incur it. A large one off payment to have a website built can be a different animal, because it may be capital in nature and treated over a longer period rather than deducted in one go. Those two are taxed differently, which means the A$4,000 build and the monthly subscription do not simply compare as numbers, and the person who can tell you how they compare for you is your accountant.
The part you can do without help is keeping the invoices where they can be found.
What about the domain name?
Your domain is bought from a registrar, not from us, and they will invoice you separately for it. Two things to watch there.
Many registrars quote domain prices without GST, because their market is businesses. So a domain shown at A$27.27 is A$30 charged. The other is that the domain is an annual charge rather than a monthly one, which means it is easy to forget it exists until the year it fails to renew.
Typical domain cost is roughly A$10 to A$30 a year, and it is worth treating as its own small line in your records rather than as part of the website bill.
What leaves your account, precisely
For SiteRoot, so there is nothing to work out:
- Listed price: A$15 a month plus GST.
- GST at 10 per cent: A$1.50.
- Charged to your card: A$16.50 a month.
- Your real cost if you are registered for GST: A$15.
- Your real cost if you are not: A$16.50.
- Setup fee: none. Nothing above it to upgrade to.
- Hosting and the padlock certificate: in the price.
- Domain: not in the price, bought by you from a registrar in your own name.
14 days free, then A$16.50/month (A$15 + GST). Card asked for during your 14 days, one free trial per customer, cancel anytime.
The part worth remembering
When you compare any two subscriptions, check whether both numbers are on the same side of the GST line before you decide one is dearer. Then check which side of that line your own business sits on, because that decides what the thing really costs you. Those two checks take ten seconds and they are the whole of this post.
