GOODS AND SERVICES TAXGST As It Affects SMEs
Alan Lewis AAccccoouunnttaannttss
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1. GST Defined
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1st July 2000
2. Commencement Date
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10%
3. GST Rate
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Imposed on goods and services supplied
Tax of 10% on the consumption of most goods and services in Australia will not apply to the export of goods or services
4. GST Scheme
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Two registrations◦ Australian Business Number◦ GST
Businesses should register for ABN If turnover under $50k might be good
reasons not to register for GST Group Registration? Branch Registration?
5. Registration Packages – The New Tax System
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All enterprises engaged in a taxable activity
Must register if turnover exceed $75,000 per annum
All taxi drivers must registerIncludes: Business Trade Profession
6. Registration For GST – The New Tax System
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Can include some activities of:◦ government◦ Government Corporations◦ Charities◦ Gift Deductible Funds, Authorities or Institutions◦ Religious Organisations
A lease or license to an interest in property
6. Registration For GST – The New Tax System cont'd....
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Enterprise does not include:◦ Hobbies ◦ Recreational activities – not for commercial reasons◦ Activities where there is no expectation of profits◦ Employee activities
Non profit organisations have to register if turnover and membership fees, excluding donations, exceed $150,000
Must register within 21 days of become liable to do so
6. Registration For GST – The New Tax System cont'd....
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Group Registration Companies, Trusts or Partnerships with
common ownership or membership often operate as a group
Companies can form a GST group if each company:◦ is a member of the same (at least 90% owned)
group as all other members of the GST group or proposed GST group;
7. Groups And Branches
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Companies can form a GST group if each company (cont’d):◦ is registered for GST;◦ has the same tax periods as all the other
members;◦ accounts for GST on the same basis (i.e. cash or
non cash) as all the other members;◦ does not belong to another GST group; and◦ has not “branched” for GST purposes
7. Groups And Branches cont'd....
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The 90% ownership requirement does not apply to non profit bodies, however non profit bodies may only form a group where:◦ all members of the GST group or proposed GST
group are non profit bodies; and◦ all members are members of the same non
profit association
7. Groups And Branches cont'd....
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Trusts and Partnerships may also become members of a GST group if they satisfy the regularity requirements
A Partnership and a Trust can form a group
Two Partnerships and a Trust can form a group
GST groups are effectively treated as a single entity
7. Groups And Branches cont'd....
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Joint application to ATO to nominate members
An entity may also register its branches as GST branches if it wishes to have them as separate entities for GST purposes
GST is payable on transactions between GST branches
7. Groups And Branches cont'd....
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If turnover under $75,000 per annum
Cannot charge GST Cannot claim GST on inputs
8. Option Of Not Registering For GST
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Supply of goods or services For payment – either cash or kind Not including private nature
activities Not on salaries or wages Not on sale of the family home
9. Taxable Activity
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Food (special provisions) Exports International Air and Sea Travel Health (virtually all) Education (virtually all) Child Care Services (virtually all) Religious Activity (virtually all) Charitable Activities (virtually all)
10. “GST Free Supplies” Goods And Services
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Water and Sewerage Rates Cars for disabled persons Health Insurance Premiums Precious metals Sale of a business (as a going concern) Supplies through inwards Duty Free
Shops Grants of freehold land Subdivided farm land
10. “GST Free Supplies” Goods And Services cont'd....
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Sales of farm land Private Sales (garage sales) Hobbies Private Recreational Pursuits Wages
10. “GST Free Supplies” Goods And Services cont'd....
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GST free unless specifically included Food defined as:
◦ food marketed for human consumption◦ beverages◦ mixtures with food◦ fats and oils
Food that is GST free will be GST free throughout the food chain – so long as it is marketed – “Fit for Human Consumption”
11. Food – GST Free Unless …
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Beverages GST free include:◦ milk products◦ soy milk and rice milk◦ tea◦ coffee◦ fruit and vegetable juices◦ beverages for infants or invalids◦ water
Packaging necessary for supply of food is GST free
11. Food – GST Free Unless cont'd....
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Live animals Any grain, cereal, sugar cane not
processed Plants under cultivation Food unfit for human consumption Prepared foods Confectionery Savoury snacks Bakery products
12. Food That Is Not GST Free
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Ice cream food Biscuit goods (except breakfast foods or
rusks) Food for consumption on premises where
it is supplied Hot take away food
12. Food That Is Not GST Free cont'd....
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GP Medical Consultations Specialist Ambulance Services Aboriginal and Torres Strait Islander Health Diagnostic, Surgical and Therapeutic Procedures Audiology Chiropody Chiropractic
13. Medical And Health Services That Are Free Of GST
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Dental Dietary Nursing Optical Occupational Therapy Pharmacy Psychology Physiotherapy
13. Medical And Health Services That Are Free Of GST cont'd....
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Speech Pathology and Therapy Social Work Health Care provided at Hospitals and
Nursing Homes Nursing Care Services provided to patients
at home Wheel chairs, crutches, artificial limbs,
modifications to motor vehicles for the disabled
13. Medical And Health Services That Are Free Of GST cont'd....
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Pre School Primary School Secondary School College TAFE University Adult Education for employment
related skills
14. Education Services That Are Free Of GST
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GST not charged
Entitled to Input Tax Credits
15. GST Free Activities
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Exempting from charging GST: Financial Services Residential Rent Supplies of Residential Premises (other
than sale of a new house)
16. Input Taxed Supplies/Activities (Exempt Supplies And Goods)
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Applies to Input Taxed Supplies/Activities
GST not charged – but Not entitled to Input Tax Credits
17. Input Taxed
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Supplier entitled to a credit on GST paid Called “Input Tax Credit” Only available to enterprises registered
for GST Only get full credit if acquisition 100%
creditable purpose Not available for Input Taxed Supplies
18. Input Tax Credit
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Must be acquired for carrying on business Not if an Input Taxed Supply Not if for private purposes
19. Creditable Purpose
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Calculated:Gross value of turnover x 10%
or1/11 of total price including
GST
20. GST On Taxable Supplies
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Output Taxless
Input Tax CreditAdjustments
equalsGST Payable or Refundable
21. GST Payable/Refundable
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Monthly Electronically Refunds can be offset against income tax
owing
22. Business Activity Statement For $20m Plus Sales
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Quarterly Can elect to lodge monthly Lodgement and payment
dates:◦ 28th February◦ 28th April◦ 28th July◦ 28th October
23. Business Activity Statement For Sales Under $20m – Standard Method of Lodgement
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Taxpayers who are required to lodge Business Activity Statements on a quarterly basis, have an option known as Option 2 "Streamlined Quarterly Remittance Form"
24. Business Activity Statement For Sales Under $20m - Streamlined Quarterly Remittance Form
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Businesses with an annual turnover under $2m have the option (known as Option 3) of lodging their Business Activity Statements on a quarterly basis.
25. Business Activity Statement For Sales Under $2m - Small Business Option
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If turnover under $2m – statement can be prepared on “Cash” basis:◦ no debtors◦ no creditors
If turnover over $2m – statement must be prepared on an “Accruals” basis including:◦ debtors◦ creditors
26. Turnover Level “Cash” Or “Accruals” Basis
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“Cash basis” means GST delayed until money received
butcannot claim input tax credits until payment made
“Accruals basis” means GST payable in period invoice prepared
andcan claim input tax credit
26. Turnover Level “Cash” Or “Accruals” Basis cont'd....
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Subject to GST Does not apply to “Private” Sales:
◦ family car◦ garage sale
Dealer gets Input Tax Credit for purchases from an unregistered person
27. Second Hand Goods
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Will pay GST on imports whether registered or not
Input Credits only allowed to registered enterprises
28. Importers
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Must include GST
GST should not be shown separately
29. Displayed Prices
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Paid direct to business’ bank, building society or credit union account
May be offset against other tax debts
30. Refunds Of GST
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Must have to claim Input Tax Credit Must supply within 28 days of request for all
invoices over $75 Must include:
◦ Name of supplier◦ Words “Tax Invoice”◦ Australian Business Number of supplier◦ Date
31. Tax Invoices
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◦ Brief description of what supplied◦ GST inclusive price◦ When GST payable is exactly 1/11 of the total
price “the total price includes GST for this supply”
or◦ the supply value and the GST amount must be
listed separately
31. Tax Invoices cont'd....
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Suppliers of $1,000 or moreAdditional information required: Recipient name Recipient’s address or Australian
Business Number Quantity or volume of goods
provided
31. Tax Invoices cont'd....
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Taxable and Non Taxable SuppliesAdditional information required: Each taxable supply The amount excluding GST for the supply The amount of GST payable Total amount payable for the supply
31. Tax Invoices cont'd....
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“Non Tax Invoice”
Must deduct Withholding Tax
32. Invoice Without An Australian Business Number
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Automatically approved to issue:◦ Agricultural Industries◦ Registered Government Entities◦ Recipients with a turnover over $20m
Other types of businesses must obtain ATO approval to issue
33. Recipient Created Tax Invoice
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Key requirements:◦ “Recipient Created Tax Invoice”◦ ABN of supplier and recipient◦ “GST shown is payable by the
supplier”
33. Recipient Created Tax Invoice cont'd....
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Cannot charge GST Cannot claim Input Tax Credits Withholding Tax will be deducted by
Payers
34. Unregistered Businesses (Without Australian Business Number Or GST Registration)
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Prepared and presented by a supplier to an enterprise as the reason for not quoting an Australian Business Number to the enterprise
If you receive a "Statement By A Supplier" you do not have to withhold any tax from the payment
You must retain the supplier's statement for five years
35. Statement By A Supplier
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Issue an invoice quoting ABN Not a “Tax Invoice” Payers do not deduct
Withholding Tax
36. Business With An Australian Business Number – But Not Registered For GST
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Discount allowed Return of faulty goods Bad Debts
37. Adjustments
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An Adjustment Note may have to be issued where an “adjustment event” occurs in a later tax period
An “adjustment event” is any event in relation to a supply which effectively:◦ cancels the supply i.e. for return of goods◦ changes the consideration e.g. prompt
payment discounts, volume rebate◦ adjustment to prices
38. Adjustment Notes
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Certain information must be known on Adjustment Notes, including:◦ the name or trading name of the supplier;◦ the words “Adjustment Note” stated
predominantly;◦ the Australian Business Number of the
supplier;◦ the date of issue of the original Tax Invoice;
38. Adjustment Notes cont'd....
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Certain information must be shown on Adjustment Notes, including (cont’d):◦ the number of the original Tax Invoice;◦ a brief description of the items for which there
is an adjustment; and◦ the GST inclusive price of the adjustment
38. Adjustment Notes cont'd....
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GST on premiums Registered enterprises can claim Input Tax
Credit No GST payable on claims Must notify Insurer of GST status If renewal is after 1st July 2000 – notify
Insurer of status before 30th June 2000
39. Insurance
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Accurate and current Correct calculation of GST Payment for the GST has to be made three
weeks after the end of a month and 28 days after the end of a quarter, except the December quarter, when payment is to be made by 28th February
40. Accounting Records For GST
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The financial records of an enterprise need to produce sufficient information for the completion of the Business Activity Statement
41. GST Control Accounts
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Your professional advisor has invested in:◦ training material◦ seminars◦ check lists◦ procedural matters
Your professional advisor can assist
42. Professional Assistance
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