GST
Document Sample
pwc
Basic Overview of GST
PwC
Agenda
• 10.00 - 11.30am Presentation and Questions
• 11.30 - 12.00pm Case Studies
• 12.00 - 1.00pm Lunch
• 1.00 - 2.00pm Presentation and Questions
• 2.00 - 2.15pm Afternoon Tea
• 2.15 - 3.00pm Case Studies
3 PricewaterhouseCoopers
Session Content
• Presentation
– Overview of GST
– Basic operation
– Tax Invoices
– ABN and PAYG
– Requirements and completion of GST BAS
4 PricewaterhouseCoopers
Impact of GST - Basic Operation
• Effective date 1 July 2000
• Tax on the consumption of goods and services in Australia
• 10 % rate or 1/11th of the price
• Transaction-based tax
• Tax on supplier
• Value-added tax
– levied on value added at each stage in production and
distribution chain
5 PricewaterhouseCoopers
Basic Operation
• Incur “input” GST on business acquisitions
– claim input tax credits
• Charge “output” GST on supplies
– assess liability to GST
• Net GST is paid to or refund claimed from ATO
6 PricewaterhouseCoopers
Basic Operation
• GST “flows through” business
– generally does not represent a cost
• GST is borne by
– final consumers
– unregistered businesses
– suppliers of input taxed goods/services
7 PricewaterhouseCoopers
Supplies & Acquisitions
• Goods
• Services
• Leases
• Licences
• Grants
• Intangibles
– includes issuing rights; and
– forfeiture of rights
8 PricewaterhouseCoopers
Taxable Supplies
• Supply for consideration
• In the course or furtherance of an enterprise
• Supply is connected with Australia
• Supplier is registered or required to be registered
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Consideration
• Any payments, acts, refraining from acting or forbearance that
are made:
– for a supply;
– in response to a supply; or
– to induce a supply.
• Includes payments by third parties
10 PricewaterhouseCoopers
Enterprise
• Enterprise is an activity, or series of activities done:
– in the form of a business
– in the form of an adventure or concern in the nature of
trade
– on a regular or continuous basis
11 PricewaterhouseCoopers
Enterprise
• Enterprise does not include activities:
– as an employee or PAYE earner
– as a private or recreational nature
– without a reasonable expectation of profit or gain
12 PricewaterhouseCoopers
In Connection with Australia
• Goods:
– goods imported, exported or made available in Australia
• Real property:
– property is situated in Australia
• Services:
– services performed in Australia or supplied through an
enterprise that the supplier carries on in Australia
13 PricewaterhouseCoopers
Supply chain
effects
GST
PwC
Types of Supplies
• Taxable supplies - 10%
– generally most supplies
• GST-free supplies
– certain food,education, exports, health and medical
appliances
• Input taxed supplies
– financial supplies, residential rents
15 PricewaterhouseCoopers
Tax Consequences
Output GST Input Tax Credits
Taxable Supplies
GST-free Supplies
Input Taxed
Supplies
16 PricewaterhouseCoopers
Taxable Supplies
Goods &
Services
$1,100
Suppliers DTF Customers
ATO
PricewaterhouseCoopers
Taxable Supplies
Goods &
Services
$1,000
Suppliers DTF Customers
$100 GST
ATO
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Taxable Supplies
Goods &
Services
$1,000
Suppliers DTF Customers
$100 GST
$100 $100
ATO
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Taxable Supplies
Goods & Goods &
Services Services
$1,000 $1,650
Suppliers DTF Customers
$100 GST
$100 $100
ATO
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Taxable Supplies
Goods & Goods &
Services Services
$1,000 $1,500
Suppliers DTF Customers
$100 GST $150 GST
$100 $100 $150
ATO
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Taxable Supplies
Goods & Goods &
Services Services
$1,000 $1,500
Suppliers DTF Customers
$100 GST $150 GST
Return with
$100 $100 $150 $50 payment
ATO
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GST-Free Supplies
International Exports
travel
Medical
supplies and
Education services
GST-free
Religious
Childcare services
Food Charitable
activities
23 PricewaterhouseCoopers
GST - Free Supplies
Drugs & Drugs &
Medicines Medicines
Chemical $1,000 $1,500
Pharmacy Customers
Company $100 GST $150 GST
$100 $100 $150
ATO
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GST - Free Supplies
Drugs & Drugs &
Medicines Medicines
Chemical $1,000 $1,500
Pharmacy Customers
Company $100 GST
$100 $100
ATO
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Input Taxed Supplies
• Financial supplies
• Residential accommodation
26 PricewaterhouseCoopers
Input Taxed Supplies
Goods & Input-taxed
Services Services
$1,000 $1,600
Plumber Landlord Tenant
$100 GST
$100
ATO
PricewaterhouseCoopers
Input Tax Credits
• Entitlements to input tax credits arise in respect of:
– creditable acquisitions
– creditable importations
• Amount of input tax credit
– GST on supply or importation
• Must hold a valid tax invoice at time of claiming
Input Tax Credits
28 PricewaterhouseCoopers
Creditable Acquisitions
• An input tax credit can be claimed if:
– Creditable purpose
– Supply is taxable supply
– Consideration
– Acquirer is registered or required to be registered
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Creditable Purpose
• Acquired in carrying on an enterprise
• Exceptions:
– acquisitions relate to supplies that would be input taxed
– private or domestic nature
e.g.: acquisition of personal car by car dealer
30 PricewaterhouseCoopers
Apportionment of input tax
• Input tax can only be recovered in so far as it relates to the
provision of GST-free or taxable supplies
• Overhead input tax may need to be apportioned.
31 PricewaterhouseCoopers
Attribution Rules
• Tax payable incurred at the earlier of:
– any payment received
– invoice issued
• Input tax credits can be claimed at the earlier of:
– any payment made
– invoice issued
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Attribution Rules - Special Rules
• Transition
• Deposits
• Progressive/periodic supplies
33 PricewaterhouseCoopers
Tax Invoices,
Adjustment Notes
& Record Keeping
PwC
Tax Invoices
• Issued by Supplier
– certain circumstances issued by Recipient
• Must be issued within 28 days of request by
recipient
• Not required for supplies < $50
• GST Regulations - information requirements for tax
invoices - issued 20 October 1999
35 PricewaterhouseCoopers
Tax Invoices
• GST legislation requires:
– ABN of issuer of document
– GST inclusive price of supply
– other information from regulations
• Regulations
– Additional information where
supply> $1000
supply <$1000
recipient created tax invoice
36 PricewaterhouseCoopers
Tax Invoices
• Total is more than $1000
– words “tax invoice”
– date of issue
– name of supplier
– name of recipient
– address or ABN of recipient
– brief description and quantity of supply
37 PricewaterhouseCoopers
Tax Invoices
• Total of supply < $1000
• Do Not Require
– name of recipient
– address or ABN of recipient
– quantity of supply
38 PricewaterhouseCoopers
Tax Invoice - Taxable supply
Name & Address of Supplier
Name & Address of Supplier
Furniture Ltd The words TAX
TAX
INVOICE
INVOICE
11 ABC Road Phone: 999 9999 TAX
Melbourne VIC 3000 Fax: 989 9999 INVOICE
Supplier
Supplier
ABN Number 98-765-432
Australian
Australian
To: DEET Name & Address of Recipient
Name & Address of Recipient Date: 1 July 2000 Business
Business
1 Spring Street Number
Number
Melbourne. VIC 3000
Quantity Description of Goods and Services Unit Price Total
Date of issue
Date of issue
10 Tables $100.00 $1,000.00
Description of
Description of Amount excluding tax
Amount excluding tax
Quantity
Quantity Goods & Services
Goods & Services
Supplied
Supplied Supplied
Supplied
GST Charged
GST Charged
Plus Goods and Services Tax $ 100.00
39 Total Amount Due $1,100.00 PricewaterhouseCoopers
Expense Reimbursement
• Entitlement to input tax credit for expenses in connection with
carrying out of enterprise
– provision of tax invoices
– education of employees
40 PricewaterhouseCoopers
Adjustments
• Adjustment events
– cancellations
– discounts/volume rebates
• Adjustments for supplies
– increasing/decreasing adjustments
• Adjustments for acquisitions
– increasing/decreasing adjustments
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Adjustment Notes
• Issued by supplier
– recipient issued in certain circumstances
• Issue within 28 days of the earlier of a request by recipient of
the suppliers awareness of the adjustment
• Requirements for adjustment notes in final ruling GSTR 2000/1
42 PricewaterhouseCoopers
Adjustment Notes
• Adjustment notes for supplies more than $1,000 must contain:
– ABN of supplier
– words “adjustment note”
– name of supplier
– name of recipient
– address or ABN of recipient
– date of issue
43 PricewaterhouseCoopers
Adjustment Notes
• Adjustment notes for supplies more than $1,000 must also
contain:
– difference between the price of the taxable supply before
the adjustment and the new or corrected price
– the amount of the adjustment to the GST payable or a
statement that the difference in price of the taxable supply
includes GST
– brief explanation of reason for adjustment
44 PricewaterhouseCoopers
Record Keeping
• Keep records that explain all transactions relevant to a taxable
supply and creditable acquisition
– tax invoices
– adjustment notes
• 5 years
• Enable liability to be readily ascertained
45 PricewaterhouseCoopers
ABN and Pay As
You Go (PAYG)
PwC
Australian Business Number
• Will identify departments and agencies for all government
purposes
• Must be carrying on an enterprise in Australia
• Apply to be registered in the Australian Business Register
– form approved by Registrar
47 PricewaterhouseCoopers
Pay As You Go (PAYG)
• PAYG Instalments
• PAYG Withholding
• Replaces 9 tax collection systems
• Business Activity Statement
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PAYG Withholding
• Merges PAYE and other withholdings into one system
• Abolishes the PPS and RPS
• Uses ABN and BAS
• Introduces 3 new withholding events
– labour hire arrangements
– no ABN on invoice
– voluntary withholding agreements
49 PricewaterhouseCoopers
No ABN quoted on invoice
• A payer (Department) must withhold from a payment for a
supply of goods or services, unless:
– supplier’s ABN is quoted
– the payment does not exceed $50
– supply is a private/domestic nature for payer
– supply is of a private/domestic nature for supplier,
supported by a written statement to that effect
– whole of the supply is made before 1 July 2000
• Amount to withhold is top marginal tax rate + Medicare
(currently 48.5%)
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Questions And Discussion
51 PricewaterhouseCoopers
Case Study 1
Caroline Oxnam
Senior Tax Consultant
PwC
Exercise 1 - Taxable Supplies
Manufacturer
Total price
$100 + $10
GST A
Total Price
$200 + $20 GST
Retailer
T
Consumer:
O
pays $
53 PricewaterhouseCoopers
Exercise 2 -
GST-free goods and services
Manufacturer
Total price
$100+$10 GST
A
Retailer
T
Total price
$110
O
Consumer
54 PricewaterhouseCoopers
Exercise 3 -
Input-taxed goods and services
Manufacturer
Total price
$100 + $10 GST
A
Supplier
T
Total Price
$220
O
Consumer
* Consumer pays no GST, however, retailer
55 increases their price to account for GST they PricewaterhouseCoopers
have incurred but cannot get a tax credit for
Exercise 4
• Property Rental company
• Revenue (GST exclusive)
• Residential rental income $300,000
• Commercial rental income $500,000
56 PricewaterhouseCoopers
Exercise 4 Continued
• Expenditure
• Refurbishment on residential property $ 10,000 (+$1000 GST)
• Fit new windows to commercial property $ 4,000 (+$400GST)
• Recarpet residential property $ 600 (+$60GST)
• Office telephone bill $ 100 (+$10GST)
• Accountancy audit fee $ 400 (+$40GST)
• Legal fees $ 1000 (+$100GST)
• How much GST can be recovered as input tax?
57 PricewaterhouseCoopers
Exercise 5
• GST Return
• Revenue
• Income from residential properties (rent) $110,000
• Income from commercial properties $220,000
• Income from sale of drugs and medicines $330,000
58 PricewaterhouseCoopers
Exercise 5 Continued
• Expenditure
• Refurbishment (residential) $ 11,000
• Audit fees $ 550
• Purchase of facsimile $ 1,100
• Valuation (on commercial) $ 4,400
• International travel $ 1,650
• New boiler for residential $ 1,100
• New computer for sale of drugs and medicines $ 1,100
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GST Return
• Output tax: $
• Input tax: $
60 PricewaterhouseCoopers
Exercise 1 Taxable Supplies - Answer
$10 GST
Manufacturer
Total price
$100 + $10
GST
$10 GST
($20-$10)
A
Total Price
$200 + $20 GST
Retailer
T
Consumer:
Total GST
$20
O
pays $220
61 PricewaterhouseCoopers
Exercise 2 GST-free goods and services
- Answer
$10 GST
Manufacturer
Total price
$100+$10 GST
$10 input tax credit A
Retailer T
O
Total GST on
process
Consumer
= $0
62 PricewaterhouseCoopers
Exercise 3 Input-taxed goods and services -
Answer
$10 GST
Manufacturer
Total price
$100 + $10 GST
A
Supplier
Total Price
$220
T
O
Consumer
* Consumer pays no GST, however, retailer
63 increases their price to account for GST they PricewaterhouseCoopers
have incurred but cannot get a tax credit for
Exercise 4 Answer
• GST directly attributable to taxable supplies: $ 400
• Directly attributable to input taxed income: $1000
$ 60
• Overhead GST: $ 10
$ 40
$ 100
$ 150
64 PricewaterhouseCoopers
Exercise 4 Answer Continued
therefore recoverable GST = $ 400
500,000 = 60%
500,000+300,000
$150 x 60% = $ 90
total GST to recover = $ 490
65 PricewaterhouseCoopers
Exercise 5 Answer
• Output Tax
$220,000 x 1/11 = $ 20,000
• Input Tax
• Directly attributable to GST free and taxable
• Valuation $4,400 x 1/11 = $ 400
66 • computer $1,100 x 1/11 = $ 100 PricewaterhouseCoopers
Exercise 5 Answer Continued
• Overhead Costs
• Audit $550 x 1/11 = $ 50
• facsimile $1100 x 1/11 = $100
$150
220,000 + 330,000 = 80%
220,000 + 330,000 + 110,000
150 x 80% = $120
therefore total input tax recoverable = $ 620
67 PricewaterhouseCoopers
Lunch
PwC
Requirements &
completion of the
GST BAS
PwC
GST Returns - BAS
• Due 21 days after end of tax period for monthly entities
• Due 28 days after end of tax period for quarterly entities
• GST is payable at time of lodgment
• If annual turnover is in excess of $20 million, must lodge
electronically
• Account for GST on accruals basis
– cash basis allowed where turnover less than $1million
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Business Activity Statement
• For reporting most tax obligations
– GST
– PAYG
– WET
– LCT
– Income tax withheld and installments
– Deferred company income tax installments
– FBT
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New Methods for Completing GST
section of BAS
• From 31 March 2001 entities accounting for GST on quarterly
basis have 3 options:
– 1. Quarterly reporting of GST collected, GST paid and total
sales ONLY (1A, 1B and G1) and completion of an annual
GST information report
– 2. Quarterly payment of GST instalment and lodgment of
an annual GST return
– 3. Continue to report using old method
• Taxation Laws Amendment Bill (No.3) 2001
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First Method - GST Information Report
• Annual GST information report must contain:
– Exports (G2)
– Other GST-free sales (G3)
– Capital acquisitions (G10)
– Non-capital acquisitions (G11)
• Must be lodged by earlier of date entity’s income tax return is
due or 28 February 2002
73 PricewaterhouseCoopers
Second Method - GST by Instalments
• GST can be paid by instalments where:
– The entity’s current OR projected annual turnover is $2m or
less
– The entity is not obliged to account for GST on monthly
basis
– The entity has lodged 4 monthly GST returns or 2 quarterly
GST returns
– The entity has lodged all previous GST returns as required
– The entity is not in a net refund position
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Electing to pay GST by Instalments
• Election to pay GST by instalments by 28 April 2001
• Election to pay GST by instalments by 28 October
• Election relates to 1 financial year only
• Commissioner can disallow election where criteria satisfied
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GST Return
• Information required on GST Return likely to be:
– GST payable (1A)
– Credits for GST paid (1B)
– Total Sales (G1)
– Exports (G2)
– Other GST-free supplies (G3)
– Capital acquisitions (G10)
– Other acquisitions (G11)
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GST Return Continued
• GST Return must be lodged by :
– time income tax return is due OR
– 28 February in following year where no income tax return is
required to be lodged
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Balancing Payments or Refunds
• Balancing amount is payable at end of financial year
• Balancing amount = GST less input tax credits less sum of all
GST instalments payable
• If positive amount, entity must pay amount on or before date
GST return is due
• If negative amount, Commissioner must pay amount 14 days
after GST return is lodged or be liable to pay interest
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GST Instalments
• GST instalment:
– determined by ATO OR
– varied by entity
• Underestimation penalties may result where varied instalment
NOT within 85% of actual GST payable
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Varied Instalment Amount
• First quarter (ending 30 September):
– varied instalment amount = estimated annual GST amount x 25%
• Second quarter (ending 31 December):
– varied instalment amount = (estimated annual GST amount x 50%) -
previous GST entity has paid or is payable
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Varied Instalment Amount Continued
• Third quarter:
– varied instalment amount = (estimated annual GST amount x 75%) -
previous GST entity has paid or is payable
• Fourth quarter:
– varied instalment amount = (estimated annual GST amount x 100%)
- previous GST entity has paid or is payable
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Old Methods of Completing GST
section of BAS
• Two options
– GST calculation sheet option; or
– GST derived from accounts option
• Calculation sheet
– follow instructions on completing relevant sections on BAS
• Accounts option
– accounts must satisfy specific requirements
• Compulsory methods for monthly entities
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Accounts option - when available?
• Accounts system must
– accurately provide details of the amount of output GST and
input GST & incorporate proper audit trails
• Accounts system must
– record the GST amount of each taxable supply in a GST
payable control account
– record the GST amount of each creditable acquisition in a
input tax credit control account
– record increasing/decreasing adjustments in either a GST
payable/input tax credit control account or a GST
adjustments control account
83 PricewaterhouseCoopers
Accounts option
• Use accounts info to complete
– G9 & 1A - Output GST
– G20 & 1B - Input GST
• For statistical purposes complete G1, G2, G3, G10, G11 & G12
– “info obtained or estimated on a reasonably accurate basis
from your accounts”
– can be the net amounts i.e. GST exclusive amounts
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Accounts option -
Additional adjustments to be included
• If accounts option used additional adjustments necessary
– Bad debts - where no corresponding entry in accounts
• bad debt outstanding for more than 12 months but
not yet written off in accounts
– Changes in extent of creditable purpose
– Goods used solely for private or domestic purposes
85 PricewaterhouseCoopers
GST Accounting on Calculation Sheet
• Supplies • Acquisitions
Total supplies Total acquisitions
(GST-free supplies) (Acquisitions with no GST)
(Input-taxed supplies) (Non-creditable acquisitions)
Increasing adjustments Decreasing adjustments
Total Total
GST Liability: 1/11 x Total Input Tax Credits: 1/11 x Total
GST inclusive amounts !
86 PricewaterhouseCoopers
G1 - Total Sales and Income & Other
Supplies
• All supplies made in course of enterprise and attributable to the
tax period
• Include:
– Taxable supplies - this may include grants received
– GST-free supplies
• exports (G2)
• other GST-free supplies (G3)
– Input taxed supplies (G4)
– Barter transactions (GST incl. market price)
87 PricewaterhouseCoopers
G1 - Total Sales and Income & Other
Supplies (Cont.)
• Exclude:
– Intra-group transactions
– Appropriations received
– Div 81 supplies made
• Special Rules:
– Supply of property under margin scheme
• include only margin on sale
88 PricewaterhouseCoopers
G2 - GST Free Supplies - Exports
• Export of:
– Goods
– Repairs of goods to be exported and goods used in such
repairs
• Issues
– FOB value
– Capture as “Export GST- free”
89 PricewaterhouseCoopers
G3 - Other GST Free Supplies
• Capture as “Other GST-free”
– food for human consumption
– health, education and childcare services
– going concern
– amounts for exports not included at G2 (international freight,
insurance & other charges)
– grandfathered contracts (not specified)
– export of services
– initial grants of freehold and similar interests in unimproved
land by Commonwealth, State or Territory governments
90 PricewaterhouseCoopers
G4 - Input Taxed Sales & Income &
Other Supplies
• Certain financial supplies, e.g. interest on outstanding loan
• Sale, lease or hire of residential premises except for
– sale of new residential premises
– sale of commercial residential premises
• Capture all input-taxed supplies
91 PricewaterhouseCoopers
G5 and G6 - Sub Totals
• G5 - Total of your GST-free and input taxed supplies
– G5 = G2 + G3 + G4
• G6 - Total of your taxable supplies
– G6 = G1 - G5
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G7 and G 18 - Adjustments
• Increasing or decreasing adjustment to previous activity
statement, e.g.
– Cancellation of supply or acquisition
– Discounts, rebates
– Non-taxable becomes taxable or vise versa, e.g. goods not
exported within required 60 days
– Change in creditable purpose
– Bad debts
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G7 and G18 - Adjustments (Cont.....)
• Separate adjustment accounts
– Increasing
– Decreasing
• Calculation:
Amount included in previous BAS
(Corrected amount)
Increasing or decreasing adjustment
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G7 and G18 - Adjustments (Cont.....)
• Increasing - G7
• Decreasing - G18
• Must be positive amounts
95 PricewaterhouseCoopers
G8 - Total of taxable supplies
• G8 = G6 + G7
– GST-inclusive
• G9 to calculate GST liability
– 1/11 x G8
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G10 and G11 - Acquisitions
• G10 - Capital acquisitions
• G11 - Other acquisitions
• Input tax credit for:
– GST included in price charged by supplier
– paid on importation of goods
– grant given for taxable supply
97 PricewaterhouseCoopers
G10 and G11 - Acquisitions (Cont.....)
• Include:
– GST-free or input taxed acquisitions
– Partly creditable acquisitions (total amount)
– Barter arrangements - GST-inclusive market value
– Acquisitions from associates
• Do not include
– acquisitions not for use in business
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G10 and G11 - Acquisitions (Cont.....)
• Exclude:
– Intra-group transactions
– Appropriations made
– Div 81 acquisitions
• Special rules
– land and buildings - margin method - cannot claim ITC for
acquisitions made under the margin scheme
• Issues:
– Must have Tax Invoice for taxable acquisitions
99 PricewaterhouseCoopers
G10 - Capital Acquisitions
• Capital items, e.g.:
– plant and equipment
– motor vehicles
– land and buildings
– other expenditure of capital nature
100 PricewaterhouseCoopers
G11 - Other Acquisitions
• Acquisitions not being a capital acquisition
• Special rules:
– Reimbursements
– Associates
• Capture as “Other” acquisitions
101 PricewaterhouseCoopers
G12 - Total Acquisitions
• G12 = G10 + G11
102 PricewaterhouseCoopers
G13 - Acquisitions for making input taxed
supplies
• Directly attributable
• Partly attributable
• Indirect - apportionment
• Include only that part of the supply which relates to input-taxed
acquisitions
103 PricewaterhouseCoopers
G14 - Acquisitions with no GST in the
Price
• From unregistered entities
• GST-free
• Input taxed
• Capture type of acquisition
104 PricewaterhouseCoopers
G15 - Estimated Private Use and Non-
deductible Acquisitions
• Partly for private and domestic use
• Certain non-deductible expenses, e.g. entertainment
• Capture type of acquisition
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G16 and G17 - Sub Totals
• G16 - Total of your non-creditable acquisitions
– G16 = G13 + G14 + G15
• G17 - Total of your creditable acquisitions
– G17 = G12 - G16
106 PricewaterhouseCoopers
G18 - Adjustments
• Also includes change in creditable purpose
• Broadly meaning, an adjustment if:
– Actual use different from intended extent of creditable use
if the thing acquired
• up to 10 adjustment periods
• no adjustment if prior adjustment under next rule:
– Solely acquired for creditable purpose, but actually applied
solely for domestic or private use
107 PricewaterhouseCoopers
G19 - Total of Creditable Acquisitions after
Adjustments
• G19 = G17 + G18
– GST-inclusive
• G20 to calculate GST input tax credit
– 1/11 x G19
108 PricewaterhouseCoopers
Business Activity
Statement (“BAS”)
- General Issues
PwC
Extension of Due Dates for Quarterly
Entities
Quarter Due Date
• 1 July to 30 September 28 October
• 1 October to 31 December 28 February
• 1 January to 31 March 28 April
• 1 April to 30 June 28 July
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Saturdays, Sundays and Public
Holidays
• Where a GST Return is due on a Saturday, Sunday or public
holiday:
– the GST Return can be lodged on the first business day
after the due date
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No Net Amount Required on BAS
• Monthly and quarterly GST returns for tax periods ending on or
after 22 February 2001 do not require:
– the net amount of the entity
112 PricewaterhouseCoopers
Pre-printed information
Nil BAS return
• ATO will pre-print info on the BAS, for example
– BAS lodgment due date
– tax period covered by the BAS
• If no obligations or entitlement to report
– sign & date the BAS and return it to the ATO by the due
date
113 PricewaterhouseCoopers
Payment of refunds
• Amounts payable by ATO to taxpayer
– paid by direct credit into nominated financial institution
account
– account must be at a branch of the institution in Australia
• Refunds will not be paid if
– you’ve an outstanding BAS or
– BAS is incomplete
• Refund will be offset against any outstanding tax debts
114 PricewaterhouseCoopers
General Interest Charge
• General Interest Charge (GIC) will accrue on amounts not paid
by due date
• Interest is calculated daily on a compounding interest basis
• GIC rate is = 13-week Treasury note yield plus 8%
• Rate will be reviewed quarterly
• GIC is tax deductible in the year it is incurred
• Currently 13.86%
115 PricewaterhouseCoopers
GST Mistakes - Revised BAS
• Honest mistake and voluntary disclosure
– penalty will be remitted in full but
– interest on any understated tax or overclaimed credit will
still be due.
• Correct mistakes by filing a Revised Activity Statement
• Request one from the ATO
• Must notify ATO of any change in details within 28 days
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GST Mistakes - Corrections to Current
or Subsequent BAS
• Input tax credits NOT claimed on earlier BAS:
– Claim ITC’s on ANY BAS after tax invoice received
– No correction limit
• Corrections which decrease GST payable:
– Correction made on current or ANY later BAS
– Correction limits
• Corrections which increase GST payable or decrease ITC’s:
– Correction made on next BAS for mistakes on most
recently lodged BAS
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– Correction limits
Correction Limits
Annual Turnover Correction Limit per BAS
• Less than $20m Less than $1,000
• $20m to less than $100m Less than $5,000
• $100m to less than $500m Less than $15,000
• $500m to less than $1b Less than $30,000
• $1b and over Less than $50,000
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1. Special tax periods
2. Lodging a BAS by mail
• If special tax periods i.e. ending in first 7 days of month
• Must still lodge BAS by 21st day of that month in which the tax
period ends
• If lodging by mail:
– ensure leave sufficient time for paperwork to reach the
ATO by the due date; and
– must use official form.
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Records
• Records must be written in English
• Records must be held for 5 years
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PAYG & GST
Offset
PwC
BAS - Large PAYG withholders
• Annual withholding amount exceeds $1million
– includes all amounts withheld (i.e. payments from salaries
• Amount deducted in a period commencing on Saturday ending
on Tuesday:
– payable on the following Monday
• Amount deducted in a period commencing on Wednesday and
ending Friday:
– payable on the following Thursday
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Offsetting GST Input Tax Credits
against a PAYG withholding liability
• To offset must:
– notify the ATO of the withholding liability
– lodge the BAS on or before the PAYG withholding due date
– pay an adjusted withholding liability if necessary
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How to offset
• Notify ATO of the withholding liability via a PAYG Withholding
Liability Notification form
• Notify this on or before the withholding due date
• The BAS with the GST credit details must be lodged:
– on or after the PAYG withholding liability notification
– but no later than the withholding due date
• Only Box W1 should then be completed on the BAS
• Do not show amounts at Boxes W2, W3 & W4
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Example - Offset
• Department pays staff fortnightly. On 1 March 2001 Dept has
– net GST credit of $2.2million
– total salary & wages paid of $4million
– PAYG withholding of $1million (due 8 March 2001)
• Completes PAYG Withholding Liability Notification - lodges it
on 8 March 2001
• Completes Feb 2001 BAS - lodges it on 8 March 2001
• ATO will refund $1.2million (i.e. $2.2m less $1m)
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Business Activity Statement -
Example Offset of GST and PAYG
BAS Complete BAS for period
GST Credit ended 30/9 lodged early
FBT Debit
PAYG Debit
(Net credit)
30/9 12/10 21/10
Amounts withheld Amount to be paid via EFT
4-6/10 due on: is amount withheld less net
credit available
Contact must be established
with ATO by lodging PAYG
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Notification form
Questions And Discussion
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Case Study 2
Caroline Oxnam
Senior Tax Consultant
PwC
Valid tax invoice?
Joe Bloggs Ltd
11 ABC Road Phone: 9999 9999 TAX INVOICE
Melbourne VIC 3000 Fax: 9989 9999
ABN 99- 998-765-432
Date: 15 July 2000
Quantity Description of Goods and Services Per Unit Total
Paper $50.00 $500.00
Plus Goods and Services Tax $ 50.00
Total Amount Due $ 550.00
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Valid tax invoice?
Joe Bloggs Ltd
11 ABC Road Phone: 9999 9999 TAX INVOICE
Melbourne VIC 3000 Fax: 9989 9999
ABN 99- 998-765-432
To: Department of Treasury & Finance Date: 15 July 2000
Quantity Description of Goods and Services Per Unit Total
2 Computer $5,000.00 $10,000.00
Total Amount Due $11,000.00
(includes GST)
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Entitlement to input tax credit?
Joe Bloggs Ltd
11 ABC Road Phone: 9999 9999 INVOICE
Melbourne VIC 3000 Fax: 9989 9999
ABN 99-998-765-432
To: Department of Treasury & Finance Date: 15 July 2000
123 Collins Street
Melbourne
VIC 3000
Quantity Description of Goods and Services Per Unit Total
1 Flight Melbourne to London $2,000.00 $2,000.00
Total Amount Due $2,000.00
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When to claim ITC?
Joe Bloggs Ltd
11 ABC Road Phone: 9999 9999 TAX INVOICE
Melbourne VIC 3000 Fax: 9989 9999
ABN 99-998-765-432
To: Department of Treasury & Finance Date: 15 July 2000
123 Collins Street
Melbourne
VIC 3000
Quantity Description of Goods and Services Per Unit Total
2000 Notebooks $1.00 $2,000.00
Plus Goods and Services Tax $ 200.00
132 Total Amount Due $ 2,200.00 PricewaterhouseCoopers
DHS supply residential rent
Department of Treasury & Finance
11 ABC Road Phone: 9999 9999 INVOICE
Melbourne VIC 3000 Fax: 9989 9999
ABN 99-998-765-432
To: Joe Bloggs Date: 15 July 2000
123 Collins Street
Melbourne
VIC 3000
Period Description of Goods and Services Per Unit Total
July 2000 Residential rents $1,500.00 $1,500.00
Total Amount Due $ 1,500.00
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DEET provides education services
DEET
11 ABC Road Phone: 9999 9999 INVOICE
Melbourne VIC 3000 Fax: 9989 9999
ABN 99-998-765-432
To: Employer Date: 15 July 2000
123 Collins Street
Melbourne
VIC 3000
Quantity Description of Goods and Services Per Unit Total
6 attendees Apprentice Training on 20 July 2000 $ 500.00 $3,000.00
Amount Due $3,000.00
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