GST by yaohongm

VIEWS: 18 PAGES: 135

									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




9                                                       PricewaterhouseCoopers
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

                              PricewaterhouseCoopers
Taxable Supplies


             Goods &
             Services

             $1,000
 Suppliers              DTF      Customers
             $100 GST




               $100       $100




                        ATO

                                 PricewaterhouseCoopers
Taxable Supplies


             Goods &             Goods &
             Services            Services

             $1,000                $1,650
 Suppliers              DTF                 Customers
             $100 GST




               $100       $100




                        ATO

                                            PricewaterhouseCoopers
Taxable Supplies


             Goods &              Goods &
             Services             Services

             $1,000                 $1,500
 Suppliers              DTF                   Customers
             $100 GST              $150 GST




               $100       $100   $150




                        ATO

                                              PricewaterhouseCoopers
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

                                              PricewaterhouseCoopers
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

                                                PricewaterhouseCoopers
GST - Free Supplies


             Drugs &                Drugs &
            Medicines              Medicines
 Chemical    $1,000                  $1,500
                        Pharmacy               Customers
 Company    $100 GST




               $100         $100




                         ATO

                                               PricewaterhouseCoopers
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




29                                                     PricewaterhouseCoopers
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



32                                                      PricewaterhouseCoopers
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



41                                         PricewaterhouseCoopers
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




48                                    PricewaterhouseCoopers
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%)
50                                                      PricewaterhouseCoopers
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

59                                                          PricewaterhouseCoopers
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



70                                                     PricewaterhouseCoopers
Business Activity Statement

     • For reporting most tax obligations
         – GST
         – PAYG
         – WET
         – LCT
         – Income tax withheld and installments
         – Deferred company income tax installments
         – FBT


71                                                    PricewaterhouseCoopers
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
72                                                    PricewaterhouseCoopers
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

74                                                   PricewaterhouseCoopers
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




75                                                   PricewaterhouseCoopers
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)

76                                                   PricewaterhouseCoopers
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




77                                                   PricewaterhouseCoopers
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




78                                                  PricewaterhouseCoopers
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




79                                                 PricewaterhouseCoopers
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




80                                                        PricewaterhouseCoopers
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




81                                                        PricewaterhouseCoopers
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

82                                                   PricewaterhouseCoopers
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



84                                                   PricewaterhouseCoopers
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




92                                                  PricewaterhouseCoopers
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



93                                                     PricewaterhouseCoopers
G7 and G18 - Adjustments (Cont.....)


• Separate adjustment accounts
     – Increasing
     – Decreasing
• Calculation:
     Amount included in previous BAS
     (Corrected amount)
     Increasing or decreasing adjustment




94                                         PricewaterhouseCoopers
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




96                                PricewaterhouseCoopers
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



98                                                     PricewaterhouseCoopers
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




 105                                                PricewaterhouseCoopers
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




110                                        PricewaterhouseCoopers
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




111                                                  PricewaterhouseCoopers
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



116                                                     PricewaterhouseCoopers
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
117                                                   PricewaterhouseCoopers

      – 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



118                                       PricewaterhouseCoopers
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.




119                                                     PricewaterhouseCoopers
Records


• Records must be written in English


• Records must be held for 5 years




120                                    PricewaterhouseCoopers
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


122                                                    PricewaterhouseCoopers
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




123                                                      PricewaterhouseCoopers
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

124                                                       PricewaterhouseCoopers
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)

125                                                   PricewaterhouseCoopers
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
126                                  Withholding Liability      PricewaterhouseCoopers

                                       Notification form
Questions And Discussion




127                        PricewaterhouseCoopers
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

     129                                                                    PricewaterhouseCoopers
     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)
     130                                                                      PricewaterhouseCoopers
     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
     131                                                                            PricewaterhouseCoopers
     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
     133                                                                           PricewaterhouseCoopers
      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
      134                                                                            PricewaterhouseCoopers
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