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GST QB Training Course - Queensland Baptists

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					GST Training Course
        Registration Involves

    •   Determining whether your church needs to register for:

            •   Australian Business Number (Mandatory for ITEC Endorsement)

            •   Goods and Services Tax

    •   Determine if endorsement is required for:

            •   Income Tax Exempt Charity Status

            •   Deductible Gift Recipient Status

        Who needs ITEC Endorsement?

Charities that already have income tax exempt status or who are seeking to have income tax exempt
status from 1 July 2000 need endorsement.

Note:- A Church is a Charity for Tax purposes.

        Basic ITEC Requirements

        A Constitution containing an acceptable dissolution clause.

        An example:

                “In the event of the church being dissolved, all property, assets and monies which
                remain after such dissolution and the satisfaction of all debts and liabilities shall be
                vested in the Baptist Union of Queensland.”

        Fellowships will need to be covered by BUQ Registration until appropriate constitutional
        arrangements can be made.

        Who needs DGR Endorsement?
Organisations that have a Gift Deductible Status Fund or who are seeking to have one with DGR status
from 1 July 2000.

If an organisation has a current 900/DGR Number, the process is streamlined.

        You MUST have an ABN

        To obtain ITEC Endorsement

        To obtain DGR Endorsement

        To avoid Withholding Tax Provisions.

        GST Registration

        You register for the GST as part of your ABN Application.

        GST Registration
        Options available

        Grouping

        Branching

        Units and Sub-entities (only available to Churches, Charities and the like.)

        Option 1 - Grouping

        Entities with a common membership of a non-profit organisation (also available to other
        organisations)

        No GST on transactions between the entities.

        One entity acts as representative member to manage GST Affairs of the Group

        Members of group liable for the GST they collect but representative member responsible for
        paying it to ATO

        Option 2 - Branching

        Branch structure

        Branches operate independently

        GST is payable between parent and branches and between branches

Cannot use branching and grouping together.

Branching not really an option for churches
       Option 3 - Sub-entities
       Charitable Institutions …

       Available for churches to isolate certain independent type activities where GST would normally
       have to be charged.

       These activities can be separated as sub-entities provided their turnover is less than $150,000.

       You can have a number of these sub-entities all with turnovers less than $150,000

       Option 3 - Sub-entities
       Charitable Institutions …

       Sub-entity considered independent if:

               It keeps its own accounting records

               Can be separately identified by the nature of its activities or by its location eg a
               committee or annual fete

       If sub-entity turnover < $150,000 can choose to register or not

       If sub-entity treated as separate cannot revoke choice for 12 months

       Must record each sub-entity that is being treated as separate entity for purposes of GST. All
       Income and Expenses must be kept separate for each Sub-entity.

       Example of Sub-entity

       GST Registered Church plans a fete once a year.

       Separate accounting records are maintained for the fete.

       Previous turnover indicates fete will raise $60,000

       Church may elect to treat as a Sub-entity for GST purposes.

       If organisers choose not to register the fete for GST, sale of items will not include GST .

       Other Examples - Play Group, Soccer Club, Fund Raising Committee

No Registration – No Claim on GST Paid

       Anytown Baptist Church

       Determining GST Registration

       What is Turnover
GST Registration
Annual Turnover Threshold.

Voluntary GST Registration

Issues to consider

         Is it worth registering for the GST

             ○   ie are the savings by way of GST you can claim back > the cost of administration
                 of the GST.

Some Advantages of GST Registration

Some Disadvantages of GST Registration

Must collect GST

Admin costs could exceed input credits

Additional accounting

Finding suitable people to do the administration

Training volunteers – culture

Key GST
Concepts

  Module 2 GST Training


If You Register for the GST…

GST must be charged where applicable

GST paid in your purchases may be claimed back as an Input Credit

Let’s look at some definitions

Types of Supplies

What is a Taxable Supply?

What Supplies are GST Free?

Basic Food

Health
        Education

        Childcare

        Exports

        Water & Sewerage

        Religious Services

        Non-Commercial Activies of Charitable Organisations

        Second Hand Goods sold by charitable Organisations

        Raffles and Bingo conducted by Charitable Organisations

        What is “Input Taxed”

        Cannot claim input credits

        The supplier of the goods or services is considered to be the end-user.

        Supplier pays GST on the inputs to create or provide the goods or services

        Which Supplies are Input Taxed?

        Financial Supplies

        Residential Rent

        Residential Premises (sale)

        School Tuckshops and Canteens

(election required)

        What is a Creditable Acquisition?

The R A T C C Test

A Creditable Acquisition occurs when:

a Registered entity, or entity required to be registered

Makes an Acquisition

Which has been a Taxable supply to that entity

For Consideration
And the acquisition is for a Creditable purpose

        What is an Acquisition?

        “Any form of acquisition whatsoever”

        Specifically included are

                An acquisition of goods or services

                The receipt of advice or information

                The acceptance of a grant, assignment or surrender of real property

                An acceptance of a grant, transfer, assignment of any right

                Acquisition of a right to require another person to do anything, to refrain from an act or
                to tolerate an act or situation

        What is a Creditable Purpose?

        Your enterprise is the Creditable Purpose

        Private purpose and Input Taxed Supplies are not a Creditable Purpose.

        An item may be partially a creditable purpose.

        Amount of Input Tax Credit

        Equal to GST on taxable supply you acquired

        Reduced if acquisition partly creditable

                Extent of creditable purpose

                Extent of consideration (payment)

        GST Transcations

          Module 3 GST Training


        So where does the local church fit in ….

        Types of Supplies

        Taxable Supply

        GST-free Supplies

        Input Taxed Supply
       Summary of GST Payable

       The Impact of ANTS/GST on Churches and Charitable Institutions

          Module 4 GST Training


       The Tax System

       A Church is a Charity

       Church is a Charity Cont’d

       Church Activities GST Free

       Church Input Taxed Supplies

       Impact of the GST on Church Revenue

       Church Offerings

       Designated Donations

       Commercial Activities

       Commercial Activities are subject to GST.

       Some Activities

               Rental of Church or Church Hall

               Sales of Religious Books, Tapes and CD’s

               Advertising Revenue

               Some fundraising activities

GST is not charged on revenue earned by a Church which is not registered for the GST.

       GST Registered Church Bookshop

       Sells Religious Books, tapes and the like.

       Sales are at Market rates less 20% discount.

       GST must be collected.

       Bookshop entitled to Input Credits on costs ex wages. (No GST on wages)

       Bible and Study Material
     Sales of bibles and prayer books are subject to GST.

     Considered a Commercial Activity and does not fit the “Religious Services” Exemption.

     Non Commercial Activities

     The Activity is non Commercial and GST free if consideration (payment) is:

             less than 50% of the GST Inclusive Market Value

Or

             Less than 75% of the cost of supply

     Accommodation
     Provided by Charities

     This Activity is non Commercial and GST free if charged at:

             less than 75% of the Market Value

Or

             Less than 75% of the cost of supply

     Example – Church Bookstall

     Church Bookstall operated as means of propagating the Christian faith

             Sells books and tracts at under 50% of market value

     Bookstall can be regarded as a non-commercial activity.

     Sales are GST Free

     Entitled to Input Credit on purchases

     Church Sausage Sizzle

     Market value of product $6.00

     Cost of supplies $2.00

     Selling price $2.50 – GST Free

     Selling price $3.50 – GST applicable

     Religious Services

     GST Free
Church able to claim Input Credits.

Provided the services are essential to the practice of the religion.

Wedding Example

Donations Grants or Sponsorships

GST Treatment of Donations, Grants or Sponsorships depends on whether:

        The funds are considered to be an unconditional donation and

        The funds are paid in return for goods or services or rights

Donations

A donation in the form a payment, in cash or in kind made unconditionally is not subject to GST
because:

No benefits or rights flow as a result of the payment and;

The recipient does not have to use the donation for a particular purpose.

Grants or Sponsorships

Unconditional grants and sponsorships not subject to GST.

        No rights or services returning to the giver.

        No conditions on use of funds

Grants with Conditions

Subject to GST

Examples

        Local Council Grant for Family Counselling Service

        Government Grants in exchange for goods or services

Grants with Conditions….

Where GST applies the amount payable to the ATO is 1/11th of the Grant.

Where your organisation is not registered for GST, no GST is payable and the Grantor is not
entitled to an Input Tax Credit.

Grants with Conditions….
       Grants received from Government should be grossed up by 10% to cover the GST.

       The Government Department or Local Council will claim an Input Credit making the Grant tax
       revenue neutral.

       Fund Raising Activities

       Fetes, lamington drives, cake stalls and fundraising dinners conducted by a GST Registered
       Church may be subject to a GST because of the 50%/75% rules.

       Remember - Special arrangement for Non-Profit Organisations – Sub-entities

       Church Fetes and Opportunity Shops

       Annual fete – church sells donated baby booties for $2.00 each. (GST Inclusive Market Value
       $6.00)

       As booties are sold for less than 50% of Market Value – GST Free.

       Remember - Special arrangement for Non-Profit Organisations –Sub-entities

       Fundraising Dinners and Theatre Nights

       A Church sells 150 tickets to a fundraising dinner @$110.00 each.

       The supply is subject to GST as the dinner is considered to be a commercial activity.

       Remember - Special arrangement for Non-Profit Organisations –Sub-entities

       Donated Second-Hand Goods

       A “Second Hand Good” is something whether new or used previously owned by someone other
       than for sale or exchange.

       Example

               An item of new clothing donated by a private individual

       = Second Hand Good.

               The same item donated by the local clothing store

       = New Good.

Food is not a second-hand good.

       Donated Second-Hand Goods…

       GST Free provided they retain their original character.
        If cleaned and/or repaired prior to sale

Second-hand Clothing on sold as rags would be subject to a GST.(original character changed)

Remember - Special arrangement for Non-Profit Organisations –Sub-entities

Sponsorships

Sponsorships usually payment for services (eg Advertising)

Will be subject to GST

1/11th remitted to the ATO.(if registered)

If Sponsor registered – can claim an Input Credit

Unconditional Sponsorships not subject to a GST

Remember - Special arrangement for Non-Profit Organisations –Sub-entities

Non-monetary Sponsorships
(Contra Sponsorship)

If sponsor provides goods and services in return for other goods and services there is a supply by
both parties.

GST is payable on each supply if the parties are GST registered.

If only one of the parties is registered, GST payable one way.

Membership Fees

Membership Fees are usually in return for services and will be subject to GST.

Membership bestow rights to members even where nothing tangible is supplied.

(Churches will need to examine various sporting clubs and the like)

Remember - Special arrangement for Non-Profit Organisations –Sub-entities

Impact of GST on Church Expenditure

GST will apply to most acquisitions from 1 July 2000.

        Repairs to church buildings

        Telephone

        Electricity
               Postages

               Purchase or Hire of Equipment

               Insurances …..

Salaries, Stipends and payment of Fringe Benefits are NOT subject to GST

       GST Registered Church Budget
       Expenditure

       Annual Budget $51,000

               Salaries $40,000 - no GST payable

               Operating Costs $11,000

                   ○   Most operating costs subject to GST

                   ○   Exceptions – Bank Charges

                   ○   Manses are Input Taxed

       Provided Church has retained Tax Invoices, Input Credits of up to $1,000 should be recoverable

       Expenditure from Fringe Benefit Accounts

       Input Credits may be claimed for creditable acquisitions purchased through Fringe Benefits
       Accounts.

       These credits would need to be refunded to the Fringe Benefit Account.

       Goods used in Religious Services

       Goods used in religious services subject to GST

       If church registered for GST, able to claim Input Credit.

       Others issues which may impact

       Implementation costs if you register

       Ongoing record keeping for ATO Audit and claiming Input Credits.

       Possible cashflow issues. (should not have much impact on church)

       Building Program

When undertaking a building programme, the Church may choose to lodge the Business Activity
Statement monthly (this must be for at least 12 months)
        GST Paperwork Invoices and Accounting

          Module 5 GST Training


        Anytown Baptist Church

        You are the treasurer in charge of GST Implementation

        You must consider the following:

                 Basis of Accounting

                 Tax Invoices

                 Tax period and Business Activity Statement (BAS) (covered in Module 6)

        Basis of Accounting

Options

Non-cash Basis

(Not suitable for Churches)

Cash Basis

(best option for Churches)

        Non Cash Basis

        GST Payable to ATO when invoice Issued for a taxable supply

        Input Credits claimed on receipt of invoice.

        Cash Basis

        GST paid to ATO in the tax period when payment received (as distinct from the invoice issued).

        Input Tax Credits claimed in the tax period when Taxable Supplies (purchases) paid for.

        Less risk in cash flow.

        What is a Tax Invoice?

        Document issued by supplier of the taxable supply

        Shows price of supply

        Indicates whether GST included
        May show amount of GST

        Requires other certain information to meet Legislative Requirements.

        Taxable and Non Taxable Supplies Combined

If tax invoice includes a combination of GST taxable and GST-free or input taxed supplies the invoice
must show:

            -     each taxable supply

            -     the amount of GST payable, and

            -     the total amount payable for the supply

        ABN’s not quoted where required

        Exceptions

        Reporting and Business Activity Statement

          Module 6 GST Training


        Reporting - The Tax Period

        The period of time for which each Report is completed

        Options

                Quarterly

        30 September, 31 December, 31 March, 30 June

                Monthly

        on last day of each Calendar month

You may be required to report monthly if you have a history of compliance failure



        Lodgement Deadline….

        Date of Lodgement of your Business Activity Statement remains 21st of the month after the end
        of the tax period.

        Payments and Refunds

        The amount you have to pay the ATO is the difference between:
        The GST you include in the Price of Sales/Services you invoice to others AND

        The Input Tax Credits you are entitled to for the GST included in the price paid on things
        used in your organisation

        Any other taxes payable (eg. PAYG withholding)

Payments and Refunds

This amount has to be paid to the ATO on or before the 21st day of the month following the end
of your tax period.

If the Input Tax Credits exceed the GST on your sales, you will receive a refund.

ATO must pay to you within 14 days or interest is payable by the ATO.

Adjustments

May occur if:

        All or part of the supply or purchase is cancelled

        The price is subsequently altered

        A supply becomes creditable

        A supply stops being creditable or stops being taxable

        The purpose of your purchase changes

        You have bad debts or you fail to pay a debt.

Adjustments

If you have accounted for the GST payable or input tax credits on an earlier Business Activity
Statement

        You need to record and adjustment in the next Business Activity Statement

If the supply is >$50, you must have an adjustment note before you can claim the input tax
credit

Which Taxes are included

GST**

Fringe Benefit Tax Instalments **

Income Tax Withheld (PAYE) **
       Income Tax Instalments Withheld (not PAYE)

       Wine Equalisation Tax

       Luxury Car Tax

       Deferred Company income Tax Instalments

** This may affect your Church

       Business
       Activity Statement

       Things to Remember

       Keep good records

       Tax invoices are money – don’t lose them

       Account for all GST collected

       Complete the BAS within 21 days after the end of the tax period.

       Resources

       Australian Taxation Office www.ato.gov.au

       David Unwin – CPA www.davidunwin.com.au

				
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