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Slide 1_102_

VIEWS: 4 PAGES: 15

									          GOODS AND SERVICES TAX (Chapter 4)
           And the completion of a BAS (Chapter 6)

• Was established by the Goods and Services Ta x Act in 1999

• The system is administered by the ATO

• It is a flat rate of tax on the taxable supply of goods and services
  in Australia.

• The tax point is when the goods/service are supplied.

• The rate is currently 10%

• Suppliers must be registered with the ATO, but they can cancel
their registration when they either cease to operate a business or
fall below the annual turnover threshold.                                1
                     GST REGISTRATION
Who must register.

• Are entities carrying on an enterprise in Australia

• Have a annual turnover of $75,000 or more
  Non profit a annual turnover of $150,000) or more
  Provider of taxi services no annual turnover threshold.

• Enterprise - refers to any commercial activity, but not one of a
  private pursuit.

• Annual turnover - refers to gross income EXCLUDING GST

• Suppliers can cancel their registration when they either cease to
  operate an entity or fall below the annual turnover threshold.
  The approved ATO form must be lodged within 21days of the event.
                                                                     2
                    GST REGISTRATION

The registration process

• Suppliers must register within 21 days of being eligible for
registration.

•A supplier must lodged the approved application form with the
ATO.

• A business must have an ABN to register for GST.

• Registration can be done when the ABN is being applied
for(same form)
                             OR
Later on the ‘ Add a New Business Account Form’
                                                                 3
                        GST REGISTRATION

Consequences of registration

The responsibilities of a GST registered supplier include:-

       -       to charge GST in the price of a taxable supply
       -       to issue tax invoices to customers
       -       to report and remit GST charged on the taxable
               supplies to the ATO at the required instalments.

Only registered suppliers are entitled to claim GST input credits for
GST paid on purchases.

The GST paid is offset and GST collected and the net amount is
remitted to the ATO(or refunded from the ATO)
                                                                    4
CATERGORIES OF BUSINESS TRANSACTIONS UNDER
              THE GST SYSTEM

1.   Supplies - goods and services sold by a business

            a.            Taxable
            b.            GST - free
            c.            Input-taxed


2.   Acquisitions - goods and services purchased by a
                    business

            a.            Creditable
            b.            GST free
            c.            Imports
                                                        5
                      TAXABLE SUPPLIES

• GST is paid when goods/services have been supplied by a business

• There are four requirements for a taxable supply:-

               1.     Supplier must be GST registered
               2.     Supply must be for consideration(price)
               3.     Supply is made in the course of business
               4.     Supply is made in Australia

• Registered suppliers must include GST in the charged amount of
  goods and services sold.

• GST included in a taxable price is calculated by:-
                      GST = GST Inclusive Price
                                      11
                                                                   6
                      GST FREE SUPPLIES

• There is no GST charged on the supplies.

• They included -     most unprocessed foods
                      exports
                      most health,education and childcare services
                      water and sewerage
                      sale of businesses as going concerns.

                      INPUT -TAXED SUPPLIES

 • They are tax exempt. No GST is charged
                               (nor can input tax credit be claimed)
 • They include -    financial supplies
                     residential premises for rent
                     residential premises for sale
                                                                  7
                   CREDITABLE ACQUISITIONS

• purchases where business are entitled to claim input tax credits for
the GST included in the price paid.

• There are 3 requirements for a creditable acquisition
       -        the purchaser must be GST registered
       -        GST is included in the price of the purchase
       -        the acquisition is for business purposes only

                       GST FREE ACQUISITIONS

• Where there is no GST charged by the supplier in the price.

•They include:-        wages and salaries
                       payments for financials supplies
                       payments for tax free supplies
                                                                    8
                       payments from an unregistered supplier
                       IMPORTS (special case)

• all importers pay GST on goods imported into Australia.

• GST is paid to Australian customs at the time the goods enter
  Australia.

• Only GST registered importers can claim input tax credits for
  any GST paid on purchased imports.




                                                                  9
                      GST RECORDS

• All GST registered business need to regularly lodge a BAS
with the ATO.

• Two other documents which business are required to keep
are:- tax invoices
       adjustment notes

• All GST related documents must be kept for 5 years.




                                                              10
                       TAX INVOICES

• are issued to purchasers by suppliers for taxable supplies.

• Purchasers cannot claim input tax credits without a tax
invoice.

• Invoices must be supplied to the purchaser within 28 days

• No tax invoice is required if GST exclusive value of the
supply is less than $75.

                  ADJUSTMENT NOTES

• registered businesses must issue a adjustment note to the
purchaser if the original tax invoice issued has been cancelled
                                                                  11
or altered.
              REPORTING AND REMITTING GST

The Tax period

GST needs to be reported and remitted to the ATO by the supplier
either:- monthly ( if turnover greater than $20million)
                              OR

       quarterly (if turnover is less than $20 million)

Accounting Method

Cash Method   (if annual turnover is less than $2million)
                             OR
Accural Method (if annual turnover is greater than $2million)


                                                                12
       BUISNESS ACTIVITY STATEMENT (BAS)

• suppliers registered for GST must prepare and lodge a BAS for
each tax period(monthly/quarterly)

• Due dates for monthly BAS is 21 days after period end

• Due dates for quarterly BAS are 28th Oct, Feb, Apr and July

• Copies of BAS and supporting documentation need to be
       retained for 5 years.




                                                             13
QUARTERLY REPORTING AND PAYMENT OPTIONS

Option 1       Report and pay GST calculated by taxpayer
       Business taxpayers calculate own net GST
       payable/receivable and show detailed calculations on BAS

Option 2        Report minimum information and pay GST
                   calculated by the taxpayer
       Less information is disclosed quarterly and an annual
       GST report needs to be lodged with the ATO when the
       annual income tax return is lodged or by 28 Feb(whichever
       is earlier)

Option 3        Report minimum information and pay GST
                       calculated by the ATO
       similar as Option 2.

                                                                   14
         HOMEWORK CHAPTER 4 and 6

Complete:
    All Active Reflection Questions 4.1 to 4.6
    All multiple choice page 102
    Quick & Easy pages 103
    Assessment Question 1 page 103

     All Active Reflection Questions 6.1,6.3 & 6.4
     All multiple choice page 155
     Quick & Easy pages 156 (not 3)
     Assessment Question 1       page 156
                            3–5 pages 157 to 158
                                                 15

								
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