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SMALL BUSINESS, EDUCATIONAL AND COMMUNITY ADVISER EDUCATION PROGRAMME. 3. SMALL AND MEDIUM BUSINESS COURSE 3: Frequently asked questions. Question 1. Q.

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SMALL BUSINESS, EDUCATIONAL AND COMMUNITY ADVISER EDUCATION PROGRAMME

3

SMALL AND MEDIUM BUSINESS

COURSE 3: Frequently asked questions


Question 1
Question 1 PROGRAMME

Q

  • We are a small business and the total amount we receive for all the goods and services that we supply is under the registration threshold of $50,000.

  • Is there any benefit for us if we register for GST?


Answer 1
Answer 1 PROGRAMME

A

  • Most approved small businesses will benefit by registering for GST


Question 2
Question 2 PROGRAMME

Q

  • As a small body, should we choose to lodge our Business Activity Statement monthly or quarterly?


Answer 2
Answer 2 PROGRAMME

A

  • Small businesses have the option to file monthly or quarterly returns.

  • Some businesses will find that quarterly returns are the better option.


Question 3
Question 3 PROGRAMME

Q

  • We understand that the cash basis of accounting for GST is easier.

  • Can businesses register on a cash basis?


Answer 3
Answer 3 PROGRAMME

A

  • Yes, if its annual turnover is $1 million or less.


Question 4
Question 4 PROGRAMME

Q

  • Will the various branches of our business have to register for GST?


Answer 4
Answer 4 PROGRAMME

A

  • No.

  • Only separate legal entities have to register separately for GST


Question 5
Question 5 PROGRAMME

Q

  • If we operate more than one activity in our business do we need to register each one separately?


Answer 5
Answer 5 PROGRAMME

A

  • No.

  • It is the entity that registers for GST, not the activity.


Question 6
Question 6 PROGRAMME

Q

  • Do we have to order new stationery?


Answer 6
Answer 6 PROGRAMME

A

  • Tax invoices must comply with GST requirements and the correct Adjustment Notes


Question 7
Question 7 PROGRAMME

Q

  • We have calculated that it will cost us a great deal to modify our systems and provide our staff with training.

  • Is there any assistance available?


Answer 7
Answer 7 PROGRAMME

A

  • The Government has provided funding to various bodies to assist you with implementing the new system.

  • Information is available fromthe ATO and the GST Start Up Assistance Office.


Question 8
Question 8 PROGRAMME

Q

  • We use an accrual system and allow customers to pay in installments.

  • Is GST payable and when?


Answer 8
Answer 8 PROGRAMME

A

  • GST will be payable

  • on the full value of all taxable supplies from the date the tax invoice is issued or the first payment is received whicheveris the earlier.


Question 9
Question 9 PROGRAMME

Q

  • What happens if a transaction amount alters after it has been accounted for in a Business Activity Statement?


Answer 9
Answer 9 PROGRAMME

A

  • Adjustments will occur if:

    • goods are returned by you to a supplier or to you by a customer

    • the original purchase price is altered

    • discounts

    • debts become uncollectible or are recovered subsequent to an adjustment


Question 10
Question 10 PROGRAMME

Q

  • Can I claim an Input tax credit equivalent to 1/11th of ALL my purchases?


Answer 10
Answer 10 PROGRAMME

A

  • No, acquisitions may be “input taxed” or GST-free.

  • Otherwise Input tax credit in respect of all purchases that are “creditable acquisitions”.


Question 11
Question 11 PROGRAMME

Q

  • Are salaries and wages and superannuation contributions subject to GST?


Answer 11
Answer 11 PROGRAMME

A

  • NO.

  • PAYE withheld on salaries and wages, and FBT may be offset against any GST owing by the ATO.


Question 12
Question 12 PROGRAMME

Q

  • If a supplier such as a contractor is not registered for GST, can we claim an Input Tax Credit?


Answer 12
Answer 12 PROGRAMME

A

  • No, a non-registered enterprise does not issue GST Tax Invoices.

  • Withhold tax at 48.5% if the business does not provide you with an ABN


Question 13
Question 13 PROGRAMME

Q

  • We use Petty Cash for small purchases. Can we claim Input Tax Credits even if we do not have a Tax Invoice


Answer 13
Answer 13 PROGRAMME

A

  • YES

  • If purchases were each $50 or less.

  • Documentary evidence is required to support the claim.


Question 14
Question 14 PROGRAMME

Q

  • If our Input tax credits exceed the GST payable to the ATO in a Tax period -

  • Will we receive a refund?


Answer 14
Answer 14 PROGRAMME

A

  • Yes

  • Transfer the refund into your nominated bank

  • within 14 days of lodging your

  • Business Activity Statement

  • if you do not have any other tax debts to be offset against this amount.


Question 15
Question 15 PROGRAMME

Q

  • Do we have to pay GST on insurance premiums?


Answer 15
Answer 15 PROGRAMME

A

  • Yes, if they are an expense in providing your services.

  • You will be entitled to the relevant Input tax credit.


Question 16
Question 16 PROGRAMME

Q

  • We outsource many of our maintenance and catering activities.

  • Will we be charged GST by the suppliers?


Answer 16
Answer 16 PROGRAMME

A

  • Yes, if they are registered for GST.

  • You can claim an input tax credit.


Question 17
Question 17 PROGRAMME

Q

  • We have budgeted to purchase a new motor vehicle for business use in July.

  • Will we be entitled to an Input tax credit in respect to the GST paid?


Answer 17
Answer 17 PROGRAMME

A

  • There are special rules for claiming input tax credits on cars.

  • Seek assistance.


Question 18
Question 18 PROGRAMME

Q

  • If we do not register for GST because we do not exceed the threshold, what do we do if we subsequently believe we will exceed the threshold?


Answer 18
Answer 18 PROGRAMME

A

  • You should register once you believe that you will exceed the threshold in the following twelve months.


Question 19
Question 19 PROGRAMME

Q

  • If we decide not to charge our customers GST on non GST-free goods and services do we escape paying GST?


Answer 19
Answer 19 PROGRAMME

A

  • No, you will be liable for GST on all “taxable supplies”

  • even if you do not collect it from your customers.

  • 1/11th of all the invoices must be paid to the ATO.


Question 20
Question 20 PROGRAMME

Q

  • What happens if our turnover exceeds $1,000,000 and we are registered on the cash basis?


Answer 20
Answer 20 PROGRAMME

A

  • You must change to accruals basis from the first day of the next GST return period.


Question 21
Question 21 PROGRAMME

Q

  • We provide full board and lodging for staff in remote locations.

  • What GST is payable?


Answer 21
Answer 21 PROGRAMME

A

  • This is a complex area.

  • Basically the accommodation for staff will be an input taxed supply.

  • No GST is payable by the staff

  • but neither will you be able to claimany input tax credits.


Question 22
Question 22 PROGRAMME

Q

  • We undertake work for some companies from countries outside Australia, that have branches in Australia? The bills are sent to the offshore company who usually pay us in foreign currency?

  • Do we charge them GST?


Answer 22
Answer 22 PROGRAMME

A

  • The supplies are made in Australia and GST is payable.


Question 23
Question 23 PROGRAMME

Q

  • We bill staff annually for parking facilities on the company premises.

  • Do we charge GST?


Answer 23
Answer 23 PROGRAMME

A

  • Yes, on that portion of the invoice which relates to the period starting 1 July 2000.


Question 24
Question 24 PROGRAMME

Q

  • We provide accommodation and food for staff while travelling.

  • What is the GST position?


Answer 24
Answer 24 PROGRAMME

A

  • GST input tax credits can be claimed as this is an input into your business and is not “residential” accommodation.


Question 25
Question 25 PROGRAMME

Q

  • We organise regular excursions for our staff locally and nationally.

  • Are we able to claim input tax credits?


Answer 25
Answer 25 PROGRAMME

A

  • If the excursion relates to operations of the activity you can claim input tax credits.

  • You can’t claim input tax credits if it is entertainment.


Question 26
Question 26 PROGRAMME

Q

  • If we sponsor a charity are we required to add GST to the value of the sponsorship?


Answer 26
Answer 26 PROGRAMME

A

  • Yes,

  • if it benefits the sponsor in the form of advertising.


Question 27
Question 27 PROGRAMME

Q

  • We are purchasing a new workshop building for the business.

  • When can we claim the input tax credit.


Answer 27
Answer 27 PROGRAMME

A

  • On the accruals basis when you a tax invoice and the sale is unconditional.

  • On the cash basis when payment is made if you have a tax invoice.


Question 28
Question 28 PROGRAMME

Q

  • I use some assets for both business and private use.

  • What is the GST treatment required?


Answer 28
Answer 28 PROGRAMME

A

  • You are required to make an adjustment in your GST return.

  • You may require assistance.


Question 29
Question 29 PROGRAMME

Q

  • We have a cheque paid by one of our customers dishonoured.

  • What is the GST treatment?


Answer 29
Answer 29 PROGRAMME

A

  • If you are on the cash basis you have not been paid.

  • If you are on the accrual basis you have a bad debt for GST purposes.


Question 30
Question 30 PROGRAMME

Q

  • We have entered into a service contract which spans July 1.

  • What are the GST implications?


Answer 30
Answer 30 PROGRAMME

A

  • A complex area.

  • Requires careful consideration and/or specialist advice.

  • Services to be rendered after30 June 2000 are subject to GST.


Question 31
Question 31 PROGRAMME

Q

  • We pay membership fees to various associations connected to our business.

  • Must we charged GST on these ?


Answer 31
Answer 31 PROGRAMME

A

  • Yes

  • They are paid in return for services provided.

  • You will get an input tax credit.


Question 32
Question 32 PROGRAMME

Q

  • We operate a staff canteen on the premises.

  • Do we need to charge GST on all sales?


Answer 32
Answer 32 PROGRAMME

A

  • Yes.

  • If you provide food to staff that is not GST-free food you need to charge GST on its sale.


Question 33
Question 33 PROGRAMME

Q

  • Is GST payable on Fringe benefits supplied to staff?


Answer 33
Answer 33 PROGRAMME

A

  • Legislation is expected to clarify the GST FBT interaction.


Question 34
Question 34 PROGRAMME

Q

  • Stock held on 1 July may have WST included and will be subject to GST .

  • Is there any relief available?


Answer 34
Answer 34 PROGRAMME

A

  • Yes

  • You will be able to claim the WST content.

  • Note pricing requirements


Question 35
Question 35 PROGRAMME

Q

  • We run a shop that sells second hand goods.

  • Do we charge GST?


Answer 35
Answer 35 PROGRAMME

A

  • Yes.

  • You charge GST on all sales.

  • You will get an input tax credit.


Question 36
Question 36 PROGRAMME

Q

  • We maintain equipment under annual service contracts.

  • Do we need to consider GST in our 2000 contracts?


Answer 36
Answer 36 PROGRAMME

A

  • Yes.

  • For the period after 1 July 2000, you need to provide for GST.


Question 37
Question 37 PROGRAMME

Q

  • What is the situation if we are a registered entity and we acquire goods or services from a non registered business?


Answer 37
Answer 37 PROGRAMME

A

  • If a business is not registered

  • for GST,

  • it cannot charge you GST.

  • No Input tax credit

  • is available to you.


Question 38
Question 38 PROGRAMME

Q

  • We are registered and we acquire goods or services from a supplier who does not provide us with an ABN.

  • What are our obligations?


Answer 38
Answer 38 PROGRAMME

A

  • Withhold tax at 48.5%

  • of the invoice value

  • and

  • remit this to the ATO

  • in your next return

  • as part of the new PAYG regime.


Question 39
Question 39 PROGRAMME

Q

  • We are a very small institution and yet we have been told that we have to submit our BAS electronically to the ATO.

  • Is this correct?


Answer 39
Answer 39 PROGRAMME

A

  • ATO will only refund

  • net credits in respect of GST to you electronically and not by cheque,

  • unless

  • your annual turnover is $20 million or more you are not obliged to submit your BAS electronically.


Question 40
Question 40 PROGRAMME

Q

  • We are required to pay deposits for various services at the time we enter into an arrangement with the service provider.

  • Are these subject to GST?


Answer 40
Answer 40 PROGRAMME

A

  • If the deposit is held as security,

  • no GST is payable.

  • If it constitutes an instalment payment, you will be charged GST.

  • If deposit is forfeited

  • then GST is payable.


Question 41
Question 41 PROGRAMME

Q

  • We run professional development courses for our staff.

  • Can we claim input tax credits on the costs.


Answer 41
Answer 41 PROGRAMME

A

  • Yes.

  • If the courses are conducted in the course of operating your activity.


Question 42
Question 42 PROGRAMME

Q

  • Staff sometimes purchase goods for the business and request reimbursement.

  • Are we entitled to input tax credits on these items


Answer 42
Answer 42 PROGRAMME

A

  • To claim an input tax credit

  • you must have the

  • relevant tax invoice.

  • Item must be used in the provision of your goods and services.


Question 43
Question 43 PROGRAMME

Q

  • We purchase safety equipment for our maintenance staff.

  • Are we entitled to claim input tax credits in respect of the purchases?


Answer 43
Answer 43 PROGRAMME

A

  • Yes

  • If they are purchased from a registered supplier and provided in yourcapacity as an employer, you mayclaim input tax credits.

  • If employees are required to pay for them, no input tax credits can be claimed.


Question 44
Question 44 PROGRAMME

Q

  • We frequently pay for staff to attend conferences and professional development courses supplied by private providers.

  • Do we have to payGST on the cost?


Answer 44
Answer 44 PROGRAMME

A

  • Yes

  • You are acquiring taxable supplies.

  • In certain cases, expenses may be considered to be a fringe benefit.

  • Advice should be sought if you are in doubt.


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