slide1 l.
Download
Skip this Video
Loading SlideShow in 5 Seconds..
SMALL AND MEDIUM BUSINESS COURSE 1: GST Introduction & Registration PowerPoint Presentation
Download Presentation
SMALL AND MEDIUM BUSINESS COURSE 1: GST Introduction & Registration

Loading in 2 Seconds...

play fullscreen
1 / 45

SMALL AND MEDIUM BUSINESS COURSE 1: GST Introduction & Registration - PowerPoint PPT Presentation


  • 162 Views
  • Uploaded on

SMALL BUSINESS, EDUCATIONAL AND COMMUNITY ADVISER EDUCATION PROGRAMME. 1. SMALL AND MEDIUM BUSINESS COURSE 1: GST Introduction & Registration. THE NEW TAX SYSTEM. A better tax system. TAX REFORM. Abolition of hidden indirect taxes Substantial personal income tax reductions

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'SMALL AND MEDIUM BUSINESS COURSE 1: GST Introduction & Registration' - chava


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
slide1

SMALL BUSINESS, EDUCATIONAL AND COMMUNITY ADVISER EDUCATION PROGRAMME

1

SMALL AND MEDIUM BUSINESS

COURSE 1: GST Introduction & Registration

the new tax system
THE NEW TAX SYSTEM

A better tax system

TAXREFORM

  • Abolition of hidden indirect taxes
  • Substantial personal income tax reductions
  • The introduction of GST
the new tax system3

TAXREFORM

THE NEW TAX SYSTEM

The Introduction of GST

  • A very visible tax - enables hidden taxes to be abolished
  • The abolition of wholesale sales tax will reduce costs for many businesses
  • GST does not increase costs for a GST registered business
  • Not all goods and services are subject to GST
the new tax system4

TAXREFORM

THE NEW TAX SYSTEM

Impact of GST

  • GST impacts many facets of a business
  • Incorrect handling of GST can cause financial loss
  • Staff need to be educated and trained
the new tax system5

TAXREFORM

THE NEW TAX SYSTEM

Government Assistance Initiatives

  • The New Tax System Advisory Board
  • The role of the Australian Tax Office
  • The role of the GST Start-Up Assistance Office
the new tax system6

TAXREFORM

THE NEW TAX SYSTEM

The Role of the GST Start-up Assistance Office

  • GST and Business Skills - an Action Guide
  • Organisation delivered assistance
  • Adviser education program
  • Direct assistance program
the new tax system7

TAXREFORM

THE NEW TAX SYSTEM

The role of the ACCC

  • Ensuring there is no price exploitation as a result of the tax changes
  • Ensuring that savings from the abolition of hidden taxes are passed on
  • Will oversee pricing changes from 9 July until July 2002
the importance of terminology

GSTTERMS

THE IMPORTANCE OF TERMINOLOGY

Overview of GST

  • It is important to become familiar with the key GST concepts and correct GST terms
  • Understanding these terms and concepts is the easiest way to start implementing GST in your business
  • This section is an overview of these terms and concepts
  • Remember: GST is a tax on domestic consumption of goods and services
the importance of terminology9

GSTTERMS

THE IMPORTANCE OF TERMINOLOGY

There are four kinds of GST supply

  • Taxable supply
  • GST - free supply
  • Input taxed supply
  • Supply by non-registered persons

All GST details flow from these concepts

These are the keys to understanding GST

gst terms

GSTTERMS

GST TERMS

Enterprise

  • Getting things done
  • Providing the things we need
  • Delivering the goods and providing the services
  • Some enterprises are required to register for GST
  • All enterprises have the option to register
gst terms11

GSTTERMS

GST TERMS

Entity

  • An entity is a person, or an organisation, or any other ‘body’ that has a separate legal identity
  • Single entities may be made up of several enterprises
  • When registering for GST care needs to be taken to register all entities that comprise a single enterprise
  • Group registration may be an option
gst terms12

GSTTERMS

GST TERMS

ABN (Australian Business Number)

  • When a business registers for GST it will receive an ABN
  • An ABN can be obtained without registering for GST
  • A business that does not have an ABN will have withholding tax at the rate of 48.5¢ in the dollar deducted from payments made to it by other businesses.
  • All businesses should obtain an ABN
gst terms13

GSTTERMS

GST TERMS

BAS (Business Activity Statement)

  • Using this form, the business will advise the ATO of its GST liability or refund claim.
  • This form will also be used for all tax payments in addition to GST
  • The GST section of this form will be completed every month, or every three months, depending on the basis of GST registration
gst terms14

GSTTERMS

GST TERMS

Goods and Services

  • Goods are the tangible things we consume
  • Services are things people do for others
  • Goods and Services have a cost and, generally, a price
  • Goods and Services are what an enterprise produces
gst terms15

GSTTERMS

GST TERMS

Taxable Supplies

  • Supplies of goods and services connected with Australia, made by registered persons or entities, for consideration
gst terms16

GSTTERMS

GST TERMS

Input Tax Credits

  • GST is included in the price of ‘GST supplies’ a business acquires
  • This GST can be claimed as an input tax credit if those supplies were acquired for business purposes
  • A business must have a TaxInvoice to claim the input tax credits
gst terms17

GSTTERMS

GST TERMS

Input Tax Credits

  • The aggregate of input tax credits is deducted from GST collected from customers
  • The net GST is payable to the ATO
gst terms18

GSTTERMS

GST TERMS

GST - free supplies

  • GST is not included in the price of GST-free supplies
  • Therefore, no input tax credits are available when you purchase GST-free supplies
  • GST input tax credits can be claimed on taxable supplies acquired by a registered person to make GST-free supplies
  • Note the categories of supplies that include GST-free supplies
gst terms19

GSTTERMS

GST TERMS

Input Taxed Supplies

  • GST is not included in the price of input taxed supplies
  • Therefore, no input tax credits are available to the purchaser for input taxed supplies
  • GST input tax credits cannot be claimed on taxable supplies acquired to make input taxed supplies
  • Note the categories of input taxed supplies
gst terms20

GSTTERMS

GST TERMS

Consideration

  • Consideration is what is given in return for supplies made
  • Consideration can be in money
  • Consideration can be in goods or services that have worth in money terms
gst terms21

GSTTERMS

GST TERMS

Value

  • When used in a GST context, value means the GST exclusive price of the goods or services supplied
  • The price of goods or services comprises of the value plus applicable GST
gst terms22

GSTTERMS

GST TERMS

Attribution rules

  • Determine time of GST supplies
  • Cash basis rules
  • Accrual basis rules
the basics of gst
THE BASICS OF GST

GST affects almost all transactions

  • GST will apply to business transactions unless a specific exemption applies
  • If a transaction is a taxable supply, GST is included in the price
  • The rate of GST is 10%
the basics of gst24
THE BASICS OF GST

GST affects almost all transactions

  • GST collected by ‘business’ from its customers periodically gets paid to the ATO
  • In principle a registered business is able to get back the GST it has to pay on its purchases
  • GST thus is not a tax on the business; it is not a business cost
the tax fraction
THE TAX FRACTION

The GST is 1/11th of the price charged or paid

  • The GST inclusive price includes both a GST content and the cost / income element
gst transactions
GST TRANSACTIONS

Every business transaction most likely will:

  • Involve a supply for GST purposes
  • For GST purposes transactions are called supplies
  • If a transaction is not treated as a taxable supply, there must be valid reasons why not
gst transactions27
GST TRANSACTIONS

Every business transaction most likely will:

  • Involve a supply for GST purposes
  • If the transaction is a supply, it has GST implications
  • The attribution rules determine in which GST period: GST output tax has to be accounted for GST input tax credits may first be claimed
contracts
CONTRACTS

All contracts should address GST issues

  • If the contract doesn’t pass the GST on to the customer, the business will wear the cost
  • Special rules provide relief from GST for some contracts entered into pre 1 July 2000 but completed after 1 July 2000
  • The ATO has released a fact sheet / charts which summarise these rules
limits on input tax credits
LIMITS ON INPUT TAX CREDITS

There are some transactions for which you cannot claim input tax credits

  • A registered person cannot claim back GST included in the price of goods or services acquired for private consumption
  • A business cannot claim input tax credits on things bought to make input taxed supplies
gst inclusive
GST INCLUSIVE

GST supplies should always be priced GST inclusive

  • Setting prices / quoting
  • Signs, advertisements, price tags, catalogues
  • Alternative of: GST inclusive pricing, or the ‘value’ of the supply plus the amount of GST stated in dollars
  • Real risk of loss for traders when they get this wrong
who can register gst
WHO CAN REGISTER GST?

To register for GST, you must be an entity conducting an enterprise

  • Businesses and entities conduct enterprises
  • Generally the GST net extends only to supplies connected with Australia
gst registration
GST REGISTRATION

Most businesses should register for GST

  • Last registration date 31 May using ABN registration form
  • Consider cash or accrual basis
  • Consider monthly or quarterly returns
  • Choices exist for some businesses
  • There is withholding tax exposure for businesses without an ABN
cash basis of registration
CASH BASIS OF REGISTRATION

The ‘cash basis’ allows for simpler accounting systems

  • Only pay to the ATO the GST included in the payments received
  • Only claim from the ATO the GST in the payments made that are covered by tax invoices
  • Threshold is one million dollars
accrual basis of registration
ACCRUAL BASIS OF REGISTRATION

Use an accrual basis only if required to, or it provides substantial cash flow or other commercial advantages

  • To calculate GST on an accruals basis include accounts owed by and owed to the business
  • Identify GST on “outputs”- taxable supplies made by the business
  • Identify receivable GST on “inputs”- supplies acquired by the business
  • Accrual basis available to all
quarterly or monthly returns
QUARTERLY OR MONTHLY RETURNS

Most Businesses will find quarterly returns are best

  • Many businesses making GST taxable supplies will adopt quarterly returns
  • GST payments just 4 times a year - 21st day following period end
  • Cash flow or other commercial advantages may prompt monthly GST reporting
tax invoice
TAX INVOICE

Always make sure a Tax Invoice is obtained

  • A tax invoice is your voucher to get money from the ATO
  • Needs to contain certain information
  • Different tax invoice levels exist- Up to $50 (before GST)- More than $50 and up to $1000 (before GST)- Greater than $1000 (before GST)
records
RECORDS

Keep a record of all transactions to keep track of GST

  • Record all outflows
  • Record all inflows
  • File tax invoices received
  • Keep all bank statements
  • Record debtors and creditors
systems
SYSTEMS

Make sure the GST information needed to complete the BAS return is readily available

  • Keep GST records up to date on a regular basis
  • Ensure the GST information and records is accurate and readily available, when required
controls
CONTROLS

Always have checks in place to make sure GST is calculated correctly

  • Make sure you get it right
  • Nothing missed - Nothing wrong
  • Automatic checks and balances
  • No tax invoice from a supplier - no payment!
risks
RISKS

Always remember GST

  • Not identifying transactions which constitute taxable supplies
  • Misclassifying a GST taxable supply as a GST-free supply
  • Charging GST and not paying it to the ATO
  • Not including GST in prices
risks41
RISKS

Always remember GST

  • Not collecting and holding valid tax invoices covering input tax credit claims
  • Not identifying GST input tax credits and not claiming refunds
  • Claiming a GST input tax credit for costs of making input taxed supplies
  • Spending GST owing to the ATO
transition
TRANSITION

Contracts entered into before 1 July 2000 and which span that date can have tax implications

  • Special transition rules apply
  • Need to check existing contracts now
  • Refunds available for WST paid on certain stock on hand at 30 June 1999
planning items
PLANNING ITEMS

The planning for GST starts now

  • Register for GST
  • Printing invoices and price lists
  • Point of sale recording
gst registration flow chart
GST REGISTRATION FLOW CHART

BASIC REGISTRATION RULES

Does the Business only make Input Taxed Supplies

You are unable to Register for GST

YES

NO

Is this a business with a current turnover greater than $50,000?

You must register for GST

YES

NO

YES

Do you expect your turnover to exceed $50,000 in the next 12 months

You may choose whether to register or not

NO

gst return period flow chart
GST RETURN PERIOD FLOW CHART

Does the business have a turnover of GST supplies and GST free supplies in excess of $20,000,000

NO

Does the business primarily make GST supplies

Does the business primarily make only GST free supplies

NO

YES

YES

YES

Registration on a quarterly basis may improve your cash position

Registration on a monthly basis may improve your cash position

You must register on a monthly basis