- GST Act is a separate Tax Act that works with the existing Tax Acts
- Liability to pay GST to ATO occurs when we make taxable supplies and taxable importations. [remit tax to ATO]
- A refund of GST from the ATO relates when we create a credible acquisitions and credible importations. GST Taxable supplies
- GST taxable supplies – Items in which GST will be payableWhat is a supplier ? – Supplier is items that are both tangible and intangible
- Consideration – Have we made a payment for the supplier ?
- Registration – Have we registered for GST ?
- Enter Price – Was that supplier related to the conduct of a business
- Tax Zone – Was the supplier based on activities in an indirect tax zone ?
- Supplies that are not taxable supplies
– Division 38 GST-free supplies
– Division 40 Input taxed supplies – Financial supplies
- GST calculation – GST needs to be payable by the companies and paid to the ATO
Amount – GST is calculated at 10% on the value of a product.
e.g. Car is worth of $10,000, then GST is $1000; The end customer needs to pay $11,000
- GST credible acquisitions; e.g. amount that have incurred from the car dealers’s perspective will be the amount that the seller can claim for a GST tax credit How do we know if we have a credible acquisition? 1) Consideration ; 2) Registered ; 3) Purchase – was that purchase for a credible purchase; was the purchase related to the activities of the company ? 4) was the supply a taxable supply [If all Yes => Entitled to a input tax credit]Exceptions – Division 69 – non-deductible expenses (e.g. penalties; relatives’ travel expenses; family maintenance; recreational club expenses; expenses of a leisure; )Importations – Calculate the value of the import in AU dollar terms; GST will be payable by the importer of 10% of the value. [GST and imported goods]
- GST free supplies – Food; Health; Education; Child Care; Exports; Supplies of going concerns
Food – some food items may not be GST free; food of a more raw nature would generally be exempt food;
Exports – Items that will be exported for foreign consumption will generally be GST free.
Supplies of going concern – sells shares/assets
- Input tax supplies – financial supplies (e.g. bank fees; overdraft facilities; debt & equity securities)
- Financial acquisition threshold – If you do not exceed the financial acquisitions threshold, you can claim the GST credit you paid on a purchase you use to make your financial supply.
You exceed the financial acquisitions threshold for a particular month if the GST credits you could claim for current or future financial acquisitions are more than either of the following:
- $50,000 (before 1 July 2012) or $150,000 (on and after 1 July 2012) in the relevant 12-month period
- 10% of the total amount of GST credits you could claim for all your purchases (including financial acquisitions) during the relevant 12-month period.
- Reduced credit acquisitions – certain special types of purchases listed in the GST regulations. You can claim 75% of GST included in the purchase price of a reduced credit acquisition. [GST and financial supplies]
- Residential premises – generally will not be input taxed; No GST applicable to these types of transactions.
- Margin Scheme – The margin scheme is a way of working out the GST you must pay when you sell property as part of your business.
e.g. John is registered for GST and is carrying on an enterprise of property development. He buys vacant land from Jenny, who is not registered for GST, for $10 million on 25 September 2007. John improves the property with roads and other services and sells it to George for $5 million on 2 October 2008. Thus, the margin is $10 mil − $5 mil = $5 mil. John must pay 1/11th of the margin, that is, $454,545, as GST.
- Second-hand goods – generally only apply when you run a business that focuses on second hand products
- Reverse charge rules – rules for supplies by non-residence of intangible property. GST will be reverse charged. GST is payable by the recipient rather than the non-resident supplier.
e.g. ABC Pty Ltd acquires, through its overseas branch, the right to use a particular copyright in Australia. That right is then transferred to its branch in Australia.The transfer is taken to be a supply that is not connected with Australia and, if the other requirements of the reverse charge rules are satisfied, the transfer is subject to GST.
- New residential premises – contract entered in on or before 30 June 2018 and settled before 1 July 2020. The sale of new premises is not input taxed.
- Adjustments events – make an appropriate GST correction
- GST general anti avoidance – if a scheme was created a sole or dominant purpose to evade tax, that scheme will be made undone by the ATO.
- GST administration –As a business owner, it’s your responsibility to register for GST if your turnover exceeds the $75,000 threshold or is likely to exceed it.
- Tax invoice requirement