Introduction:
GST which is a broad-based consumption tax was introduced on 1 July 2000 and reinstated a wholesale sales tax. Goods and services tax (GST) is a tax of 10% on most goods, services and extra items sold or consumed in Australia.
GST refers to either the “value” of a taxable supply or the “price”: The value of a taxable supply is the GST-exclusive consideration payable for the supply. The price is the GST-inclusive consideration payable for the supply.
However, GST is applied differently for certain products or for certain entities.
Applying GST rules correctly is essential for any businesses registered for GST. If your bookkeeper has not recorded GST correctly, you may be subject to future interest charges and penalties from the ATO. The following lists the most common areas where mistakes are made with GST.
Bank Fees
No GST involved on Bank charges. However, 10% GST applies on merchant fees.
Donations
All donations are GST free.
Exporting
No GST on overseas sales, however, 10% GST can be claimed back on any domestic purchases.
Financial Payments
All types of financial payments, like Hire Purchase payments, Loan repayments, Interest Charges, etc are all GST free.
Fine & Penalties
No GST involved.
Government Charges
Most government charges, like land tax, council rates, water rates, stamp duties, ASIC Fees are all GST free
Government Grants
Most grants and incentives include 10% GST.
Insurance Expenses
GST component is not 10% of the invoice total due to the stamp duty.
Loans
The proceeds of a business loan do not include GST.
Motor Vehicle Cost
The maximum GST credit that can be claimed on Motor Vehicle purchase for 2016-17 financial year is limited to $5,234 due to the luxury car limit of $57,581.
Personal Expenses
All personal expenses should be marked ‘not reportable’ due to the private nature.
Residential Properties
No GST is payable on any income generated from residential properties, and no GST can be claimed back either from any expenses spent on residential properties.
Wages, PAYG Withholding and superannuation expenses
No GST involved & should be marked ‘not reportable’.
We can assist with:
- Lodgement of Annual GST returns and reconciliations.
- Preparation and Lodgement of Business Activity Statements.
- Preparation and Lodgement of Installment Activity Statements.
- Registration/De-registration – GST, ABN, PAYG.
If you require assistance managing compliance of GST such as when to apply it, payments, and credits and completing Activity statements, Accounting Direct has the expertise to ensure this aspect of your business activity is managed and controlled.
If you are looking for efficient and prompt accounting services, you can call us 03 8502 2878 or email info@accountingdirect.com.au