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Business Activity Statement (BAS) GST
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Session Outline

• Brief overview of key GST concepts
• Requirements of the BAS
• Completion of the BAS
• BAS Issues
• PAYG large withholding the BAS

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Basic Operation

• Incur input GST and claim input tax credits
• Charge output GST and assess liability to GST
• Net amount GST charged - GST incurred
• Borne by private consumers, not business

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Types of supplies

• Taxable supplies - 10
• generally most supplies
• GST-free supplies
• e.g. Exports, food
• Input-taxed supplies
• e.g. Financial supplies

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How much GST is payable on taxable supplies?

• GST Payable Price x 1/11th
• Price is the monetary consideration plus
  GST-inclusive market value of non-monetary
  consideration

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Tax periods

• If annual turnover gt 20million monthly
• If annual turnover lt 20million choice of
  monthly or quarterly

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Attribution Rules

• GST Liability and Entitlement to Input Tax Credits

• General Rule
• Earlier of
• Invoice or
• Payment

• Special Rules
• Transition
• Deposits
• Progressive/periodic supplies

Must hold Tax Invoice at time of claiming Input
Tax Credits
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Transitional Time of Supply

• Goods
• when the goods are removed
• if not removed - when available to recipient
• if on approval, sale or return - when certain a
  supply has been made.

• Real Property
• when made available to recipient (settlement?)
• Services
• when the services are performed
• Supply of rights - to extent exercised after 1
  July 2000

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Deposits as security

• No GST on the taking of a deposit as security
• GST becomes payable if
• deposit forfeited or
• deposit applied as consideration
• GST is not attributable prior to
  forfeiture/application as consideration

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Periodic/Progressive Supplies

• Supplies where the consideration is provided on a
  progressive or periodic basis, for example
• insurance cover paid monthly
• commercial leases for a period
• For GST purposes each periodic/progressive
  component is treated as a separate supply
• Supplier can issue a single tax invoice
• Must be a valid tax invoice and detail separate
  components of the periodic/progressive supply

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Division 81

• Applies to taxes, fees and charges
• Brings these into the GST regime
• Allows certain taxes, fees and charges to be
  excluded by Treasurer determination
• Recent determination issued by Treasury Dept.
• Determination lists the taxes, fees and charges
  excluded from GST regime
• List is extensive

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Grants

• Most grants are consideration for a supply
• obligation to do something
• grantor will require a tax invoice
• grant may need to be increased for GST
• GSTR 2000/11

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Appropriations - Government Related Entity

• Section 9 - 15 (3) ( c ) A New Tax System (Goods
  Services Tax) Act 1999
• Payment by Government Related Entity (GRE) to
  another Government related entity
• Legislative authority for the payment
• Goods Services Tax Ruling 2000/4 - Final ruling
• Not consideration for a supply.

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Input Tax Credits

• Entitlements to input tax credits arise in
  respect of
• creditable acquisitions
• creditable importations
• Amount of input tax credit
• GST on supply or importation
• Must hold a valid tax invoice

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Adjustments

• Adjustment events
• cancellations
• discounts/volume rebates
• Adjustments for supplies
• increasing/decreasing adjustments
• Adjustments for acquisitions
• increasing/decreasing adjustments

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Requirements completion of the GST BAS
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GST Returns - BAS

• Due 21 days after end of tax period
• GST is payable at time of lodgment
• Refunds due within 14 days of lodgment of GST
  return
• interest payable if refund late
• If annual turnover is in excess of 20 million,
  must lodge electronically
• Account for GST on accruals basis
• cash basis allowed where turnover less than
  1million

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Business Activity Statement

• For reporting most tax obligations
• GST
• WET
• LCT
• Income tax withheld and installments
• Deferred company income tax installments
• FBT

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Completing GST section of BAS

• Two options
• GST calculation sheet option or
• GST derived from accounts option
• Calculation sheet
• follow instructions on completing relevant
  sections on BAS
• Accounts option
• accounts must satisfy specific requirements

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Accounts option - when available?

• Accounts system must
• accurately provide details of the amount of
  output GST and input GST incorporate proper
  audit trails
• Accounts system must
• record the GST amount of each taxable supply in a
  GST payable control account
• record the GST amount of each creditable
  acquisition in a input tax credit control account
• record increasing/decreasing adjustments in
  either a GST payable/input tax credit control
  account or a GST adjustments control account

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Accounts option

• Use accounts info to complete
• G9 1A - Output GST
• G20 1B - Input GST
• For statistical purposes complete G1, G2, G3,
  G10, G11 G12
• info obtained or estimated on a reasonably
  accurate basis from your accounts
• can be the net amounts i.e. GST exclusive amounts

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Accounts option - Additional adjustments to be
included

• If accounts option used additional adjustments
  necessary
• Bad debts - where no corresponding entry in
  accounts
• bad debt outstanding for more than 12 months but
  not yet written off in accounts
• Changes in extent of creditable purpose
• Goods used solely for private or domestic purposes

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GST Accounting on Calculation Sheet

• Supplies
• Total supplies
• (GST-free supplies)
• (Input-taxed supplies)
• Increasing adjustments
• Total
• GST Liability 1/11 x Total

• Acquisitions
• Total acquisitions
• (Acquisitions with no GST)
• (Non-creditable acquisitions)
• Decreasing adjustments
• Total
• Input Tax Credits 1/11 x Total

• GST inclusive amounts !

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G1 - Total Sales and Income Other Supplies

• All supplies made in course of enterprise and
  attributable to the tax period
• Include
• Taxable supplies - this may include grants
  received
• GST-free supplies
• exports (G2)
• other GST-free supplies (G3)
• Input taxed supplies (G4)
• Barter transactions (GST incl. market price)

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G1 - Total Sales and Income Other Supplies
(Cont.)

• Exclude
• Intra-group transactions
• Appropriations received
• Div 81 supplies made
• Special Rules
• Supply of property under margin scheme
• include only margin on sale

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G2 - GST Free Supplies - Exports

• Export of
• Goods
• Repairs of goods to be exported and goods used in
  such repairs
• Issues
• FOB value
• Capture as Export GST- free

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G3 - Other GST Free Supplies

• Capture as Other GST-free
• food for human consumption
• health, education and childcare services
• going concern
• amounts for exports not included at G2
  (international freight, insurance other
  charges)
• grandfathered contracts (not specified)
• export of services
• initial grants of freehold and similar interests
  in unimproved land by Commonwealth, State or
  Territory governments

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G4 - Input Taxed Sales Income Other Supplies

• Certain financial supplies, e.g. interest on
  outstanding loan
• Sale, lease or hire of residential premises
  except for
• sale of new residential premises
• sale of commercial residential premises
• Capture all input-taxed supplies

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G5 and G6 - Sub Totals

• G5 - Total of your GST-free and input taxed
  supplies
• G5 G2 G3 G4
• G6 - Total of your taxable supplies
• G6 G1 - G5

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G7 and G 18 - Adjustments

• Increasing or decreasing adjustment to previous
  activity statement, e.g.
• Cancellation of supply or acquisition
• Discounts, rebates
• Non-taxable becomes taxable or vise versa, e.g.
  goods not exported within required 60 days
• Change in creditable purpose
• Bad debts

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G7 and G18 - Adjustments (Cont.....)

• Separate adjustment accounts
• Increasing
• Decreasing
• Calculation
• Amount included in previous BAS
• (Corrected amount)
• Increasing or decreasing adjustment

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G7 and G18 - Adjustments (Cont.....)

• Increasing - G7
• Decreasing - G18
• Must be positive amounts

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G8 - Total of taxable supplies

• G8 G6 G7
• GST-inclusive
• G9 to calculate GST liability
• 1/11 x G8

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G10 and G11 - Acquisitions

• G10 - Capital acquisitions
• G11 - Other acquisitions
• Input tax credit for
• GST included in price charged by supplier
• paid on importation of goods
• grant given for taxable supply

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G10 and G11 - Acquisitions (Cont.....)

• Include
• GST-free or input taxed acquisitions
• Partly creditable acquisitions (total amount)
• Barter arrangements - GST-inclusive market value
• Acquisitions from associates
• Do not include
• acquisitions not for use in business

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G10 and G11 - Acquisitions (Cont.....)

• Exclude
• Intra-group transactions
• Appropriations made
• Div 81 acquisitions
• Special rules
• land and buildings - margin method - cannot claim
  ITC for acquisitions made under the margin scheme
• Issues
• Must have Tax Invoice for taxable acquisitions

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G10 - Capital Acquisitions

• Capital items, e.g.
• plant and equipment
• motor vehicles
• land and buildings
• other expenditure of capital nature

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G11 - Other Acquisitions

• Acquisitions not being a capital acquisition
• Special rules
• Reimbursements
• Associates
• Capture as Other acquisitions

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G12 - Total Acquisitions

• G12 G10 G11

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G13 - Acquisitions for making input taxed supplies

• Directly attributable
• Partly attributable
• Indirect - apportionment
• Include only that part of the supply which
  relates to input-taxed acquisitions

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G14 - Acquisitions with no GST in the Price

• From unregistered entities
• GST-free
• Input taxed
• Capture type of acquisition

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G15 - Estimated Private Use and Non-deductible
Acquisitions

• Partly for private and domestic use
• Certain non-deductible expenses, e.g.
  entertainment
• Capture type of acquisition

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G16 and G17 - Sub Totals

• G16 - Total of your non-creditable acquisitions
• G16 G13 G14 G15
• G17 - Total of your creditable acquisitions
• G17 G12 - G16

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G18 - Adjustments

• Also includes change in creditable purpose
• Broadly meaning, an adjustment if
• Actual use different from intended extent of
  creditable use if the thing acquired
• up to 10 adjustment periods
• no adjustment if prior adjustment under next
  rule
• Solely acquired for creditable purpose, but
  actually applied solely for domestic or private
  use

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G19 - Total of Creditable Acquisitions after
Adjustments

• G19 G17 G18
• GST-inclusive
• G20 to calculate GST input tax credit
• 1/11 x G19

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Systems Issues

• Tax invoices
• Accounting systems
• time of supply
• adjustments/ rebates
• other special requirementse.g.. bad debts,
  balance sheet, accounts set up
• Specifications for electronic version of the BAS
• www.taxreform.ato.gov.au/taxhome/index.htm
• under entries for 22 May 2000

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Business Activity Statement (BAS) - General
Issues
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3-2-1-0 Initiative

• Transitional lodgment/payment extension
• 1st quarter (1 July 2000 - 30 Sept 2000) 11 Nov
  2000
• 2nd quarter (1 Oct 2000 - 31 Dec 2000) 4 Feb
  2001
• 3rd quarter (1 Jan 2001 - 31 Mar 2001) 28 April
  2001
• 4th quarter (1 April 2001 - 30 June 2001) 21
  July 2001
• Does not apply to
• large PAYG withholders (gt1million)
• businesses on monthly BAS (whether by election or
  not)
• substituted accounting period adopted for income
  tax

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Pre-printed informationNil BAS return

• ATO will pre-print info on the BAS, for example
• BAS lodgment due date
• tax period covered by the BAS
• If no obligations or entitlement to report
• sign date the BAS and return it to the ATO by
  the due date

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Payment of refunds

• Amounts payable by ATO to taxpayer
• paid by direct credit into nominated financial
  institution account
• account must be at a branch of the institution in
  Australia
• Refunds will not be paid if
• youve an outstanding BAS or
• BAS is incomplete
• Refund will be offset against any outstanding tax
  debts

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General Interest Charge

• General Interest Charge (GIC) will accrue on
  amounts not paid by due date
• Interest is calculated daily on a compounding
  interest basis
• GIC rate is 13-week Treasury note yield plus 8
• Rate will be reviewed quarterly
• GIC is tax deductible in the year it is incurred

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Mistakes on the BAS

• Honest mistake and voluntary disclosure
• penalty will be remitted in full but
• interest on any understated tax or overclaimed
  credit will still be due.
• Correct mistakes by filing a Revised Activity
  Statement
• Request one from the ATO
• Must notify ATO of any change in details within
  28 days

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1. Special tax periods2. Lodging a BAS by mail

• If special tax periods i.e. ending in first 7
  days of month
• Must still lodge BAS by 21st day of that month in
  which the tax period ends
• If lodging by mail
• ensure leave sufficient time for paperwork to
  reach the ATO by the due date and
• must use official form.

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Records

• Records must be written in English
• Records must be held for 5 years

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PAYG GSTOffset
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BAS - Large PAYG withholders

• Annual withholding amount exceeds 1million
• includes all amounts withheld
• Amount deducted in a period commencing on
  Saturday ending on Tuesday
• payable on the following Monday
• Amount deducted in a period commencing on
  Wednesday and ending Friday
• payable on the following Thursday

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Offsetting GST Input Tax Credits against a PAYG
withholding liability

• To offset must
• notify the ATO of the withholding liability
• lodge the BAS on or before the PAYG withholding
  due date
• pay an adjusted withholding liability if necessary

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How to offset

• Notify ATO of the withholding liability via a
  PAYG Withholding Liability Notification form
• Notify this on or before the withholding due date
• The BAS with the GST credit details must be
  lodged
• on or after the PAYG withholding liability
  notification
• but no later than the withholding due date
• Only Box W1 should then be completed on the BAS
• Do not show amounts at Boxes W2, W3 W4

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Example - Offset

• Department pays staff fortnightly. On 1 March
  2001 Dept has
• net GST credit of 2.2million
• total salary wages paid of 4million
• PAYG withholding of 1million (due 8 March 2001)
• Completes PAYG Withholding Liability Notification
  - lodges it on 8 March 2001
• Completes Feb 2001 BAS - lodges it on 8 March
  2001
• ATO will refund 1.2million (i.e. 2.2m less 1m)

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Questions And Discussion
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