TABL5551 - PowerPoint slides - Week 11 - GST.ppt

Any gst paid on purchases best of both worlds the

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any GST paid on purchases: best of both worlds The List of GST free supplies in div 38 [ATL 1603- 1611] includes certain: * food * medical services & other heath goods & services, * education and child care * exports * charity’s non commercial activities (raffles etc) * going concerns * second-hand goods etc TABL5551 - RHW adapted - Week 11 - GST 22
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Input Taxed Supplies 6.2 Input taxed: No GST is payable on supply, BUT the supplier is not entitled to input tax credits on supply Categories of input-taxed supplies: 1. Financial supplies – sub- div 40-A 2. Certain sales/lease of residential premises – sub-divs 40B, 40C 3. Precious metals – sub-div 40-D 4. supply of food by a school tuckshop or canteen – sub-div 40-E 5. fundraising activities by charitable institutions – sub-div 40-F Dealt with in detail below TABL5551 - RHW adapted - Week 11 - GST 23
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Charging GST: The supplier is generally liable for GST at 10% on the “net amount of supplies they make in a tax period: s 9-40, 195-1 Example [ATL 1590]: IT Shop sells Aya a computer for $3,300 for use in Aya’s business. The supply by IT Shop is a taxable supply, and the price charged includes 10% GST (1/11 th x $3,300 = $300) The GST will be (generally) allocated to the tax period in which either any consideration is received, or an invoice is issued relating to a supply: s 29-5(1) TABL5551 - RHW adapted - Week 11 - GST 24
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Obtaining input tax credits: requires a “creditable acquisition” Input tax credits only attach to a creditable acquisition: defined in GST Act s 11-5 as: * An acquisition solely or partly for a creditable purpose (i.e. to the extent it is in carrying on an enterprise: s 11-15(2) ) * Via a taxable supply for consideration * By a person who is registered or required to be registered See also Div 15 Creditable Importations TABL5551 - RHW adapted - Week 11 - GST 25
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Creditable Purpose It is not a creditable purpose to the extent the purpose of acquisition is: * of a private or domestic nature, or * relates to making of input taxed supplies Note – expenditure for a capital purpose can be a creditable purpose TABL5551 - RHW adapted - Week 11 - GST 26
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Input tax credits [ATL 1592] A person making a “creditable acquisition” is entitled to a an Input Tax Credit of 1/11 th of the cost of the acquisitions: s 9-75 (i.e. the amount of GST paid on the acquisitions) As a result, transactions between registered persons with full ITCs are effectively tax-free After 2012, the right to claim ITCs will be lost unless either: 1. the credit has been taken into account in an assessment within 4 years of the date on which the relevant GST return was due ( s 93-5 ), or 2. an exception applies ( ss 93-10(1)-(5) ) TABL5551 - RHW adapted - Week 11 - GST 27
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Where the proportion of creditable use changes, the taxpayer must adjust the claim for ITCs accordingly: Example [ATL 1593] : Taj buys cloth for use 80% in their business (and 20% private purposes for $2,200 (including $200 GST) Taj will be entitled to an ITC of $160 (80% x $200)
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