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SMALL AND MEDIUM BUSINESS COURSE 3: Frequently asked questions

SMALL BUSINESS, EDUCATIONAL AND COMMUNITY ADVISER EDUCATION PROGRAMME. 3. SMALL AND MEDIUM BUSINESS COURSE 3: Frequently asked questions. Question 1. Q.

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SMALL AND MEDIUM BUSINESS COURSE 3: Frequently asked questions

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  1. SMALL BUSINESS, EDUCATIONAL AND COMMUNITY ADVISER EDUCATION PROGRAMME 3 SMALL AND MEDIUM BUSINESS COURSE 3: Frequently asked questions

  2. Question 1 Q • We are a small business and the total amount we receive for all the goods and services that we supply is under the registration threshold of $50,000. • Is there any benefit for us if we register for GST?

  3. Answer 1 A • Most approved small businesses will benefit by registering for GST

  4. Question 2 Q • As a small body, should we choose to lodge our Business Activity Statement monthly or quarterly?

  5. Answer 2 A • Small businesses have the option to file monthly or quarterly returns. • Some businesses will find that quarterly returns are the better option.

  6. Question 3 Q • We understand that the cash basis of accounting for GST is easier. • Can businesses register on a cash basis?

  7. Answer 3 A • Yes, if its annual turnover is $1 million or less.

  8. Question 4 Q • Will the various branches of our business have to register for GST?

  9. Answer 4 A • No. • Only separate legal entities have to register separately for GST

  10. Question 5 Q • If we operate more than one activity in our business do we need to register each one separately?

  11. Answer 5 A • No. • It is the entity that registers for GST, not the activity.

  12. Question 6 Q • Do we have to order new stationery?

  13. Answer 6 A • Tax invoices must comply with GST requirements and the correct Adjustment Notes

  14. Question 7 Q • We have calculated that it will cost us a great deal to modify our systems and provide our staff with training. • Is there any assistance available?

  15. Answer 7 A • The Government has provided funding to various bodies to assist you with implementing the new system. • Information is available fromthe ATO and the GST Start Up Assistance Office.

  16. Question 8 Q • We use an accrual system and allow customers to pay in installments. • Is GST payable and when?

  17. Answer 8 A • GST will be payable • on the full value of all taxable supplies from the date the tax invoice is issued or the first payment is received whicheveris the earlier.

  18. Question 9 Q • What happens if a transaction amount alters after it has been accounted for in a Business Activity Statement?

  19. Answer 9 A • Adjustments will occur if: • goods are returned by you to a supplier or to you by a customer • the original purchase price is altered • discounts • debts become uncollectible or are recovered subsequent to an adjustment

  20. Question 10 Q • Can I claim an Input tax credit equivalent to 1/11th of ALL my purchases?

  21. Answer 10 A • No, acquisitions may be “input taxed” or GST-free. • Otherwise Input tax credit in respect of all purchases that are “creditable acquisitions”.

  22. Question 11 Q • Are salaries and wages and superannuation contributions subject to GST?

  23. Answer 11 A • NO. • PAYE withheld on salaries and wages, and FBT may be offset against any GST owing by the ATO.

  24. Question 12 Q • If a supplier such as a contractor is not registered for GST, can we claim an Input Tax Credit?

  25. Answer 12 A • No, a non-registered enterprise does not issue GST Tax Invoices. • Withhold tax at 48.5% if the business does not provide you with an ABN

  26. Question 13 Q • We use Petty Cash for small purchases. Can we claim Input Tax Credits even if we do not have a Tax Invoice

  27. Answer 13 A • YES • If purchases were each $50 or less. • Documentary evidence is required to support the claim.

  28. Question 14 Q • If our Input tax credits exceed the GST payable to the ATO in a Tax period - • Will we receive a refund?

  29. Answer 14 A • Yes • Transfer the refund into your nominated bank • within 14 days of lodging your • Business Activity Statement • if you do not have any other tax debts to be offset against this amount.

  30. Question 15 Q • Do we have to pay GST on insurance premiums?

  31. Answer 15 A • Yes, if they are an expense in providing your services. • You will be entitled to the relevant Input tax credit.

  32. Question 16 Q • We outsource many of our maintenance and catering activities. • Will we be charged GST by the suppliers?

  33. Answer 16 A • Yes, if they are registered for GST. • You can claim an input tax credit.

  34. Question 17 Q • We have budgeted to purchase a new motor vehicle for business use in July. • Will we be entitled to an Input tax credit in respect to the GST paid?

  35. Answer 17 A • There are special rules for claiming input tax credits on cars. • Seek assistance.

  36. Question 18 Q • If we do not register for GST because we do not exceed the threshold, what do we do if we subsequently believe we will exceed the threshold?

  37. Answer 18 A • You should register once you believe that you will exceed the threshold in the following twelve months.

  38. Question 19 Q • If we decide not to charge our customers GST on non GST-free goods and services do we escape paying GST?

  39. Answer 19 A • No, you will be liable for GST on all “taxable supplies” • even if you do not collect it from your customers. • 1/11th of all the invoices must be paid to the ATO.

  40. Question 20 Q • What happens if our turnover exceeds $1,000,000 and we are registered on the cash basis?

  41. Answer 20 A • You must change to accruals basis from the first day of the next GST return period.

  42. Question 21 Q • We provide full board and lodging for staff in remote locations. • What GST is payable?

  43. Answer 21 A • This is a complex area. • Basically the accommodation for staff will be an input taxed supply. • No GST is payable by the staff • but neither will you be able to claimany input tax credits.

  44. Question 22 Q • We undertake work for some companies from countries outside Australia, that have branches in Australia? The bills are sent to the offshore company who usually pay us in foreign currency? • Do we charge them GST?

  45. Answer 22 A • The supplies are made in Australia and GST is payable.

  46. Question 23 Q • We bill staff annually for parking facilities on the company premises. • Do we charge GST?

  47. Answer 23 A • Yes, on that portion of the invoice which relates to the period starting 1 July 2000.

  48. Question 24 Q • We provide accommodation and food for staff while travelling. • What is the GST position?

  49. Answer 24 A • GST input tax credits can be claimed as this is an input into your business and is not “residential” accommodation.

  50. Question 25 Q • We organise regular excursions for our staff locally and nationally. • Are we able to claim input tax credits?

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