Goods and Service Tax
Transcript of Goods and Service Tax
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GST & BAS
By – Bhargav Kejkar
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Introduction
• Introduced on 1st July 2000 and replaced sales tax.
• Under the current tax system in Australia specific good & services have a tax levied on them at 10%.
• One of the most important things to remember is that GST is not tax deductible.
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GST Free Goods
• Health and Medical care. • Educational supplies.• Fresh food and beverages.• Cars for disable people etc.
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BAS
A Business Activity Statement is a form that is lodged with the Australian Taxation Office (ATO) that reports a client’s obligations and entitlements relating to:
• GST (similar to VAT)• Wine equalization tax• Luxury car tax• Pay As You Go (PAYG) amounts withheld from payments (similar to
TDS)• PAYG installments• Fringe benefits tax installments
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LODGEMENT OF BUSINESS ACTIVITY STATEMENT
• If annual turnover < $ 20 million, entity can choose to lodge BAS either quarterly or monthly.
• Quarterly tax periods are July 1st - September 30th
Oct 1st - Dec 31st Jan 1st - March 31st April 1st - June 30th
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Accounting For GST
• On Cash Basis – on receipt basis , when– Annual turnover < = $1 Million– Accounting for Income tax on receipt basis– Charitable institution, a trustee of charitable fund or a gift
deductible entity
• On Non - Cash Basis – on Accrual Basis, when– Any consideration is received or Paid– Any invoice (a document notifying an obligation for
payment) is issued by supplier or issued to purchaser
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Accounting for GST• GST on income (Credit in Balance Sheet)
(always PAYABLE) = GST on sales = GST payable control account = GST Collected• GST on expenses (Debit in Balance Sheet)
(always RECEIVABLE)= GST on sales = Input tax credit account = GST Paid
• Net GST = GST on income – GST on expense
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• GST Payable / Refundable – GST on sales > GST on Purchases = GST Payable
(Net credit) – GST on sales < GST on Purchases = GST refundable
(Net debit)– Transferred to GST Clearing for Clearing Purpose
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Accounting treatment for GST• While dealing with GST a/cs, we usually have to
face following a/cs(a) Input Tax Credit Control A/c(b) GST output control a/c(c) GST Clearing a/c(d) BAS payable(e) GST output tax credit adjustment a/c
etc.• GST Clearing a/c consist of all quarterly GST
payments / receipts.• BAS payable shows last year’s last quarter’s
liability.
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• Firstly we transfer GST clearing a/c balance to suspense a/c.
• Then, GST on sales and GST on purchase trf to GST clearing a/c. GST clearing a/c will show net GST.
• We check detailed ledger for how these quarterly payments or receipts had been made.
• After which we pass entries of those payments.
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Entries are shown below…. 1. Last year BAS cleared.
BAS Payable a/c Dr To Suspense a/c
2. Current year BAS clearedGST Clearing a/c Dr To Suspense a/c
3. Create current year’s last quarter liabilityGST Clearing a/c Dr To BAS Payable a/c
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Making ATO Payments/Refunds for C.Y.• GST Clearing Account
– All the ATO (GST) Payments or refunds relating to 3 quarters (Sep, Dec, March) are transferred to GST Clearing Account
• PAYG W/H Payable Account – All the ATO (PAYG W/H) payments are transferred to Debit of PAYG W/H
Liability Account
• Net Wages Account– All the ATO (PAYG W/H) payments are transferred to Debit of Wages to make
it Gross, as clients in Australia are allowed to Claim PAYG W/H as a direct deduction
• Fuel tax Credit Account– All the ATO (Fuel Tax credit) refunds are transferred to P & L credit as Diesel
Fuel Rebate
• PAYG Installments– All the ATO(IAS) payments are transferred to Debit of Equity section of
Balance Sheet as PAYG tax Installments
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Example
• Practice Job 2
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THANK YOU