Introduction to Gst

Topics: Accounts receivable, Invoice, Accounts payable Pages: 2 (546 words) Published: May 22, 2013
Introduction to GST
* A goods and services tax (GST) was introduced into Australia on 1 July 2000 * It is a tax levied at the rate of 10% on the supply (sale) of most services and goods * Business registered under the GST legislation collect the tax on behalf of the Australian tax office (ATO) and remit the amounts collected to the ATO at regular intervals * Business are allowed to offset and GST they pay on buying services and goods against the GST collected on supplies * Any business which is registered for GST typically has two accounts: * GST collection (GST payable in the GST legislation) for any GST received or receivable by the entity from its customers. This is what the company “owes” to the government. Therefore, it a liability * GST Outlays (GST credit in the GST legislation) for any GST paid or payable by the entity to its suppliers. This is what the entity can claim as a refund from the government. Therefore, is an asset all * All supplies of services and goods are subject to GST unless they are Non-taxable * There are two types of non taxable supplies

* “GST-free” supplies are services and goods that would normally attract GST but are exempted under the legislation. (e.g. fresh food, educational courses, wages and salaries, capital contribution and withdrawals) * “Input taxed” supplies (e.g. bank fees, bank charges, a loan from a bank)

Items| GST/No GST|
Contribution of cash by the owner| No GST|
Purchase of supplies on credit| GST|
Payment of tuition fees| No GST|
Payment of wages to employees| No GST|
Sales of service on credit| GST|
Cash paid to accounts payable| No GST|
Purchase of services for cash| GST|
Interest received from a bank| No GST|
Cash received from accounts receivable | No GST|

Accounting for GST

* The GST legislation provides rules for allocating GST payable and GST credits to the relevant tax period * The tax...
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