A simplistic perspective of taxation
Taxation is a crucial part which needs lot of attention in any business. Understanding the basic concepts of tax is hence important. The major components will be tax invoices and information about GST.
A tax invoice is a document that is issued by the supplier which states the price of the sale of goods or services. It also includes the GST (goods and services tax) amount if applicable to the sale. GST is nothing but the percentage of tax that is levied by the government on the consumers on purchase or usage of retail goods and services. Any business which has an annual turnover of 75000 $ will have to be registered for GST. For any businesses with lesser turnover GST registration is optional. This will save their earnings. GST cannot be reclaimed. So it is important to get complete information and then registering for GST. Any transaction which has a sale amount of 82.5$ including GST is taxable and a tax invoice must be issued for the same. To register for the GST the supplier will mandatorily need an ABN. If they do not have it they can apply for both GST and ABN through ATO. Every industry will have its own set of regulations for applying GST. The supplier must be aware of the same and has to be transact keeping the rules in mind. This info also to be used in tax return Sydney CBD.
Items to be included:
- ABN and the details of the vendor.
- Date on which tax invoice was issued and what was sold in terms of quantity and price.
- Taxable amount of each item. If the purchase is more than 1000$ then purchaser’s details are required to be mentioned.
Ideally the supplier is expected to mention all the details while issuing the tax invoices. But if under reasonable and unavoidable circumstances the supplier is unable to provide all the details then ATO can be contacted and consulted. If the supplier has certain credit limit with GST without tax invoice details, ATO has to be informed and explained. They will further advise on the situation.
Once a tax invoice is issued it is legally expected from the supplier to maintain it in their records. It will be useful for claiming. Once the claims are done then the supplier has to preserve them for at least a span of 5 years. A tax invoice is an important document and it is better suggested to preserve them for business purposes. Add this amount without GST in your tax return Sydney.
Accounting of GST:
A supplier has to choose an accounting method for GST related transactions. The modes are cash and non-cash basis. The small food retailers have simplified methods of accounting. They can make use of this option. Larger businesses will have to choose the non-cash mode. A supplier must keep track of all the GST related transactions accurately. Failing to pay or manage the same will result in heavy penalties from the government. Smaller businesses also have the option of paying the GST either in instalment basis or on a quarterly basis. This is to assist and motivate small business and they must make use of this option. This will simplify their accounting as well. If the GST actually collected is varying from the GST claim amount then the supplier will have to send an activity statement stating the reason for the difference to ATO.
Any supplier who has registered for GST is entitled to GST credit. The purpose of the sale must be purely for business sake. The items that are sold must be eligible for GST. Depending on the size and nature of business GST credit is allocated. For any further information the supplier can contact ATO. If the supplier is setting up a new company or is purchasing used goods then special regulations will imply for the same.
The supplier will have to pay the GST amount to ATO. All the taxes must be reported and paid by the supplier. The GST credit can be reclaimed by filing a return. Before the end of the reporting period the ATO will issue a GST filing statement two weeks in advance. The dates for filing and reporting will be mentioned on the statement. The supplier will have to fill the same and send it. Generally this is done on a quarterly basis. But paying GST amount at the discretion of the supplier’s convenience whether they want pay it quarterly, monthly or annually. Smaller businesses with turnover less than 2 million can opt to pay in instalments as well. Any errors while reporting the same has to be corrected as soon as possible.
If the supplier intends to close his business or wants to sell the same then the GST registration has to be cancelled. The ABN will also be cancelled. This has to be done within 21 days of selling or closing the said business. In case if the supplier is altering the structure of the business such as an instance of partnership then in such circumstances also the GST will have to be cancelled. Cancellation of GST is an extremely simple process. All it requires is filling up of a form and sending it to ATO. It can be done via phone as well. Before cancellation all the returns must be filed and if there are any kind of dues the same has to be cleared. The last statement must also include the account of the supplier’s assets sale and also account of the sale of business. Only once this process is completed the supplier’s GST registration will be cancelled.
ATO has an amazing taxation support centre. It helps a supplier to gather all the information that is required about tax for smooth running of a business venture. There is also a separate section dedicated to small businesses. This section provides an insight on every detailing that is needed depending on the type of business the supplier operates. Based on the type of questions they have different helpline numbers where the supplier can talk directly with a representative and have their doubts clarified. Contact your accountant for assistance with your Tax Return Melbourne.