GST For Small Business

Simpler BAS - 9 November 2017

GST For Small Business

From 1 July 2017, small businesses now have less GST information to report on their business activity statement (BAS).

This will be the default GST reporting method for small businesses with a GST turnover of less than $10 million.

The ATO has automatically transitioned eligible small business’ GST reporting methods to Simpler BAS from 1 July 2017.

GST On Low Value Imported Goods – Summary Of Reforms

The Government has passed the Treasury Laws Amendment (GST Low Value Goods) Act 2017 which will extend GST to low value imports of physical goods imported by consumers from 1 July 2018.

Businesses that meet the A$75,000 registration threshold will need to take action now to review their business systems to ensure that they are able to comply.

The existing processes to collect GST on imports above $1,000 at the border are unchanged.

In summary, the reforms:

  • make supplies of goods valued at A$1,000 or less at the time of supply connected with Australia if the goods are purchased by consumers and are brought into Australia with the assistance of the supplier;
  • treat the operator of an electronic distribution platform (EDP) as the supplier of low value goods if the goods are purchased through the platform by consumers and brought into Australia with the assistance of either the supplier or the operator;
  • treat re-deliverers as the suppliers of low value goods if the goods are delivered outside of Australia as part of the supply, and the re-deliverer assists with their delivery into Australia as part of a shopping or mailbox service that it provides under an arrangement with the consumer;
  • allow non-resident suppliers of low value goods that are connected with Australia to elect to access the simplified registration and reporting system; and
    prevent double taxation.

Buy Services Or Digital Products From Overseas?

From 1 July 2017, GST will apply to imported services and digital products.

Australian GST-registered business can avoid GST on these purchases from a non-resident supplier if they provide their ABN to the non-resident supplier and state that they are registered for GST.

If overseas suppliers sell imported services or digital products to Australian consumers and they meet the GST registration turnover threshold, they need to register for GST. They will meet the registration turnover threshold if their taxable sales to Australian consumers in a 12-month period are A$75,000 or more. Once registered, they will need to report and pay GST on sales to the ATO.

Simplified Accounting Methods Determination For Food Retailers

The Goods and Services Tax: Simplified Accounting Methods Determination for Food Retailers – Business Norms, Stock Purchases and Snapshot Methods determination will repeal and replace Simplified GST Accounting Methods Legislative Instrument (No 1) 2007 – F2007L02577, registered on 14 August 2007.

This draft determination is substantially the same as the previous determination that it replaces. If you were eligible to use a particular simplified accounting method (SAM) specified in the previous determination, you will continue to be eligible to use that SAM under this determination.

GST Input Tax Credits Disallowed – Tax Invoices Not Enough

In a recent case, a property development company was not entitled to claim back GST in relation to bulk earthwork services supplied to it by another land development company. The evidence showed that:

  • tax invoices did not demonstrate any actual supplies made to the taxpayer;
  • evidence from various sources, including third parties, showed that all relevant development works were completed prior to the dates of the invoices;
  • the taxpayer had already claimed the input tax credits in its BASs for previous tax periods.

The Administrative Appeals Tribunal noted that the taxpayer had to prove, on the balance of probabilities, that the assessment was excessive and what the correct assessment ought to be. In this case, the taxpayer failed to do either of these things.

The mere existence of a “tax invoice” is not, by itself, sufficient to establish that a “taxable supply” and corresponding “creditable acquisition” (i.e. entitlement to claim an input tax credit for the GST) has in fact occurred.

GST – Removing The Double Taxation Of Digital Currency

On 9 May 2017, the Government announced that from 1 July 2017 it will align the GST treatment of digital currency (such as Bitcoin) with money.

Digital currency is currently treated as intangible property for GST purposes. Consequently, consumers who use digital currencies as payment can effectively bear GST twice: once on the purchase of the digital currency and again on its use in exchange for other goods and services subject to GST.

This measure will ensure purchases of digital currency are no longer subject to the GST.

No changes to the income tax treatment of digital currency are proposed.

There are a number of changes to GST which may have an impact on your business. Contact us to discuss if any of these changes affect you or your business.

9 November 2017

For expert advice and assistance in dealing with your Business Goods and Services Tax in Australia, please contact Mathews Tax Lawyers in Brisbane on 07 3188 5627 or Sydney and Melbourne on 1800 685 829

Disclaimer: The information on this page is for general information purposes only and is not specific to any particular person or situation. There are many factors that may affect your particular circumstances. We advise that you contact Mathews Tax Lawyers before making any decisions.

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