ABOUT THIS BOOKLET - Complete Performance Solutions · HOW TO USE THIS BOOKLET 4 GST Management for Sport Guide to GST Produced by the Australian Taxation Office in November 1999

HOW TO USE THIS BOOKLET

ii GST Management for Sport

ABOUT THIS BOOKLET

Welcome to GST Management for Sport.

This booklet has been developed for the AustralianSports Commission with financial assistance from theGST Start-Up Assistance Office.

The purpose of the booklet is to help treasurers andadministrators of sporting organisations to comply withtheir obligations under Australia’s new GST system.

In addition to outlining how your various transactionswill be treated for GST purposes, the booklet will alsohelp you maintain appropriate accounting records andmanage your GST affairs.

Important information concerning this material - please read

This material is provided under the Commonwealth’s GST Start-Up Assistance Program and is designed to provide generalinformation on the GST and the business skills, practices and processes necessary to operate with the GST. Becauseorganisational circumstances can vary greatly, the material is not designed to provide specific GST or business advice forparticular circumstances. Also, because aspects of the GST are complex and detailed, the material is not designed tocomprehensively cover all aspects of the GST. Further, the laws implementing GST, and rulings and decisions under thoselaws, may change.

Before you rely on this material for any important matter for your organisation, you should:

• make your own enquiries about whether the material is relevant and still current, and whether it deals accurately andcompletely with that particular matter, and

• as appropriate, seek your own professional advice relevant to that particular matter.

This material is provided on the understanding that neither the Commonwealth or its personnel, the Australian SportsCommission or its personnel, Ernst & Young or its personnel, nor any other organisation or person involved in developing ordelivering the GST Start-Up Assistance Program, is thereby engaged in providing professional advice for a particular purpose.

These limitations and warnings also apply to information based on this material presented at any seminars or workshopsprovided as part of the GST Start-Up Assistance Program.

The information in this booklet is current as at 1 March 2000.

© Commonwealth of Australia 2000

ISBN 1 74013 021 9


GST Management for Sport iii

CONTENTSHOW TO USE THIS BOOKLET

1. How this booklet is organised............................................................... 12. Other resources ..................................................................................... 23. Useful information sources................................................................... 6

PART 1 - How to understand the basics of GST

1. What is GST?........................................................................................ 72. How does GST work?........................................................................... 83. What are supplies? ................................................................................ 84. What is an input tax credit? ................................................................ 125. Who will monitor prices? ................................................................... 166. How to decide whether to register ...................................................... 16

PART 2 - How to set up your accounting records

1. Why do you need to keep records?..................................................... 232. What basic accounting records should you be

keeping and what new records will you need? ................................... 243. Manual accounting systems – the cash book...................................... 244. Computerised accounting systems...................................................... 255. What other records should you keep?................................................. 276. Cash and accrual accounting .............................................................. 287. Tax invoices........................................................................................ 29

PART 3 - How to classify transactions for GST purposes

1. Types of supplies for GST purposes................................................... 342. Transaction matrix .............................................................................. 353. Further information on particular supplies ......................................... 364. What are adjustments? ........................................................................ 51

PART 4 - How to complete your Business ActivityStatement

1. What is a Business Activity Statement? ............................................. 572. What does a BAS look like? ............................................................... 583. When do I lodge my BAS? ................................................................. 604. How do I complete my BAS? ............................................................. 615. How do I lodge my BAS?................................................................... 666. Other information ............................................................................... 66

PART 5 - How to improve your business practices

1. How to plan your cash flow................................................................ 672. How to price your goods and services for GST.................................. 743. What are the transitional issues?......................................................... 744. How to deal with the Tax Office ........................................................ 75

APPENDICES

1. Cash Payments Journal2. Cash Receipts Journal3. Transaction Matrix4. Glossary


GST Management for Sport 1

HOW TO

1 How this booklet is organisedThis booklet has been structured in five parts as follows:

! Part 1: How to understand the basics of GST

! Part 2: How to set up your accounting records

! Part 3: How to classify transactions for GST purposes

! Part 4: How to complete your Business Activity Statement

! Part 5: How to improve your business practices

At the end of the booklet are three Appendices:

! Appendix 1: A sample cash payments journal! Appendix 2: A sample cash receipts journal! Appendix 3: A transaction matrix analysis of sales and purchases

to help you determine the GST treatment of frequent transactions

Each part of the booklet is self-contained and flows logically onto the nextpart. In this way, the booklet will lead you through the necessary steps tocomply with the GST system and manage your accounting records.

An outline of the parts of the booklet is shown on pages 2–3.

2 Other resourcesOther resources available to help you include:

! The GST & Business Skills: An Action Guide

! Guide to GST

! Sport, Recreation and Gaming & The New Tax System

! Guide to Registering for The New Tax System

! Draft Business Activity Statement Instructions

! Pay As You GO (PAYG): An Introduction for Individuals withInvestment Income

! How to Keep Your Business Records

See pages 4–6 for further details.


2 GST Management for Sport

3 OutlineThis outline will help you to find your way around this booklet.

How to understandthe basics of GST

The GST system

Deciding whether toregister

OUTCOME: At theconclusion of this Partyou should be able tomake a decision onwhether to register.

If you are still unsurewhether to register, youcan read on to helpclarify your decision.

How to set up youraccounting records

Records required

Manual andcomputerised

accounts

OUTCOME: At theconclusion of this Partyou should understand:

• Accounting requirements• Records needed• Tax invoices

How to classifytransactions forGST purposes

Types of transactionsand GST classifications

Adjustments

OUTCOME: At theconclusion of this Partyou should understand:

• GST treatment ofvarious transactions

• Action you need totake regarding thosetransactions

11PA R T

33PA R T

22PA R T



Appendices

1. Cash paymentjournal

2. Cash receipt journal

3. GST transactionmatrix

How to improveyour business

practices

Planning cash flow

Pricing goods andservices

The transitionalissues

Dealing with the ATO

OUTCOME: At theconclusion of this Partyou should understand thevarious business practicesthat will help you to bettermanage the GST.

How to completeyour Business

Activity Statement

What is a BAS?

How to complete aBAS

How and when tolodge it

OUTCOME: At theconclusion of this Partyou should understandhow your accountingrecords relate to theBAS, and BASlodgementrequirements.

PART PART

4. Glossary



Guide to GSTProduced by the AustralianTaxation Office in November 1999.

The guide is intended for smallbusiness and non-profitorganisations who want to findout how the GST system worksand what is required to be part ofthe system.

Sport, Recreation andGaming & The New TaxSystemProduced by the AustralianTaxation Office in November 1999.

This publication is written formembers of the sport, recreationand gaming industry and dealswith GST issues specific to thatsector.

The GST & Business Skills:An Action GuideProduced by the GST Start-UpOffice and KPMG.

This publication is written forsmall to medium enterprises aswell as those in the communityand education sector to providegeneral information on GST andbusiness skills.



Guide to Registering for TheNew Tax SystemProduced by the AustralianTaxation Office.

This guide provides informationabout the new AustralianBusiness Number, as well ashow to register for an ABN andfor GST.

Draft Business ActivityStatement InstructionsProduced by the AustralianTaxation Office.

This booklet contains draftinstructions for filling in theBusiness Activity Statement andreporting arrangements forbusiness under the New TaxSystem.

Pay As You Go (PAYG): AnIntroduction for Individualswith Investment IncomeProduced by the AustralianTaxation Office in January 2000.

This guide is written forbusiness taxpayers, includingnon-profit organisations. Itgives a basic introduction to thenew Pay As You Go (PAYG)system.



4 Useful information sources! GST Start-Up Office Assistance

www.gststartup.gov.au

Infoline: 13 30 88

! Australian Taxation Office

www.taxreform.ato.gov.au

Tax Reform Infoline: 13 24 78

Fax from tax, telephone 13 28 60

! Australian Sports Commission

www.ausport.gov.au/gst

! Confederation of Australian Sportwww.sportforall.com.au

! Australian Competition and Consumer Commission

www.accc.gov.au

How to Keep Your BusinessRecordsProduced by the AustralianTaxation Office in November1999.

This booklet sets out somegood record-keeping practicesfor small business and non-profit organisations.

PART 1: GETTING STARTED


HOW TO

Purpose: To provide an overview of what GST is and how it operates. Thedifferent types of GST supplies are also discussed.

!"#$%#$&1. What is GST?2. How does GST work?3. What are supplies?4. What is an input tax credit?5. Who will monitor prices?6. How to decide whether to register

1 What is GST?Overview ofGST

The goods and services tax (GST) is a broad based consumption taxwhich is charged at a rate of 10% on the value of the supply of mostgoods and services consumed in Australia. The GST is effective from 1July 2000 and will, over time, replace many existing Commonwealth andState/Territory indirect taxes (often referred to as “embedded taxes”).Wholesale sales tax (WST), stamp duty on securities transactions,financial institution duty (FID) and Bank Account Debits tax (BAD) arejust some examples.

If you are registered or are required to be registered for GST, you willhave to include GST in the price of taxable supplies you make, egmemberships, venue hire. However, you will generally be entitled toclaim tax credits for any GST included in the price of goods and servicesor anything else acquired for use in carrying on your enterprise. Thiscredit is known as an input tax credit. It is the consumer who willultimately bear the cost of GST.

Most goods and services and anything else consumed in Australia aresubject to GST. These are defined as taxable supplies. There are alsotwo other types of supplies. These are called GST-free supplies and inputtaxed supplies. The operation of these GST supplies is discussed below.



2 How does GST work?Multi-stage tax

GST is a multi-stage tax collected at each step along the chain of the supplyof goods and services. The supplier is responsible for collecting the GSTincluded in the price of goods and services they supply and remitting it tothe Australian Taxation Office (ATO). However, registered entities canclaim input tax credits from the ATO for GST included in the price paid forgoods and services for the enterprise. It is this credit mechanism whicheliminates cascading (tax on tax) as well as allowing the cost of GST to beborne by the end-user.

Liability onsupplier

It is important to note that the liability to remit GST to the ATO rests on thesupplier of goods and services and not the customer. For example, if yousupply sporting facilities to a community group, you are responsible forremitting the GST payable on the hire of the facility to the ATO, not thehirer.

If the GST payable on your supplies (output tax) exceeds the GST includedin the price you paid for your acquisitions (input tax), the difference is whatyou owe to the ATO. Conversely, where your input tax exceeds output tax,you will be entitled to a refund.

GST is imposed on taxable supplies and taxable importations.Organisations may also have transactions which are not subject to GST.There are three categories of such transactions:

❐ GST-free supplies❐ input taxed supplies❐ supplies out of scope of the GST

3 What are supplies?3.1 What are taxable supplies?A supply will be a taxable supply and subject to GST if it is made by aperson who is registered (or is required to be registered) and the supply is:

! made for some form of consideration! made in the course or furtherance of an enterprise, and is

! connected with Australia.

Some of the most common taxable supplies made by a sportingorganisation are:

! memberships

! entrance fees

! facilities/venue hire

! advertising space

The following diagram illustrates the basic operation of GST on anindividual taxable supply and demonstrates how registered entities will beable to recover any GST included in the price paid for goods and servicesused in the enterprise.



Taxable supplydiagram

Taxable Supply

Bicyclemanufacturer

ValuePlus Tax $100Price

Supply

Sportsgoods

wholesaler

$1100

$100

Supply

Value$150

Price

Sportsshop

$1650

$50

Value$200

Price

Supply

Consumer

$2200

$50

Australian Taxation Office= $200+ +

S1 S2 S3$150-$100 $200-$150

$1000

$1100

$1500

$1650

$2000

$2200Plus Tax Plus Tax

Taxable supplyexample

S1 - The supply of a bicycle by the bicycle manufacturer to the sportsgoods wholesaler is a taxable supply. The selling price of the bicycleis $1100 which includes $100 GST. The bicycle manufacturer remits$100 to the Tax Office.

S2 - The sports goods wholesaler sells the bicycle to a sports shop for$1650 which includes $150 GST. The wholesaler remits $150 (GSTamount) minus $100 (the amount of GST included in their purchase ofthe bicycle) which is $50 to the Tax Office.

S3 - The sports shop sells the bicycle to a consumer for $2200 including$200 GST. The sports shop remits $200 (GST amount) minus $150(the tax credit for the amount of GST in their purchase of the bicycle)which is $50 to the Tax Office.

As illustrated, the total payment to the ATO over the supply chain is $200,which is equal to the GST included in the price paid by the consumer at thelast point in the chain. There is no duplication of the amount on which thetax is to be charged because each supplier is entitled to a tax credit for theGST paid on the things acquired to make the sale.

3.2 How to work out GST on taxable suppliesThe amount of GST is always included in the price of a taxable supply eventhough it may not be separately shown.

To work out how much GST to include in the price of a taxable supply youare making, you divide the value of the supply by 10.

To work out how much GST is included in the price of an acquisitionwhich you have made, you divide the price by 11.



ExampleBen’s Tennis Warehouse supplies 30 tennis rackets to your tennis club. The totalvalue of the tennis rackets amounts to $3000. Ben works out how much GST ispayable by dividing the value of the supply by 10 ($3000/10 = $300). Ben chargesyou $3300, that is, $3000 for the rackets plus $300 GST.

If you want to calculate the amount of GST included in the price you paid for thetennis rackets, you divide the price of your purchase by 11. The amount of GST is$300 ($3300/11).

3.3 What are GST-free supplies?Certain types of supplies are GST-free. This means that GST does not haveto be charged on these supplies but the supplier is entitled to input taxcredits on purchases he makes in the course of his business. Supplies whichwill be GST-free include:

Categories ofGST-freesupplies

❐ basic food❐ water and sewerage❐ exports❐ education❐ child care❐ health❐ non-commercial activities of charitable institutions

The following diagram illustrates the basic operation of GST on GST-freesupplies:

GST-freesupply diagram

Computermanufacturer

Value $200Plus Tax$20Price $220

Supply

Computerwholesaler

$220

$20

Supply


Food store

$550$50 - $20

$30

Value $100Plus Tax $0Price $100

Supply

Sportingclubkiosk

$100$0 - $50

$(50)

Australian Taxation OfficeAustralian Taxation Office

GST- Free SupplyGST- Free Supply

= $0+ +S1 S2 S3

GST-freesupplyexample

S1 - The sale of a computer by the computer manufacturer to a wholesaleris a taxable supply. The selling price of the computer is $220 whichincludes $20 GST. The manufacturer is liable to remit $20 GST to theATO.

S2 - The computer wholesaler supplies the computer to the fresh food shopfor $550 including $50 GST. This is also a taxable supply. The



computer wholesaler needs to remit $30 to the ATO being thedifference between GST collected ($50) and his input tax creditentitlement ($20).

S3 - A supply of fresh fruit by the food store to the sporting club kiosk is aGST-free supply. The store does not charge GST on the value of thesupply of fresh food, therefore, the price charged to the club is $100.The fresh food store has collected no GST but is entitled to claim aninput tax credit $50 for the GST included in the price of the computer.As a result, the fresh food store will receive a refund of $50 from theATO.

The ATO has collected a total of $50 but it also has to give the fresh foodretailer a $50 refund. Therefore, the incidence of GST on the supply offresh food is removed.

3.4 What are input taxed supplies?Input taxed supplies are those supplies with no GST levied on their sale,but unlike GST-free supplies, the supplier has no entitlement to claim inputtax credits for the GST they have paid on their purchases. As aconsequence, businesses that make input taxed supplies may face increasedcosts with a GST. Supplies that will be input taxed include:

Categories ofinput taxedsupplies

❐ financial supplies, including a charge or mortgage over real orpersonal property, an annuity, a guarantee, credit under a hirepurchase agreement, Australian currency or foreign currency,securities and derivatives

❐ residential rents

❐ certain residential premises.

The following diagram illustrates the basic operation of GST on input taxedsupplies:

Input taxedsupply diagram

Input Taxed SupplyInput Taxed Supply

Australian Taxation OfficeAustralian Taxation Office

Value $106Plus Tax $0Price $106

Supply

Sportingclub

$106

Supply


$66$6

$6

$0

$0 = $6+S1 S2

Hardwareshop Landlord



Input taxedsupplyexample

S1 - A hardware shop supplies a set of tools to the landlord for maintenancework to the property. This is a taxable supply so the shop must remit the $6GST component to the Tax Office.

S2 - The sporting club rents a property from the landlord for an interstatecoach. As the supply is residential rent it is input taxed. The landlordcharges no GST in the rent. However he cannot claim an input tax creditfor the $6 GST he has paid out.

3.5 What are taxable importations?Most imported goods will be subject to GST at the point of import. Ataxable importation occurs when you import goods that would haveattracted GST if bought in Australia. Unlike taxable supplies, you have topay GST on taxable importations irrespective of whether or not you areregistered for GST. However, if you are registered, you can claim input taxcredits for GST paid on the goods imported.

The GST amount on the taxable importation is calculated as 10% of thesum of:

! the “customs value” of the imported goods

! the costs of transporting the goods to Australia

! the costs of insurance, and

! the customs duty.

4 What is an input tax credit?An input tax credit is an amount allowed to offset GST included in theprice of an acquisition or an importation if it was acquired for use in anenterprise. It is important that you understand about input tax credits inorder to determine the amount of credits which you can claim against GSTpayable on the supplies you make, and therefore to work out whether youhave a net amount to pay to the Tax Office or if you are entitled to a refund.

Some common purchases for which you can claim input tax credits are:

! gym and sporting equipment

! facility hire

! accounting fees

! advertising

4.1 When can you claim input tax credits?GST law

Input tax credits are available for the GST included in the price paid for anacquisition if:

! the supply to you was a taxable supply! you are registered



! the purchase is made for the purpose of carrying on your business,and

! you have the applicable tax invoice for the supply. (Note taxinvoices are discussed in Part 2 of this booklet.)

Situations where input tax credits would not be claimable include:

! you have purchased something for private use, or

! your acquisition relates to a non-deductible expense.

Non-deductible expenseThe GST legislation specifically denies input tax credits for acquisitions orimportations where that expense is not deductible for income tax purposes.

Your sporting club will need to be aware of the non-deductible types ofexpenses you incur and of the exceptions which may apply. In addition,the limit on the input tax credit that can be claimed for a creditableacquisition of a car will also need to be noted.

Examples ofnon-deductibleexpenses

Expenses which are considered non-deductible expenses for GST purposes(ie those which do not give rise to an input tax credit) are:

" fines

" relative’s travel expenses

" expenses incurred for maintaining your family

" expenses for a leisure facility or boat

" entertainment expenses

" expenses in respect of non-compulsory uniforms

" agreements for the provision of non-deductible, non-cash businessbenefits

" car parking for certain self-employed persons, partnerships andtrusts.

Expenditure will not be a “non-deductible expense” if incurred in providinga fringe benefit for fringe benefits tax purposes.

4.2 How do you work out the amount of input taxcredit?

The amount of the input tax credit you can claim on an acquisition is theamount of GST included in the price you paid for the acquisition. If youhave acquired something exclusively for use in your organisation, you areentitled to claim the full GST amount you paid for your purchase.However, your entitlements to input tax credits will be reduced if:



Partly forcreditablepurpose

! you acquire something which you intend to be used only partly forthe purpose of your organisation.

If you acquire something partly for a creditable purpose, you willneed to apportion the input tax credit. This means that you divide theinput tax credit between the purpose that relates to your organisationand the purpose that does not relate to your organisation.

Example 1Susan buys a mobile phone and plans to use it for 60% in her sports shop and 40%for private purposes. The phone costs $165 including $15 GST.

Susan is entitled to claim input tax credit of 60% of the GST included in the price ofthe mobile phone, that is 60% of $15, which is $9.

Partconsideration

! you pay or are liable to pay only part of the consideration for theacquisition.

If you pay or are liable to pay only part of the consideration for anacquisition, you can only claim input tax credit that relates to theconsideration that you pay or are liable to pay.

Example 2Jeremy has a business providing referees for football games. He is often requestedto send referees interstate and therefore incurs airfare costs. Jeremy usually pays10% of the airfare and the rest is paid by the sporting club.

Jeremy is therefore entitled to only 10% of the input tax credit for the airfare whilethe sporting club may claim 90% of the credit.

4.3 Where your planned use changesChanges in use

In calculating your input tax credits on purchases which only partiallyrelate to carrying on your business, you need to work out the extent of thecreditable purpose at the time of acquisition. Where your actual use ofwhat you acquire is different from what you originally estimated, you mayneed to make an adjustment in your Business Activity Statement tocorrect the input tax credit you received. Discussions of adjustments wherethere is a change in creditable purpose can be found in Part 3 Section 4.2 ofthis booklet.



Example 3This example follows on from example 1. Susan had purchased a mobile phoneand intends to use the phone for 60% in her sports shop. She claims 60% of theGST included in the phone’s purchase price as an input tax credit for theacquisition.

After using the mobile phone for a year, Susan calculates that she actually uses thephone only 50% for her sports shop. The input tax credit that Susan should havereceived is 50%, not 60%. As a result, Susan will need to make an adjustment inher next Business Activity Statement to correct the amount of input tax credit shereceived.

4.4 Special GST creditIf you are holding any stock for resale on 1 July 2000, you may be entitledto claim a special GST credit equalling the amount of wholesale sales tax(WST) you paid on the stock.

ExampleFor example a tennis club may sell tennis balls to its members. The stock on handat 30 June 2000 will have an amount of wholesale sales tax in its purchase price.

This may be claimed by the club as a special credit so that after 1 July 2000 whenGST is added to the value of the tennis balls it is not added to the wholesale salestax as well.

The club could look at the invoice for the tennis balls to see if the WST amount islisted on it. If it is not they should talk to the Tax Office for guidance on calculationmethods.

This special credit will only be available in respect of WST-paid tradingstock on hand as at 1 July 2000 but does not apply to:

! stock held for the purposes of manufacture

! certain stocks of second-hand goods

! goods held for hire, business consumables and goods held for yourown use and not for sale or exchange

! beer, wine, spirits and other alcoholic beverages subject to WSTwhich will be subject to alternative transitional arrangements thattake account of excise on these products.

Claimingspecial GSTcredits

Since the special GST credit is to be claimed against your GST liability,you must be registered for GST at 1 July 2000. You can claim yourspecial GST credit in any one Business Activity Statement before 22January 2001.

Furtherinformation

You can obtain further information about special GST credits in the ATOGuide to GST, or call the Tax Reform Infoline on 13 24 78.



5 Who will monitor prices?With the removal of “embedded taxes” following the introduction of TheNew Tax System, prices charged by suppliers for goods and services arelikely to be affected. The effects will vary with some prices falling andsome prices rising. The government intends that consumers should benefitfully from reductions in indirect tax and has established a price oversightregime which prohibits price exploitation. The Australian Competition andConsumer Commission (ACCC) has special powers in relation to thisregime.

ACCCguidelines

The ACCC will closely monitor prices set by businesses and organisationsto ensure that prices are adjusted in accordance with the changes in the taxrate under The New Tax System. Price exploitation is prohibited so it isimportant that you pass on any available cost savings arising from taxreforms to your customers and not increase prices unreasonably.

It is important that you maintain appropriate records to demonstrate thatyou have complied with the new legislative provision and the ACCCguidelines regarding pricing. Contravention of these rules could result in afine of $10 million for corporations and $500 000 for individuals peroffence.

Further reading

! Guide to GST, Part 1 pages 3-6, Part 3 pages 15–30

! Sport, Recreation and Gaming, pages 8–13

! ACCC web site www.accc.gov.au

6 How to decide whether to register6.1 Rules

GST lawThe relevant rules about registering for GST purposes are as follows:

You must be registered if:

! you are carrying on an enterprise, and

! your annual turnover is $50 000 or more, or $100 000 or more fornon-profit bodies.

You can choose to register if:

! you are carrying on an enterprise, and

! your annual turnover is less than $50 000, or less than $100 000 fornon-profit organisations.

For GST purposes, sporting clubs will be “carrying on an enterprise”. Asmost clubs are non-profit organisations, only those with a turnover greaterthan $100 000 will be compelled to register for GST. Those clubs with aturnover of less than $100 000 can choose whether to register or not.



6.1.1 What being registered meansBenefits ofbeingregistered

Electing to register for GST purposes will have a number of fundamentalconsequences for your organisation, both in terms of the treatment of yoursales and purchases, and compliance obligations with the Tax Office.

Sales and purchase transactionsSales: If you are registered for GST, you will be required to include GSTin the price of the goods and services you sell.

If you are NOT registered for GST purposes, you will not be required toinclude GST in the price of the goods and services you sell.

Purchases: If you are registered for GST, you will be entitled to claiminput tax credits from the Tax Office for any GST that is included in theprice of the purchases you make for the purposes of carrying on yourbusiness.

If you are NOT registered for GST, you will not be able to claim input taxcredits for the GST included in the price of the purchases you make.

ExampleA cricket club purchases a new roller valued at $2200, including $200 GST. If theyare registered, the club can claim an input tax credit of $200. If they are notregistered, no input tax credit will be available and the club will bear the full cost of$2200.

Lodging yourBAS

GST complianceIf you are registered for GST, you will be required to lodge regular GSTreturns (known as Business Activity Statements) with the Tax Office. Youcan choose to lodge these either quarterly or monthly if your turnover isless than $20 million. If your turnover is greater than $20 million, or if youhave a financial period that does not end on 30 June, you will be required tolodge your Business Activity Statement (BAS) monthly. NOTE: theTreasurer has issued a press release (No. 84) to say that the GST law willbe amended to allow non-profit entities to choose either a quarterly ormonthly period, regardless of the date they end their accounts.

You will use the GST section of the Business Activity Statement to reportGST payable on your taxable supplies and claim GST included in the priceof your acquisitions. More information about completing a BAS iscontained in Parts 4 and 5 of this booklet.

Any GST payable (amount of GST collected less input tax credits) will belodged with the Tax Office at the same time as you lodge your BAS.

There will be cash flow implications regarding the BAS lodgement cycleyou choose. More information on this is contained in Part 5 of this booklet.



6.1.2 Annual turnoverAnnual turnover is a very important factor, as it determines whether youneed to:

! register for GST

! use quarterly or monthly tax periods

! lodge your return electronically or manually, and

! adopt the cash or accruals method of accounting.

How do I work out my annual turnover?To work out your annual turnover, you need to calculate the following:

! your current annual turnover, and

! your projected annual turnover.

Your annual turnover meets the registration threshold if:

! your current annual turnover is at or above the threshold ($100 000for non-profit organisations), or

! your projected annual turnover is at or above the threshold.

Current annual turnover: Your current annual turnover is the value of allsupplies (sales) you make or are likely to make during the current monthplus the value of supplies (sales) you made during the past 11 months, egmemberships/grants/interest earned/sponsorship.

Projected annual turnover: Your projected annual turnover is the value ofall supplies you made during the current month plus all the supplies you arelikely to make for the next 11 months.

Monitoringturnover

When calculating turnover, you do not need to include the following:

! any GST included in the price of supplies, ie only include the GSTexclusive amount

! input taxed supplies, eg a loan received

! supplies for no consideration, eg donations and gifts

! sale of business assets.

There are many sporting clubs which have an annual turnover which is justless than $100 000 per year, or whose turnover fluctuates around the$100 000 mark. If this is the case, you will have to monitor your annualturnover every month.

Projected annual turnover

Current annual turnover

Currentmonth

+ Next 11 months

Previous 11 months +



Administrationtip

TIP: Organisations with turnover close to registration thresholds will haveto continually monitor the last 12 months turnover and the projectedturnover for the next 12 months. If either of these figures is over $100 000,the club will be required to register.

Note: The Tax Office can register you if your turnover is over the threshold.Penalties will be incurred as well as the possibility that the Tax Office will

backdate the effective date of your registration For further information referto Part 5, Section 4 of this booklet.

ExampleA soccer club has an annual turnover which fluctuates around $90 000 to $110 000each year, depending upon the level of grants and sponsorships it receives. At theend of July 2000, when looking forward at the next 12 months, the annual turnoveris estimated at $105 000. Therefore the soccer club will have to register for GST atthe beginning of August.

6.2 Registration considerationsThere are many considerations which need to be looked at in decidingwhether to register or not. If you do decide to register, then keep in mindthat you must remain registered for at least 12 months.

Key issues to take into consideration in deciding whether to register or notinclude:

! increasing costs on purchases

! the main types of customers/contributors you deal with

! compliance costs of lodging regular Business Activity Statements

! fluctuating turnover around the turnover threshold.

Note: If you choose not to register before I July 2000 bear in mind that theoption is still available to register at a later date.

6.2.1 How will registration affect the cost of my purchases?If you register for GST purposes then you will be entitled to claim an inputtax credit from the Tax Office for the GST included in the price ofpurchases that you make. This will mean that the cost of these purchaseswill be less than if you were not registered. Ultimately, this may affecteither the profitability of your organisation and/or the price you have tocharge your customers in order to cover your costs.

This point is particularly important to those organisations who are makinglarge capital purchases. If your capital purchases make up a largepercentage of your expenses, then registration may be a good option foryou.

6.2.2 Why is my customer base important in my decision toregister?

If you make supplies to a large number of registered entities (who are ableto claim input tax credits on their purchases), you may find that they willprefer to deal with other registered entities. This is because supplies made



by registered entities include a GST component on which the purchaser canclaim an input tax credit. The price of supplies by a non-registered entity,while not including GST, may rise as their costs are higher on purchasesthan a registered entity which can claim the input tax credits.

Grants and sponsorshipsInput taxcredits forsponsors

Sponsorships and most grants will attract GST, ie if you are registered, youwill have a GST liability for 1/11th of the amount of the sponsorship orgrant received. The person providing you with the sponsorship/grant mayprefer to deal only with registered organisations (since they can claim aninput tax credit for the amount of GST on the sponsorship/grant). Youshould therefore talk to all organisations that provide yoursponsorship/grant funding to ensure that all parties understand how GSTwill impact upon their obligations.

6.2.3 Cash flowThere can be cash flow benefits from registering for the GST. If you canhold on to GST collected for a period before passing it onto the Tax Office,you can earn interest on the money for that period. For further informationon managing cash flow, refer to Part 5 of this booklet.

6.2.4 Compliance costs and registrationIf you choose to register for GST purposes, you will incur additionalinternal costs in undertaking the following:

! determining which of your supplies are taxable and including anamount for GST in the price

! issuing tax invoices to customers for supplies, and

! compiling and lodging quarterly or monthly Business ActivityStatements.

You will need to take these considerations into account when making yourdecision whether to register or not.

6.2.5 Why will a fluctuating turnover be a factor in my decisionto register?

As mentioned above, those organisations whose turnover is close to thethreshold and who decide not to register will have to constantly monitortheir turnover against the turnover tests outlined above. The need toconstantly monitor this will impose an additional duty and cost upon yourorganisation. In these cases, if you believe the monitoring task to beonerous, you may choose to register to avoid this ongoing task.

You need to be aware that if your turnover exceeds the threshold and theTax Office thinks it is reasonable that you should have been able toestimate your turnover, it can backdate your registration. Further, if itsuspects that you deliberately avoided registering you may face penalties.



Further reading

! Guide to GST, pages 12–14



6.3 Cancelling your registrationIf you are under the annual turnover threshold, and you have chosen toregister, you can cancel it should you decide that you no longer want toremain registered. However, you can only do this if you have beenregistered for at least 12 months.

Cancellingregistration

The Tax Office will have a form which you will complete to requestcancellation of your registration. You will then be notified in writing of thecancellation and the date the cancellation has taken effect.

6.4 ABN registrationIf you choose to register, or are required to register for GST, you willreceive an Australian Business Number (ABN). It is important to note thatyou can register for an ABN without the need to register for GST.

If you register for GST, then you will be required to display your ABN onall your tax invoices.

The reason you might want to register for an ABN, even if you don’t wantto register for GST purposes, is because of the new Pay As You Go(PAYG) System. One element of this system is that any payment made to aperson or entity who does not have an ABN, except for employees, willhave 48.5% of that payment withheld by the payer and remitted to the TaxOffice.

BusinessActivityStatement

If:

! you are registered with an ABN, and

! you are registered for GST purposes

then you will have to lodge a Business Activity Statement (BAS).InstalmentActivityStatement

If:

! you are registered with an ABN, and

! you are NOT registered for GST purposes

then you will have to lodge an Instalment Activity Statement (IAS).

Further reading

! Pay As You Go (PAYG)

! Guide to GST



6.5 Penalties for failing to registerThe Tax Office has penalties for those who do not register when theyshould. If the Tax Office thinks that you should register, it will register youand notify you in writing.

The Tax Office may also backdate your registration. If you apply forregistration and the Tax Office thinks you should have applied earlier,because you should have known that your turnover was going to go overthe threshold, your registration will be backdated. This means that all yoursupplies from that date (as fixed by the Tax Office) will be subject to GST,and you would be able to claim input tax credits on your purchases fromthat date.

6.6 How to registerTo register for the GST you will need to complete an application formwhich is available from the Tax Office. They also have a guide toregistering for The New Tax System which will help you to complete theapplication. You will find an application form in the guide, along withinstructions on how to complete the form. The same application form isused to register for an ABN.

Some of the questions on the form will require you to perform somecalculations and make decisions about how you plan to comply with theGST. These include:

! What is your estimated annual turnover?

! How will you account for GST? Cash or accruals?

! Do you provide goods and services to business? If yes, whatpercentage of your sales are to business?

The form will also ask you to nominate your bank account details. It isimportant that you complete this section of the form as any GST refund towhich you are entitled will be paid automatically by the Tax Office intoyour nominated account.

You can complete this form manually, via the Internet, or give it to your taxagent to lodge electronically for you.

Further reading


NOTE: For the remainder of this booklet the information provided assumesyou have chosen to register.

The implication of your decision to register will be discussed in detail. If you are still unsure whether registration is the best option for you, reading

on may help to clarify the decision.

PART 2: RECORD KEEPING FOR GST


HOW TO

Purpose: To outline the basic records you should set up to record theaccounting information required to fulfil your GST reporting requirements.

!"#$%#$&1. Why do you need to keep records?2. What basic accounting records should you be keeping now and what new

records will you need?3. Manual accounting systems - the cash book4. Computerised accounting systems5. What other records should you keep?6. Cash and accrual accounting7. Tax invoices

1 Why do you need to keep records?Taxcomplianceand goodbusinesspractice

Apart from the need to keep accounting records for the purposes ofaccounting to members, shareholders and/or other stakeholders regardingthe use of an organisation’s funds, all businesses must keep records fortaxation purposes under the new GST system. Fundamentally, good recordkeeping also allows an organisation to manage its affairs and make soundfinancial decisions.

Completing theBAS

In terms of complying with the reporting requirement of the GST, thesample accounting records outlined in the sections which follow show youhow to use the information they contain to complete the form that the TaxOffice will require you to lodge on a regular basis for GST purposes. Thisform is called the Business Activity Statement.



2 What basic accounting recordsshould you be keeping now andwhat new records will you need?

The following is a list of the records you should be keeping now:! cash book (or cash payments book plus cash receipts book)! bank statements! cheque books! deposit slips! cash register summaries (if applicable)! supplier receipts! your own issued invoices! credit card receipts and statements.

With the introduction of the GST you will need to keep a few more records,in particular:! tax invoices received! tax invoices issued! adjustment notes received! adjustment notes issued! cash book, or account entry for sales and expenses under $55 (GST

inclusive).

Also, you will need to amend your cash book to include some additionalcolumns to record GST information. This is outlined in the sections whichfollow.

3 Manual accounting systems - thecash book

Cash book -the keyaccountingrecord

In a manual accounting system, the cash book is the key accounting recordthat needs to be maintained. A cash book is a record of all your paymentsand receipts and is generally comprised of two parts:

! a section for payments (sometimes referred to as a cash paymentsjournal), and

! a section for receipts (sometimes referred to as a cash receiptsjournal).

Sometimes payments and receipts may be contained in two separatebooks, or they may be contained in the one book (a cash book).

Examples of a typical cash payments journal and a cash receipts journalare contained in Appendices 1 and 2.



In the sections which follow, we examine both the systems for recordingcash payments and cash receipts, and outline the modifications you willneed to make to cater for the information required for GST purposes.

3.1 Cash payments journalThe cash payments journal (or the payments section of a cash book) is usedto record all outgoings for acquisitions you make in running yourorganisation.

An example of a cash payments journal is given in Appendix 1 The shadedcolumns represent the new columns that will need to be added to record theinformation required for GST purposes.

Format of thecash paymentsjournal

Most cash payment journals have columns along the page for each differentcategory of expense. The cash book example in Appendix 1 shows you asample layout.

The introduction of the GST will mean examining all your expenses toclassify them as either acquisitions with GST included in the price, oracquisitions without GST. Using these columns will help when youcomplete your GST return (Business Activity Statement).

3.2 Cash receipts journalThe cash receipts journal (or the receipts section of a cash book) is used torecord all your income. It is often used to list and tally the differentcategories of income that your organisation receives. In most cases,organisations will choose to record each individual receipt separately in thecash receipts journal. Most payments received will be supported byreceipts issued by the organisation.

Format of thecash receiptsjournal

An example of a cash receipts journal is given in Appendix 2. The shadedcolumns represent the new columns that will need to be added to record theinformation that will be required for GST purposes. Using these columnswill help when you complete your GST return (Business ActivityStatement).

Further reading! How to Keep Your Business Records

4 Computerised accounting systemsIf you have a computerised accounting system, you will need to modify thedata captured by the system to ensure all the information required tocomplete and substantiate your Business Activity Statement is recorded.

New accountsTo adjust your accounting system to record the new information that isrequired, you will need to set up four new balance sheet accounts in yourchart of accounts.



These accounts can be called:! GST paid! GST collected! GST supply adjustment! GST acquisition adjustment.

Alternatively you can have one account called the GST clearing account,which will have both the GST paid and the GST collected. The GST paidis simply the total of all the debits in the account. The GST collected is thetotal of all credits in the account. How your accounting software reports,will determine whether you want one GST clearing account, or twoseparate accounts as outlined above.

Whenever you receive or issue an invoice or adjustment note, you canallocate the correct amounts to the GST accounts as you process thetransactions. Examples for a payment and receipt are outlined below.

The first example is when using cash.

Example 1You receive your electricity bill for $1100. This includes $100 GST. When enteringthis invoice into the accounting system it will be entered as follows:

Debit Electricity $1000

GST paid $100

Credit Cash at bank $1100

Example 2You sell a set of golf clubs for $3300. This includes $300 GST. When entering theinvoice into the accounting system it will be entered as follows:

Debit Cash at bank $3300

Credit Sales $3000

Credit GST collected $300

If you use a debtor or creditor system, your entries would be as follows:

Example 3You receive your electricity bill for $1100. This includes $100 GST. When enteringthis invoice into the accounting system it will be entered as follows:

Debit Electricity $1000

GST paid $100

Credit Creditors $1100

Then when you actually pay the bill, the entry is:

Debit Creditors $1100

Credit Cash at bank $1100



Example 4You sell a set of golf clubs for $3300. This includes $300 GST. When entering theinvoice into the accounting system it will be entered as follows

Debit Debtors $3300

Credit Sales $3000

Credit GST collected $300

When you actually receive the money, the entry is:

Debit Cash at bank $3300

Credit Debtors $3300

Some of your expenses may be paid out of petty cash. This would beexactly the same process. Whenever you enter your petty cash transactioninto the system, is when you will do the GST split according to the invoicesyou have.

5 What other records should youkeep?

5.1 Supporting recordsYou need to keep the following records to support the transactions enteredin your cash books:

❐ receipts for supplies you make, and/or tax invoices for taxablesupplies you make

❐ receipts/invoices for acquisitions and other expenses you incur andtax invoices for creditable acquisitions you make (other records foracquisitions may include cheque butts and petty cash vouchers).

These records need to be kept for a minimum of five years after they areprepared, obtained or the transaction completed.

Tax invoicesFrom 1 July 2000 you will need to have a tax invoice to claim an input taxcredit for a creditable acquisition. If you do not have a tax invoice, youwill not be able to claim the input tax credit. Tax invoices are not requiredif the GST-exclusive value of the supply is $50 or less. Certain informationmust be contained on tax invoices, this is explained in Section 7 of thisPart.

If you make taxable supplies, your registered customers will need taxinvoices to claim input tax credits for their acquisitions with a GST-exclusive value of more than $50. If you are asked to provide a tax invoice,you must do so within 28 days of being requested.



5.2 Filing your supporting documentsYou will require a good filing system to ensure that all your supportingrecords are accessible should you be called upon to substantiate a particularclaim.

At a minimum, you should consider maintaining the following files:

❐ a file for invoices/receipts for paid accounts

❐ a file of your invoices for monies received

❐ a file for petty cash vouchers and associated receipts.

6 Cash and accrual accountingThe GST legislation specifies two methods of accounting for the GST:

Cash basis

! Cash basis• Supplies: you account for GST (payable) on supplies

made in the tax period in which you actually receive thecash for the supplies.

• Acquisitions: you account for GST (credits) on

acquisitions in the tax period in which you actually makepayment for the supplies.

Accrual basis

! Accrual basis• Supplies: you account for GST (payable) on supplies made

in the tax period in which you receive any considerationfor the supplies OR you issue any invoice, whicheveroccurs first.

• Acquisitions: you account for GST (credits) onacquisitions in the tax period in which you make anypayment for the supplies OR you receive an invoice for thesupplies, whichever occurs first.

6.1 Cash basisYou can choose to account for GST on a cash basis if:! the annual turnover of your organisation is $1 million or less, or! you are accounting on a cash basis for income tax purposes.

Tax Officeapproval

If you do not fit into the above requirements for cash accounting, but youwish to account for GST on a cash basis, you can apply to the Tax Officefor approval to account on a cash basis. Conversely, if you do meet theabove requirements but do not wish to account for GST using the cashbasis, you can choose to use the accrual basis.

Where you are using a cash basis for accounting under GST, you accountfor GST payable when you receive payment for a taxable supply and claiminput tax credits when you actually pay for acquisitions.



If you only receive part of the consideration for a supply, you attribute onlythat part of the GST that relates to the amount of consideration received tothe tax period in which it is received.

On the other hand, if you have only made a part payment for an acquisitionand you hold a tax invoice for that amount, you can claim an input taxcredit to the extent that you have made payment in that tax period.

6.2 Accrual basisIf your club’s annual turnover is more than $1 million, you must accountfor GST on an accrual basis unless the Tax Office gives you approval toaccount on a cash basis.

Where accrual accounting is used by your club, you will need to accountfor GST payable on taxable supplies at the earlier of:

! the tax period in which you receive any of the consideration, or

! the tax period in which you have issued an invoice to your customer.Part payment

In other words, under the accruals system, you may have to account forGST before you actually receive full or any payment.

Where you have made an acquisition and you are accounting on an accrualbasis, you will be able to claim the total input tax credit for acquisitionsmade in:

! the tax period in which you provide any of the consideration, or

! the tax period in which the supplier issues an invoice requestingpayment.

This means that you can actually claim an input tax credit on an acquisitionbefore making payment.

7 Tax invoices7.1 What are tax invoices?An invoice is a document notifying an obligation to make a payment.Similarly, a tax invoice is a document that records the supply of goods orservices and that complies with the requirements specified in the GST law.

There is not much difference between a tax invoice and existing transactiondocuments. Most of the information required to be recorded on tax invoiceswill probably already appear on invoices and receipts used by businesses atpresent.

7.2 Why are tax invoices important?Generally, you must hold a tax invoice when you lodge your BusinessActivity Statement to be entitled to claim an input tax credit for a creditableacquisition. If you do not have the tax invoice, you cannot claim an inputtax credit until you receive it. However, you do not need a tax invoice if:



! the GST-exclusive value of the taxable supply is $50 or less

! you are claiming an input tax credit for a creditable importation, or

! the Commissioner has determined that a tax invoice is not required.

7.3 When do you issue tax invoices?The supplier of the goods and services is required to issue tax invoices eachtime they make a taxable supply.

If you are asked to provide a tax invoice to your customer, you have toissue the tax invoice within 28 days of the request. This is another reasonwhy you might choose to issue all your invoices in a form which satisfiesthe requirement of a tax invoice.

Under certain circumstances it is possible for the recipient of the supply tocreate a tax invoice for the supply (Recipient Created Tax Invoices). Ifyou find yourself in a situation where the recipient of your supply wants toraise the tax invoice it would be best to seek professional assistance toensure all the requirements are met. The ATO has published a draft rulingon Recipient Created Tax Invoices (GSTR 1999/D5).



7.4 What are the requirements of a tax invoice?A draft GST ruling published by the ATO specifies certain informationwhich must be shown on tax invoices. These requirements are outlinedbelow.

7.4.1 Supplies of less than $1000

Tax invoices for taxable suppliesof less than $1000 must include:

the Australian Business Number ofthe supplier

the GST-inclusive price of the taxablesupply

the words “tax invoice” statedprominently

the date of issue of the tax invoice

the name of the supplier

a brief description of each thingsupplied, and

when GST payable is exactly 1/11th

of the total price, either a statementalong the lines of “the total priceincludes GST”, or the GST amount

!"#$%&'(%)*

Joe’s Fitness CentreABN: 32 123 45 789

6 Montagu StNew Town NSW

Date: 1 August 2000

Description of supply Total

TOTAL PRICEINCLUDING GST

Membership fee $450

$450



7.4.2 Supplies of $1000 or more

1

+

,

-

.

/

Tax invoices for taxable suppliesof $1000 or more must include:

the Australian Business Number ofthe supplier

the GST-inclusive price of the taxablesupply

the words “ tax invoice” statedprominently

the date of issue of the tax invoice

the name of the supplier

the name of the recipient

the address or the AustralianBusiness Number of the recipient

supplied

the quantity of the goods or the extentof services supplied, and

0

1

2

3

Either(a) When the GST payable is exactly 1/11th

of the total price, a statement along thelines of “ the total price includes GST”(as for the previous example); or

(b) the GST amount (as in the examplebelow)

-4

a brief description of each thing

!"#$%&'(%)*

Joe’s Fitness Centre

ABN: 32 123 45 789

6 Montagu St

New TownNSWDate: 1 August 2000

.

0

+-


To:#Ms M. Jones 2 Newstead Road Bayview NSW

Qty

-

+

/

3

2 1

-4

,

2 Exercise Bikes

GST

$4000

$200 $400

$4400

Price

TOTAL AMOUNTPAYABLE

$2000



7.4.3 Taxable and non-taxable supplies

If the tax invoice is for a taxablesupply and either a GST-free orinput taxed supply, the tax invoicemust also show:

each taxable supply

the total amount payable for thesupply

the amount of GST payable (inrelation to the taxable supplies)

!"#$%&'(%)*

Joe’s Fitness Centre

ABN: 32 123 45 7896 Montagu St

New TownNSW

Date: 1 August 2000 +

-


To:#Ms. M. Jones 2 Newstead Road Bayview NSW

Qty

-

,

Price

TOTAL AMOUNT PAYABLETotal includes GST of

*indicates taxable supply.

2Exercise bikes*2Membership fees* $450

$200$900$400

$1350$130

10L bottle of water2 $25 $50

PART 3: GST TREATMENT OF TRANSACTIONS


HOW TO

Purpose: To explain the types of transactions made by sporting clubs andoutline the way they will be affected by the GST. An easy to read matrix oftransactions is provided to help you identify most transactions and the GSTconsequences associated with them. Adjustments to transactions thathave already occurred are also discussed.

!"#$%#$&1. Types of supplies for GST purposes2. Transaction matrix3. Further information on particular supplies4. What are adjustments?

1 Types of supplies for GST purposesAs discussed in Part 1, Section 3 for GST purposes, there are four differenttypes of transactions that can occur - each one with a different GSTtreatment. These are:

! taxable supplies - a supply (sale) where a registered supplier isrequired to include GST in the purchase price. The supplier isentitled to claim input tax credits for any GST paid on acquisitionsmade to run their business

! GST-free supplies - a supply that does not attract GST, andtherefore no GST is to be included in the purchase price. However, aregistered supplier may still claim input tax credits for any GST paidon the acquisitions made to run their business

! input taxed supplies - no GST is charged on the supply of thesegoods and services and no input tax credits can be claimed foracquisitions made in relation to making input taxed supplies, and

! supplies that are outside the scope of the GST legislation - theseare supplies that do not fall within the scope of the GST scheme andare therefore not subject to GST. Input tax credits can still beclaimed for acquisitions made for the purposes of making these typesof supplies.



In running your organisation, it will be important for you to classify eachtransaction (supply) that you make to determine which of the fourcategories it fits into. The category that it falls into will determine whetheryou charge GST on the supply, and whether you are entitled to an input taxcredit for the acquisitions you make for the purposes of making thosesupplies.

2 Transaction matrixThe transaction matrix at Appendix 3 outlines the major types oftransactions that your organisation may possibly enter into. A summary ofthese transactions, separated into revenue transactions (supplies) andexpense transactions (purchases), is set out below and at the beginning ofAppendix 3.

Matrix columnsThe matrix has the following columns:

❐ Transaction number - an identifying number for ease of referencefrom the summary table to the matrix

❐ Description - a brief description of the transaction

❐ GST treatment - the typical GST classification (ie type of supply)that applies to this transaction

❐ Effect - a brief summary of the GST consequences of thetransaction

❐ Strategies/Action - notes some important actions and/or strategiesthat an organisation will need to consider as a result of theclassification of the transaction

❐ Reference - notes whether there is further analysis of thetransaction in the sections which follow the matrix

Note: Care should be taken in using this matrix as it presents only generalinformation on the transactions and their GST treatment. If there are special

circumstances relating to any of your transactions, you should look closely athow those special circumstances affect the transaction or seek professional

advice regarding its GST treatment.

Further information on some of the more significant transactions, or incases where special rules may apply, is outlined in Section 3 below.



2.1 Summary table of transaction matrix

Supply (revenue) Acquisition (expenses)S1 Grants A1 WagesS2 Membership

fees/subscriptionsA2A3

Sporting equipmentElectricity

S3 Competition fees A4 FoodS4 Non-member facility usage

feesA5A6

InsuranceStaff & club uniforms

S5 Deposits A7 Cleaning, laundry, wasteS6 Fundraising - raffles A8 Lease paymentS7S8

DonationsSponsorships

A9 Motor vehicle running costs

S9 Restaurant sales A10 Prize moneyS10 Catering A11 Appearance moneyS11 Commissions - phones,

vending machinesA12A13

Rates and taxesRepairs and maintenance

S12 Housie / bingo A14 Facility hireS13 Pool tables A15 AdvertisingS14 Facility hire - grounds,

roomsA16 Printing, postage and

stationeryS15 Clothing / uniforms A17 TelephoneS16 Interest A18 SecurityS17 Advertising A19 Training

A20 Accounting and audit feesA21 Legal feesA22 SubscriptionsA23 Bank chargesA24 Interest expenseA25 Capital improvementsA26 ReimbursementsA27 CoachingA28 Officiating / umpires etc

3 Further information on particularsupplies

This section provides more information on some of the more significanttransactions outlined in the transaction matrix.

3.1 Grants3.1.1 “Grossing up” of grantsIn most circumstances, the payment of a grant to your sporting organisationwill represent consideration for a supply made by you. If you areregistered for GST purposes you will have a GST liability of 1/11th of theamount of the grant. The diagram on the next page outlines this.



Grant - Registered Sporting Club

ATO

Grant

provider

Sporting clubNet = $10K$11K

Pay GST $1KInput tax credit $1K

tax invoice

Grant recipientMost grants are taxable supplies because a recipient will, in most cases,make an undertaking or enter into an obligation to use the grant funds in acertain way. This agreement, undertaking or fulfilment of the obligationrepresents the supply made by the recipient of the grant.

For all the grants that you receive, you will have to determine if there areconditions attaching to payment of the grant and therefore whether theyrepresent a taxable supply. If there is no obligation under the terms of thegrant, and no other supply is made by your organisation in return for thegrant, then no GST will be payable.

Tax invoiceWhere a grant does constitute a taxable supply, you will need to give thegrant provider a tax invoice in relation to the grant.

Grossing upYou will need to talk to your grant providers to determine if they will“gross up” the amount of the grant to take into account the GST you haveto remit to the Tax Office. If the grant provider is registered for GST theymay be willing to do this as they will be entitled to an input tax credit forthe amount of GST that you “collect”. Therefore, after allowing for theinput tax credit, the grant provider will be in the same net position. This isillustrated in the diagram above.

Exampleexplained

The intention of the grant provider was to grant the sporting club $10 000.However, knowing that the sporting club would lose 1/11th of the grantmoney the grant provider “grossed up” the grant payment to include $1000GST. The grant provider is no worse off as they are entitled to claim aninput tax credit of $1000 when they receive a tax invoice from the sportingclub. Although the grant provider has paid out $11 000, with theentitlement to input tax credit netting out the GST included in the grant,both the grant provider and the sporting club are in the same net position.

3.1.2 No “Grossing up” of grantsCompare the above diagram with the one following where the grantprovider did not gross up the amount of grant payment.



Grant - No “grossing up”

ATO

Grant

provider

Sporting clubNet = $9091K$10

Pay GSTInput tax credit

tax invoice

As the sporting club is liable for GST of 1/11th of the grant payment, the netpayment received by the club is actually reduced to $9091 with $909 beingpaid to the Tax Office (ATO).

3.1.3 Unregistered clubsIf your sporting club is not registered for GST, you will not be required toremit GST on the amount of the grant received. Similarly, your grantprovider will not be entitled to claim an input tax credit. The followingdiagrams show the before and after GST effect of a grant payment providedto an unregistered sporting club.

Grant - Pre GST

Grant

provider

Sporting club

Net = $10K$10K

Grant - Post GSTUnregistered sporting club

ATO

Grant

provider

Sporting club

Net = $10K$10K

Note: It is possible that the grant provider (if a government agency) may seekto reduce your grant by an amount representing the likely cost saving thatyour organisation will enjoy under The New Tax System. You may wish to

seek professional advice on this.

3.1.4 Other issuesIf the grant money is supplied to your club on a progressive or periodicbasis, for example over a number of years, if you are registered you areliable to remit GST at the time of each grant payment.



ExampleA registered golf club receives a two year grant from a Golf Association for $22 000covering the period 1 July 2001 to 30 June 2003. The grant will be paid in twoequal payments of $11 000 on 1 July 2001 and 1 July 2002.

The golf club will be liable to remit to the Tax Office GST of $1000 on eachpayment. The Golf Association will be able to claim an input tax credit of $1000 foreach of the payments.

Claiming inputtax credits

If your organisation provides grants to others who are registered for GST,you will need to consider if these payments represent consideration for asupply made to you. If they do constitute a taxable supply, you will be ableto claim the GST component of the payment as an input tax credit. Youwill need to obtain a tax invoice from the recipient in order to claim thecredit.

3.2 MembershipsAs a general rule, membership joining fees and (annual) renewal fees aresubject to GST. This is because they are paid in return for a supply of thebenefits and rights of being a member of the club. If your sporting club is aregistered entity, you need to account for GST of 1/11th of the membershipfees received and remit this to the Tax Office.

The following example shows you how to work out the amount of GST tocharge on a membership fee if you want to collect the same net amount permembership fee after GST is introduced.

ExampleA netball club is registered for GST and currently charges its membership fees at$120 per player per season. Since membership fees are subject to GST, thenetball club needs to work out how much GST is payable by the players. It does soby dividing the value of the membership by 10 (ie $120/10 = $12).

The netball club therefore includes an additional $12 in its membership fees andcharges each player $132 (ie $120 membership + $12 GST).

A club often offers its members different types of membership such as lifemembership or term membership. GST treatment of memberships aredependent upon the type of membership sold and the date when themembership is created.

3.2.1 Term membershipsWhere your sporting club has sold a membership for a pre-determinedperiod (eg a one year membership), the membership will not be subject toGST if it was paid in full before 2 December 1998. However, if themembership was paid on or after 2 December 1998, you will be liable forGST on that part of the payment that relates to the period after 1 July 2000.

If the price of the membership has two components - joining fees(nomination fees) and annual fees, you may need to separately determine



the GST of each component and calculate the amount of GST to include inthe membership fee as a whole.

Joining feesLike annual fees, joining fees are subject to GST. A joining fee is a once-off payment which entitles you to be a member of a club, it is therefore nottreated as a periodic or progressive supply. No GST will be charged onjoining fees paid before 1 July 2000. However, your club will need toinclude GST in the joining fee if it is paid after 1 July 2000. Let’s take alook at the following example.

Example 1A gym club provides yearly memberships for the period between January andDecember. The membership fees are split into two components:

Joining fees $200 and

Annual fee $400

Jack joined the gym in January 2000 and paid $620 in total for his yearlymembership. The following shows the composition of his membership fees:

*Joining fees: $200. No GST is included here because the joining fee is a once-offpayment and the amount is paid before 1 July 2000.

*Annual fees: $420 ($200+$220). Because annual fees will be paid periodically(every year), the club needs to charge GST for portions after 1 July 2000. Sincethe membership is effective between January and December, GST is charged athalf the value of $400. The amount of GST included in Jack’s membership istherefore $20 ($200/10).

Example 2Following from the above example, if Vicki joined the same gym in January 2001,she would have to pay:

Joining fees ($200+$20 GST) $220

Annual fees ($400+$40 GST) $440

Total $660

3.2.2 Life membershipsIf your sporting club issues life memberships, you have effectively enteredinto a contract whereby you are granting your member a right to enjoy clubbenefits for the reminder of his or her life. In this case, three possible GSTtreatments can arise:! where the membership was both created and completely paid for

prior to 2 December 1998, the supply of membership will be GST-free

! where the membership was created before 2 December 1998 and fullpayment was not made before 2 December 1998, the member willbe given until 1 July 2005 to pay for the supply. Any considerationpaid prior to 1 July 2005 will be taken to be for the component ofthe supply which is GST-free. Any consideration paid after 1 July2005 will be subject to GST, or

! where the life membership was created on or after 2 December1998, the full membership fee is subject to GST. This would



include any supplies made from the date of the agreement to 1 July2000.

Free lifememberships

If your club gives away free life memberships to your members, themembership will not be subject to GST because no consideration is givenin return for the supply of membership rights. Your club will not incur aGST liability for the supply of free memberships.

3.2.3 Other membership services - free servicesIf your sporting club provides free services to your members such as theprovision of free bus services between venues for club activities, theservice will not be subject to GST because no consideration is received inreturn. Your sporting club will, therefore, not have a GST liability forproviding free services.

While no GST is payable, your club will be entitled to claim input taxcredits for any GST included in the price of buying, leasing or hiring thebus, or any GST included in the price paid for running the free services (egpetrol). The reason for your entitlement to input tax credit is because thefree service is provided as a part of your business activities.

3.3 Competition fees and prize moneyCompetition fees are a taxable supply as the money received isconsideration for the right to participate in a sporting event. Therefore,your club will be liable to remit 1/11th of competition fees received to theTax Office.

Cash prizesIf cash prizes are awarded to the winner of a competition who is registeredfor GST purposes, the winner is liable for GST of 1/11th of the prize money.

Non-cashprizes

Similarly, if non-cash prizes are awarded to the winner of a competitionwho is a registered sportsperson, the winner is liable for GST of 1/11th ofthe market value of the prize given.

The only circumstances where the prizes awarded will not be subject toGST (and therefore the winner will have no GST liability) is if the personreceiving the prize is not registered for GST. This is the most likelysituation facing a sports club.

ExampleLee-ann is a professional squash player and she paid a $165 entry fee (including$15 GST) to the All State Squash Association, which is registered for GST, for entryinto a national squash competition. Lee-ann, as a sole trader, is registered for GSTpurposes.

Lee-ann came first in her age group and she won $5500 in prize money.

All State needs to account for GST in the following manner:

GST payable (on entry fee): $15 ($165 x 1/11)

Input tax credit (on prize money): $500 ($5500 x 1/11).



3.4 Non-member facility usage feeWhere a sporting club has facilities that may be used by non-members, theGST treatment is the same as it would be when used by members. It isimportant to remember that GST is determined on the supply of the goodsor services itself and is not dependent on the identity of the recipient of thesupply.

Non-membercharges

A supply of club facilities for a fee is a taxable supply. Therefore, if yoursporting club charges both members and non-members for the use of yourfacilities, you will need to include GST in the fee for supplies made on orafter 1 July 2000.

ExampleA tennis club currently charges its members $4 per hour for using its tennis courts.Non club members can also use the courts by paying a fee of $6 an hour.

The tennis club works out how much GST to charge for the court fees by dividingthe value of the fee by 10. The new GST-inclusive price for court hire from 1 July2000 will be $4.40 for members and $6.60 for non-members.

3.5 DepositsIt is important that your sporting club distinguishes between the two typesof deposits:

! normal deposits which form part of the payment for a taxable supply,and

! security deposits which are usually refunded when the obligations towhich the deposit relates are fulfilled.

Part paymentdeposits

Normal deposits are subject to GST if they are paid as part of a supplywhich will be made on or after 1 July 2000. Therefore, your sporting clubwill need to include GST on the amount of the deposit.

Securitydeposits

Where your sporting club receives security deposits, for example, for thehire of lockers, you cannot charge GST on the security deposit because it isnot treated as consideration for a supply under the GST legislation.

The only circumstances where you need to charge GST on security depositsis if the deposit is forfeited or it is later incorporated in the considerationfor a taxable supply. The GST is attributed to the tax period in which thedeposit is forfeited or is applied towards the consideration.



ExampleJim pays $11 for hiring a buggy at a golf club. GST of $1 is included in the hire feebecause this is a taxable supply. The club also requires a security deposit of $55 tobe paid for each buggy hire. The deposit will be returned when the buggy isreturned to the club.

Jim returns the buggy at the end of his game and his security deposit of $55 isreturned to him.

Paul also hired a buggy from the same club but he fails to return the buggy to theclub and forfeits the $55 deposit. The club therefore needs to account for GST of1/11th of the security deposit ($5) for the tax period in which Paul fails to return thebuggy.

3.6 FundraisingBroadly speaking, there are two main types of fundraising activity that anorganisation may engage in:❒ those that have a gambling character, such as a raffle or bingo, and❒ those that don’t have a gambling character, such as a fete or jumble

sale.

Fundraising via gambling type activitiesA gambling fundraising event is one in which people are paying money fora chance to win something, like a raffle or bingo. In this case the differencebetween the total amount of cash raised and the total cash prizes paid out isthe amount that is subject to GST.

Example 1A registered soccer club runs a fundraising raffle to enable its soccer team to enteran interstate competition. The club raffles a cash-only prize of $440 and hascollected a total of $990 from the sale of raffle tickets. A margin of $550 thereforeresulted ($990-$440). The amount of GST payable is 1/11th of $550 which is $50.As there are no input tax credits on cash prizes, the club must pay $50 GST to theTax Office. The soccer club therefore made a profit of $500.

Non-cashprizes

Where your club gives away non-monetary prizes to the winner of afundraising activity, your club is entitled to claim input tax credits for GSTincluded in the acquisition of the non-cash prizes.

Example 2If the same soccer club raffles a television which cost $440 (ie GST paid at $40)and collected a total of $990 from the ticket sale, the margin for running thefundraising is $990 as there are no cash prizes being paid out. GST payable on themargin is 1/11th of $990 which is $90. The soccer club is entitled to claim $40 inputtax credit for GST included in the price of the television.

The net amount of GST payable by the soccer club is $50, being the amount ofGST on the margin less the input tax credit entitlement ($90-$40). The soccer clubtherefore makes a total profit of $500.

As shown through the above examples, the effect of GST on fundraisingactivity is the same regardless of whether cash or non-cash prizes are paidout.



Further reading❐ Sport, Recreation and Gaming, pages 28–29

Fundraising via non-gambling type activitiesA non-gambling fundraising event is where people purchase something,such as cakes at a cake stall, or goods at a trash and treasure market. Inmost cases, GST will apply to the sale of goods at these fundraising events.For example, you will need to include GST in the price of goods sold at acake stall.

Note: Special rules will apply to fundraising events conducted bycharities where goods are sold at a certain amount which is less than

market value or less than cost. Special rules also apply to sales ofdonated secondhand goods by charities. Please seek further

advice on these issues if you think they apply to you.

3.7 DonationsDonations of money to a non-profit body will have no GST consequencewhere the donation is by way of gift. A gift is where there is no return ofany benefits or rights received by the donor.

Unconditionaldonations

If your sporting club receives an unconditional donation in the form of apayment in cash or in kind, the donation is not subject to GST. This isbecause no benefits or rights flow as a result of the payment and yoursporting club does not have to use the donation for a particular purpose.

Conditionaldonations

Where conditions or obligations are attached to donations, for example ifyou are required to use the money to promote a certain sporting activity, thepayment becomes a sponsorship or a conditional donation and it will besubject to GST. Your sporting organisation, if registered, would be liableto remit 1/11th of the amount of the donation to the Tax Office. If the donoris registered, he or she will be entitled to an input tax credit in respect of thedonation and you will need to issue a tax invoice to your donor.

ExampleStephen’s football club is given a donation of $1000 by a bookshop with norequirement to provide any goods and services in return. This is a donation and willnot be subject to GST.

The football club also received a trophy from a local sporting store and the club isnot required to do or pay anything in return. This is also a donation and will not besubject to GST.

However, if the sporting store required the football club to promote its name by wayof signage at weekly games in return for offering the trophy this will constitute aconditional donation or sponsorship and GST is applicable to the GST inclusivemarket value of the trophy.

3.8 SponsorshipsUnlike donations, most sponsorships will not be the unconditionalprovision of funds or goods/services. Normally there will be conditionsattaching to sponsorships such as advertising or an agreement to use the



funds in a certain way. These payments will be subject to GST if you areregistered for GST.

Generally speaking, there are two types of sponsorship: monetary and non-monetary or “contra” sponsorship.

3.8.1 Monetary sponsorshipWhere your sporting club is registered for GST and receives a monetarysponsorship from a registered entity, you will have to remit 1/11th of thesponsorship received to the Tax Office. If registered, your sponsor isentitled to claim back 1/11th of the sponsorship amount as an input taxcredit.

Negotiatingwith sponsors

Note: You may wish to negotiate with your sponsor to increase thesponsorship payment by 10% to cover the GST liability (if your sponsorhas not decided to do so). Talk to your sponsors to make sure everyone

understands their GST obligation in relationship to the sponsorship.

ExampleA sports drink company has given a basketball club $8800 sponsorship money inreturn for advertising signs at a series of basketball games (market value of theadvertising is valued at $8800).

GST payable by the club equals $800 which is 1/11th of the sponsorship receivedas consideration for the supply of the advertising. GST would also be payable bythe sports drink company as 1/11th of the market value of the advertising receivedas consideration for the provision of the sponsorship (ie $8800 x 1/11 = $800).

Both parties would be able to claim input tax credits equal to the amount of GSTpayable.

Net GST liability Club Sports drink co.

GST payable ➤ $800 $800

Input tax credit ➤ $800 $800

Net payable ➤ $800-$800 = nil $800-$800 = nil

If your club receives sponsorship money from an unregistered entity, theentity cannot claim input tax credits, however you are still liable to payGST on the money received. It is unlikely that the unregistered sponsorwould increase the amount of sponsorship to cover the GST liability. Ineffect, the value of the sponsorship has decreased since you have to remitGST on the payment you receive.

Note: Financial institutions cannot claim input tax credits on purchases(including sponsorships) they make as these are input taxed.

3.8.2 Contra sponsorshipsIf you receive goods or services from your sponsor and in return youprovide other goods or services, such as advertising or promotion, eachparty has made a taxable supply to the other. This is often referred to as a“contra sponsorship”.



Both partiesregistered

The GST treatment regarding contra sponsorship depends on whether theparties involved are registered for GST. If both the sponsor and therecipient are registered, each will be liable to pay GST on the supply to theother. You and your sponsor are also entitled to claim input tax creditsequal to the amount of GST paid for the contra sponsorship, this will resultin a net position of zero for both of you.

Where the supplies are made by each party in the same tax period, no GSTwill be payable to the Tax Office because the value of the supply will bethe same as the value of the acquisition. However, both will still need toaccount for the supply and acquisition in their Business Activity Statement.As each party will need to account for GST payable and input tax credits oneach transaction, it is important that you both issue a tax invoice so that theinput tax credits can be claimed.

Value of thesponsorships

Normally you will both agree on the value of the sponsorship provided toeach other. If you do not agree on the value of the transaction, then theconsideration for the transaction will be taken to be the GST inclusivemarket value of the goods or services received.

Example 1A uniform manufacturer provides a sports club with 20 football uniforms in return foradvertising. Both parties agreed that the transaction is to be valued at $2200 beingthe market value of the uniforms.

The sports club has received the consideration (football uniforms) in return for itsadvertising of $2200. The club is liable to pay GST on 1/11th of the value of thetransaction being $200 ($2200 x 1/11).

The uniform manufacturer is also liable to pay $200 as GST on 1/11th of the valueof the advertising received as consideration for the supply of the football uniforms.

Both parties are entitled to input tax credits equal to the amount of GST payablewhere tax invoices have been issued.

The net GST position for this transaction for both parties is NIL, assuming thesupplies occur for both entities in the same tax period.

The following example illustrates the GST effect when your sporting clubreceives both a cash and in-kind sponsorship from the same sponsor.

Example 2An athletics club has received from a radio station $1100 plus two minutes air timeas sponsorship for its carnival. The radio station in return gets to broadcast thisevent for the day.

The athletics club is liable to pay GST equalling the amount of $100 ($1100 x 1/11)as well as 1/11th of the market value of the air time.

It is therefore necessary that the athletics club obtain the market value of the airtime provided by the radio station. (That is, the club needs to find out how muchthe radio station would normally charge its clients for two minutes air time at itsstation.)



3.9 CommissionsWhere your sporting club receives commission, for example, for arrangingthe sale of goods (eg through vending machines), or executing certainservices, you are liable to remit GST on the commission received becauseyou have received money in return for the supply of your services (ie theagreement to facilitate the sales). Similar to the situation with conditionalgrants and donations, if the payer of the commission is registered, you needto issue a tax invoice to them so that they can claim an input tax credit.

3.10 Salary and wagesGST will not be charged on salary or wages as salary and wage paymentshave been specifically excluded from the operation of the GST system.

That means, if your club acquires the services of an unregistered individualacting in their own right (eg an individual acting as a treasurer of the club),generally this is not a taxable supply and no GST is payable. However, ifyour club acquires the service from an individual who is acting on behalf ofa registered entity, in effect, your club is dealing with the entity and notwith the individual. GST will therefore apply if your club providesconsideration (eg money or recognition of the entity in your club’snewsletter) in return for the service acquired and you can claim input taxcredits.

3.11 FoodSince many sporting clubs have restaurants, kiosks or coffee shops thatwould be involved in preparing or supplying food for human consumption,it is therefore vital that you understand what food is taxable and what foodis GST-free.

3.11.1 Food that is not GST-free Food is taxable if:

! it is consumed on the premises or the grounds surrounding thosepremises in which it is supplied (ie cafés, restaurants, food courts,football grounds), or

! it is hot food that has been heated for consumption away from thosepremises, or

! it is listed in Schedule 1 of the GST legislation.Premises

The meaning of premises for GST purposes is more than just the placewhere the food is supplied. It includes:

! the grounds surrounding a café, public house or other outlet wherefood is supplied, and

! the whole of any enclosed space, such as a football ground, garden,showground, amusement park or similar area.

‘Premises’ does not include any part of a public thoroughfare unless it isdesignated for use in connection with supplying food from a particularoutlet, eg an annual street food fair.



Taxable foodSchedule 1 includes the following categories of food as being subject toGST:

➢ prepared food (including pizzas, quiches, hamburgers, hotdogs,sandwiches, platters of food and food marketed as prepared meals)

➢ confectionery (including lollies, chocolates, muesli or health foodbars, popcorn, crystallised fruit)

➢ savoury snacks (including potato chips, processed seeds or nuts,caviar. NOTE: unshelled nuts and raw nuts are GST-free)

➢ bakery products (including cakes, cheesecakes, muffins, pavlovas,pastries, scones, doughnuts, croissants, pies [meat, vegetable orfruit], sausage rolls, pastries and bread with a sweet filling orcoating. NOTE: Bread, including savoury bread, is GST-free)

➢ ice-cream foods (including ice-cream cakes, frozen yoghurt, softserves, flavoured ice blocks), and

➢ biscuits (including cookies, pretzels, crackers, wafers and cones).

Beverages, other than those listed under Section 3.11.3 below, will betaxable.

3.11.2 GST-free foodMost food for human consumption is GST-free. Generally speaking,supplies of fresh fruit and vegetables, herbs when sold in bunches and notas part of a living plant, meat, eggs, bread, breakfast cereals, flour, cheese,infant formula, and sugar are examples of food which will be GST-free.Ingredients for food for human consumption and fats and oils for culinarypurposes are also GST-free.

3.11.3 GST-free beveragesSince the definition of food also include beverages, the supply of beveragesand ingredients for beverages, are GST-free if:

➢ it is listed in Schedule 2 of the GST legislation, and

➢ it is for human consumption

and it is not:

➢ supplied for consumption on the premises from which it is supplied

➢ supplied hot, or

➢ of a kind specified in the regulations.

Schedule 2 of the legislation specifies the following beverages as GST-free:

➢ milk (including milk, skim milk, buttermilk, powdered milk and milkproducts that consist 95% of milk. Flavoured milk is taxable)

➢ soy milk and rice milk

➢ preparations for the making of beverages - tea, coffee, coffee essenceand malt extracts



➢ dry preparations used to flavour milk

➢ fruit and vegetable juice (that consist of at least 90% juice content)

➢ beverages, and ingredients for beverages, for infants and invalids, and

➢ non-carbonated bottled natural water.

3.11.4 Definition of “food” for GST purposes

Food for human consumption is GST-free except where explicitly specifiedas taxable. Food is defined to mean:

➢ food for human consumption (whether or not processing or treatment isrequired)

➢ ingredients for food for human consumption

➢ beverages for human consumption (including water)

➢ ingredients for beverages

➢ goods to be mixed with or added to food for human consumption(including condiments, spices, seasonings, sweetening agents orflavourings)

➢ fats and oils marketed for culinary purposes, or

➢ any combination of the above. The definition of food excludes:

➢ live animals, except crustaceans and molluscs (eg crabs, oysters andlobster will be GST-free)

➢ unprocessed and untreated grains, cereal or sugar cane

➢ unprocessed cow’s milk

➢ plants under cultivation (ie herbs in a pot, vegetables growing in theground), and

➢ food marketed for animals.

3.11.5 Club restaurants, coffee shops, kiosksFrom the discussion above, it can be seen that most food sold at the clubrestaurant or kiosk will be taxable because a majority of food supplied willbe consumed on the premises. Moreover, snacks, prepared food andtakeaway food such as hot chips, hamburgers, pies, sausage rolls and pizzasare taxable irrespective of whether they are consumed on the premiseswhere sold or not.

Your club will need to identify the type of food supplied by your foodoutlet and account for GST on the food which is taxable under the GSTsystem.

More information on the classification of food items for GST purposes canbe found at:



Further reading

! Sport, Recreation and Gaming, pages 33–35! Guide to GST, pages 56–60

3.12 TrainingWhere your sporting club purchases education or training courses for youremployees and members, it is important to know whether the course fallsunder the definition of GST-free education courses.

If your club pays for an employee to attend a course which leads to aqualification that is an essential prerequisite for entry into a profession ortrade, this constitutes a GST-free education course. Since no GST is paid,you are not entitled to claim input tax credits.

Furthermore, if the course attended by your employees is one which isaimed at adding employment related skills or it involves first aid,resuscitation and other life saving skills, it is also likely to be GST-free.You are not entitled to claim input tax credits because no GST is includedin the price of the education courses.

3.13 Coaching, officiating/umpires, overseassportsperson payment

Where your organisation has acquired services from coaches, umpires oroverseas sportspersons, the GST treatment of such transactions will dependon whether these entities are registered for GST and whether they have anAustralian Business Number (ABN).

If the acquisition of services is from a registered entity, your club mayclaim input tax credits for GST included in the price of the services.

If the service is supplied by an unregistered entity, the transaction would beoutside the scope of the GST system. However, there are issues whicharise under the new PAYG scheme where payments are made to entitiesthat do not have an ABN. If the provider does not have an ABN, you willneed to withhold 48.5% of the payment made to the entity as PAYG andremit it to the ATO.

There will be no GST consequences in relation to coaches who areemployees (ie those subject to PAYE deductions) as wages are not subjectto GST.

3.14 Special rules for charitable organisationsPlease note that special rules will apply to you if you are a registeredcharitable organisation. These rules relate to:

❒ supplies made by charitable organisations in a “non-commercial”manner, and

❒ raffles and fundraising activities run by charitable organisations.



Please refer to the ATO’s booklet Charitable, Religious and Non-profitOrganisations & The New Tax System for more information on these rulesif you think that they may apply to you.

4 What are adjustments?In making and receiving taxable supplies, there are often events which willoccur that alter the amount of GST payable on a taxable supply or the inputtax credit claimed in the previous tax period. For instance, if you havelodged your Business Activity Statement and something occurs later toalter the amount of GST payable or the amount of input tax credit claimed,or if the items you purchased are returned to the supplier, the result is thatyou have either overstated or understated the amount of your GST or inputtax credit. This will require you to make an adjustment in the BusinessActivity Statement covering the tax period in which the change occured.

Broadly speaking, there are three circumstances where you may be requiredto make an adjustment:

Adjustmentcircumstances

! an adjustment event

! a change in the extent of the creditable purpose of an acquisition thatyou have made, or

! bad debts.

When any of the above events occur, you need to make an adjustment onthe Business Activity Statement (BAS) in the tax period when the changehappens or when you discover the change. However, you cannot accountfor the adjustment in your BAS until you hold an adjustment note. Pleaserefer to Section 4.1.1 of this part for further discussion on adjustment notes.

4.1 Adjustment eventsOne way in which an adjustment can arise is if an adjustment event occurs.The following will constitute adjustment events:

! all or part of a supply or acquisition is cancelled

! a change in the consideration of the supply or acquisition

! a supply becomes, or stops being taxable, or

! an acquisition becomes, or stops being creditable.Type ofadjustments

If any of the above adjustment events occur, you need to make a correctionin your Business Activity Statement to reflect the correct amount of GSTpayable or input tax credit claimable. There are two types of adjustmentsthat will result from an adjustment event:

1. increasing adjustment - increases your net amount for the taxperiod, and

2. decreasing adjustment - decreases your net amount for the taxperiod.



The net amount is the difference between the GST payable by you and yourinput tax credits for a tax period. This amount must be paid to, or refundedby, the ATO.

In relation to taxable supplies:Increasingadjustments

! Increasing adjustments occur where the GST amount in a previoustax period has been understated. The amount of adjustment equalsthe difference between the amount of GST which should have beenpaid (the corrected GST amount) and the GST amount that waspreviously attributed in a previous tax period.

Decreasingadjustments

! A decreasing adjustment occurs where the GST amount in aprevious tax period has been overstated. The amount of adjustmentin this case will be the difference between the previously attributedGST amount and the corrected GST amount.

Example 1Jim runs a golf shop and sold a golf buggy on 28 December 2000 for $550 andaccounted for GST payable of $50 in the tax period ending 31 December 2000which was included in his Business Activity Statement lodged on 21 January 2001.

However, on 1 February 2001 the customer returned the buggy and Jim refundedthe purchase price of $550.

Jim has accounted for too much GST payable ($50) on a supply which wascancelled. To correct this, Jim needs to make a decreasing adjustment to accountfor less GST payable in the tax period in which he finds out about the change.

In relation to creditable acquisitions:

! An increasing adjustment occurs where you have over-claimedyour input tax credit in a previous tax period. The adjustmentamount is the difference between the correct input tax amount creditand the previously calculated amount.

! A decreasing adjustment occurs where you have claimed too littleinput tax credit previously. That is, the correct input tax credit whichyou are entitled to is greater than the previously calculated amount.The difference between the two will give you the adjustment figure.

It is important to note that if you account for GST on a cash basis ratherthan an accrual basis, you make the adjustment in the tax period in whichyou actually pay the additional consideration.



Example 2Wendy operates a swimming centre and operates on a cash accounting basis,lodging GST returns quarterly. She paid $110 in August 2000 for the purchase ofgoggles and claimed an input tax credit of $10 in respect of the purchase in theSeptember 2000 tax period. In October, the wholesaler gives Wendy a volumediscount of $22 for her purchase made in September. Therefore, the real price ofWendy’s acquisition of the goggles is $88.

Wendy has claimed an input tax credit higher than that to which she is entitledfollowing the adjustment. The correct amount of input tax credit for the purchase ofgoggles is $8.

To correct this, Wendy needs to make an adjustment that reduces her input taxcredits by $2 in the December quarter tax period. She needs to make an increasingadjustment in her Business Activity Statement in the tax period ending 31December.

The following table will help you to determine when you need to make anincreasing or decreasing adjustment for taxable supplies or creditableacquisitions.

Taxable supplyadjustments

Adjustment for Taxable Supply

Increasingadjustment(increase GST payable)

• if you have made a supply and the considerationyou receive or are entitled to receive hasincreased.

Decreasingadjustment(reduce GST payable)

• cancellation➢ if a supply you made has been cancelled and

you have already accounted for GST on thesupply on a previous Business ActivityStatement.

• refund, discount:

➢ if the payment you receive or are entitled toreceive for a supply is reduced and you haveaccounted for GST in the previous taxperiod on the higher price. For example,you decide to give a customer a volumediscount after you accounted for GST on thesupply or you refund some of the paymentyou received for the supply.



Creditableacquisitionadjustments

Adjustment for Acquisitions

Increasingadjustment(reduce input tax credit,therefore increase GSTpayable)

• discount:➢ if there is a decrease in the consideration

you pay or are required to pay for anacquisition after you have claimed an inputtax credit. For example, a supplier gave youa discount after you have claimed your inputtax credits.

• cancellation, refund:➢ if you cancelled or returned an acquisition

you made for your sporting club andreceived a refund or credit from the supplier.

Decreasingadjustment(increase input taxcredit, thereforedecrease GST payable)

• if you have to pay more for an acquisition youmade for your sporting club after you haveclaimed an input tax credit on your previousBusiness Activity Statement. For example, thereis a backdated increase in rent you have to payfor your club.

4.1.1 Adjustment notesIf an adjustment event arises, you will need to issue an adjustment note tothe recipient of the supply if you have issued or been requested to issue atax invoice. However, you do not have to issue an adjustment note if theGST inclusive price of the taxable supply is $55 or less.

In general, an adjustment note is like an amended tax invoice and maycontain similar information to a tax invoice. It is a document whichsatisfies the following requirements:

! it must be issued by the supplier (except recipient created adjustmentnotes - look at the information re recipient created tax invoices underPart 2 of this booklet - the same advice applies to adjustment notes)

! contains the Australian Business Number of the entity issuing theadjustment note (in most cases this is the supplier)

! contains other information required by the Commissioner (this is setout in the ATO Draft Ruling, GSTR 1999/D1), and

! be in the approved form.ATO DraftRuling

You can find out more about the content that should be contained in theadjustment note from the ATO Draft Ruling, GSTR 1999/D1 which isavailable from the Tax Office or from its web site.

It is important that you issue an adjustment note to your customer to showthe additional consideration for the acquisition so they can claim additional



input tax credits. Your customer cannot attribute an adjustment to a taxperiod until the adjustment note is held.

You must issue an adjustment note within 28 days of becoming aware ofthe adjustment, or of being requested by the recipient to issue an adjustmentnote, whichever happens sooner.

Likewise, it is important that your club receive an adjustment note fromyour supplier where you have made a creditable acquisition with a GST-inclusive price of more than $55. You cannot make an adjustment to claimadditional input tax credits if you do not hold an adjustment note. You mayrequire your supplier to issue you with an adjustment note where necessary.

4.2 Change in the extent of creditable purposeAs discussed in Part 1.3, the amount of input tax credit you are entitled todepends on how much you plan to use an acquisition in your business. Youdetermine the extent of creditable purpose at the time you make thepurchase.

$1000 ruleThere may be occasions where your actual use of the acquired goods orservices may vary from your original intended use. If this happens you willneed to make an adjustment for the change in usage to ensure that you havecorrectly claimed your input tax credits. You only have to make theseadjustments if the GST exclusive amount you paid for the purchase orimportation was more than $1000 and does not relate to making financialsupplies.

Adjustmentperiods

The GST legislation requires you to continually monitor and makeadjustments for the change in use relating to your acquisitions over anumber of years depending on the price of the acquisition. Theseadjustments are made in adjustment periods. Your first adjustment periodis the tax period that starts at least 12 months after the end of the tax periodin which you claimed the input tax credit for the acquisition or importation.The adjustment period ends on 30 June in any year or the end of whichevertax period that ends close to 30 June. For example, if you made anacquisition in March 2002, your first adjustment period will end on 30 June2003.

The number of adjustment periods you have for an acquisition orimportation depends on the GST-exclusive amount you paid for theacquisition or importation. The following table details the number ofadjustment periods you are required to report in for different valuedacquisitions and importations.

GST-exclusive amount of considerationfor acquisition or importation

Number of adjustmentperiods

$1000 or less 0$1001 - $5000 2$5001 - $499 999 5$500 000 or more 10

Note: Acquisitions or importations that relate to making financial supplies aresubject to different adjustment periods.



4.3 Bad debtsIf you are accounting for GST on an accrual basis, you may be required tomake an adjustment when you write off a debt as bad or when your clubrecovers amounts previously written off.


As a supplier, you will have a decreasing adjustment where:

! you have made a taxable supply

! the whole or part of the consideration for the supply has been due for12 months or more, and

! your sporting club writes off as bad the whole or part of the debt.Increasingadjustments

On the other hand, you will have an increasing adjustment where:

! you have made a taxable supply and have previously recorded thedebt owed to you as bad debt, and

! you recover all or part of that debt which has been due for 12 monthsor more.

Increasingadjustments

Similarly, if you have acquired something for use in your sporting club,you may need to make an adjustment to input tax credits. You will have anincreasing adjustment where:

! you claimed an input tax credit in a previous Business ActivityStatement and the amount you still owe for the acquisition has beendue for 12 months or more (ie the amount is written off by thesupplier).


Conversely, you will need to make a decreasing adjustment in yourBusiness Activity Statement in the tax period where:

! you pay the supplier an amount which has been due for 12 months ormore.

Further reading

! Guide to GST, Part 1 pages 3–6, Part 3 pages 15–30


! ATO Draft Ruling - GSTR 1999/D1

PART 4: THE BUSINESS ACTIVITY STATEMENT


HOW TO

Purpose: To help you complete your organisation’s Business ActivityStatement. It will help you take the information from your accountingrecords (as set out in Part 2) and incorporate it into your Business ActivityStatement.

!"#$%#$&1. What is a Business Activity Statement?2. What does a BAS look like?3. When do I lodge my BAS?4. How do I complete my BAS?5. How do I lodge my BAS?6. Other information

1 What is a Business ActivityStatement?

GST lawThe Business Activity Statement (BAS) is the form that the Tax Officerequires organisations to complete to report all their tax obligations,including GST. Even though it is a form that is used to report other taxesas well as GST, it is often referred to as a “GST return”. If applicable toyou, other taxes that will be reported on a BAS include:

! wine equalisation tax

! luxury car tax

! income tax withheld

! income tax instalments

! deferred company income tax instalments, and

! fringe benefits tax instalments.

While the BAS is designed to cover more than just GST, the informationcontained in this part of the booklet relates only to GST. You should seekassistance from other sources or your advisers if you need help with any ofthe other taxes mentioned on the BAS.



2 What does a BAS look like?At the time of producing this booklet, the Tax Office had not finalised theformat or completed the final instruction booklet for the BAS. However, aBAS in draft from had been circulated and it is reproduced below.

The BAS is a doubled sided, single page document.

The front page looks like this:



The reverse side looks like this:

Net amountThe front page of the BAS sets out a summary of taxes owing to the TaxOffice (left hand side) and tax refunds/credits owing to the taxpayer (righthand side). From these it calculates the net amount owed or refundable.

Calculationsheet

On the reverse side of the BAS is a calculation sheet that helps youcalculate your GST amounts, and summarise taxes withheld and income taxinstalments. The figures calculated here, are then transferred to the front ofthe BAS to calculate your total tax liability.

2.1 What GST amounts are reported on the frontpage of the BAS?

The front page of the BAS asks you to fill in two GST figures:

❐ GST payable (item 1A on the BAS), and

❐ Credit for GST paid (item 1B on the BAS).



Subtracting item 1B from 1A will give you what is called your “GST netamount”. The “GST net amount” refers to your GST payable on yourtaxable supplies less the input tax credits for the GST you have paid onyour acquisitions. If the amount is positive, it is the amount of GST youowe the Tax Office. If the amount is negative, it is the amount of GST theTax Office owes you. The Calculation Sheet on the reverse side of theBAS will help you to calculate items 1A and 1B.

Other taxes reported on the front side of the BAS, if applicable, are takeninto consideration in working out the “Net amount of your obligations”which you owe or are owed by the Tax Office. That is, your GST netamount can be added to or offset against other tax liabilities you have to theTax Office.

2.2 What GST amounts are reported on thereverse side of the BAS (the CalculationSheet)

As indicated above, the Calculation Sheet set out on the reverse side of theBAS will help you calculate the figures you have to include at items 1Aand 1B on the front of the BAS.

The Calculation Sheet asks you for information on:Supplies

Supplies you have made:! total sales and income

! GST-free supplies

! adjustments to supplies made in previous tax periodsAcquisitions

Acquisitions you have made:! capital acquisitions

! all other acquisitions

! adjustments to acquisitions made in previous tax periods.

Information contained in your accounting records, as set out in Part 2 ofthis booklet, will help you complete this information. The sections thatfollow in this part of the booklet will show you how to take the informationcontained in your accounting records and include them in the BAS.

3 When do I lodge my BAS?As outlined in Part 2 of this booklet, you will lodge your BAS on either amonthly or quarterly basis. You must lodge your BAS within 21 days ofthe end of your tax period. The Tax Office will send you a partiallycompleted, pre-printed BAS before the end of each period for you tocomplete.

PaymentsIf you calculate that you owe the Tax Office money then it must be paid tothe Tax Office by the 21st of the month following your lodgement period (ieat the same time you lodge your BAS).



RefundsIf you calculate that the Tax Office owes you a refund, it must be paid toyou within 14 days of you lodging your BAS. This refund will be paid intothe bank account that you nominated on your ABN registration form.

Example 1The local tennis club has elected to and has advised the Tax Office that it wishes tolodge its BAS on a monthly basis. For the month of July 2001, it calculates that itowes the Tax Office $500 in GST (ie its GST net amount is $500), with no othertaxes to offset it.

It must lodge its BAS and pay $500 to the Tax Office by 21st August 2001.

Note that if the tennis club lodged its BAS quarterly, then GST owing for the monthof July 2001 would be reported in the BAS lodged for the quarter ending 30September 2001, which would be due for lodgement on 21 October 2001.

Example 2The local soccer club lodges their BAS on a quarterly basis. For the quarter endingSeptember 2000, it calculates that it is due a refund of $200 in GST (ie its GST netamount is -$200).

The soccer club must lodge its BAS by 21st of October. If it lodges its BAS on thisday, the Tax Office must refund the $200 within 14 days (ie 5 November) or it willhave to pay interest for the period that it is overdue. The refund will be paid into thebank account that the soccer club has advised to the Tax Office in its Application forRegistration form.

4 How do I complete my BAS?This section of the booklet has been designed to help you complete theGST amounts on your regular BAS. It does so by working from the sampleaccounting records that have been explained in Part 2 of this booklet.

How to complete the Calculation Sheet on the reverse side of the BAS isexamined first - both in terms of the supplies and acquisitions you havemade. How to complete the front of the BAS is then examined using theinformation worked out on the Calculation Sheet.

Further reading

! Draft Business Activity Statement Instructions

4.1 The GST Calculation Sheet - suppliesTo complete the “Supplies you have made” section of the Calculation Sheetyou need to know the total amount of all of your sales, inclusive of theGST.

4.1.1 Computerised accounting systemsIf you have a computerised accounting package, you will need to do thefollowing:

Steps to follow

! Step 1: Obtain your profit and loss statement and balance sheet forthe relevant tax period.



! Step 2: Complete Item G1 by adding up total sales plus GSTcollected during the period. That is, the total of all your sales andincome plus the amount of GST collected (as accumulated in theGST collected account in your balance sheet)

! Step 3: Complete the value of any exports at box G2.

! Step 4: Complete the value of any GST-free supplies at box G3.

! Step 5: Complete the value of any input taxed supplies at box G4.

! Step 6: Calculate the figures for boxes G5 and G6 as indicated.

! Step 7: Complete any adjustments to supplies made in previousperiods at box G7.


The final figure you have calculated at box G9 is your GST payable andshould be transferred to box 1A on the front of the BAS. Note this figureshould equal the figure that is in your GST collected account in yourbalance sheet. If this does not equal that amount, you will need torecheck your figures.

Please refer to the Draft Business Activity Statement Instructions forfurther assistance on how to complete any particular box.

4.1.2 Manual accounting systemsIf you have a manual accounting system you will need to do the following:

Steps to follow

! Step 1: Obtain your cash receipts book, which has totals for therelevant tax period.

! Step 2: Complete Item G1 by subtracting your capital and otherreceipts column from your total supplies column. That is - the totalof all your sales and income less any out of scope income such asdonations.

! Step 3: Complete the value of any exports at box G2.

! Step 4: Complete the value of any GST-free supplies at box G3.This is the total of your GST-free supplies column.

! Step 5: Complete the value of any input taxed supplies at box G4.


! Step 7: Complete any adjustments to supplies made in previousperiods at box G7.


Your final figure in G9 should equal the total of your “Amount of GST”column. This figure should be transferred to the front page of the BAS atbox 1A.



Cash Receipts Book

Name of Business Countryland Tennis Club

Date Details Total Taxable Supplies GST Free Capital/OtherSupplies Amount of GST Amount excl. GST Supplies receipts

2-Jul Donation 200 20012-Jul Member fees 1100 100 100014-Jul Court hire 220 20 20030-Jul Grant 3300 300 3000

Total 4820 420 4200 200

4 6 2 0

4 6 2 0

4 6 2 04 2 0

1 2

1 2-

4.2 The GST Calculation Sheet – acquisitionsTo complete the “Acquisitions you have made” section of the CalculationSheet you need to know the total amount of all of your purchases, inclusiveof the GST.

4.2.1 Computerised accounting systemsIf you have a computerised accounting package, you will need to do thefollowing:

! Step 1: Obtain your profit and loss statement, balance sheet andasset register for the relevant tax period.

! Step 2: Complete the value of any capital acquisitions made(inclusive of GST amount) at box G10.

! Step 3: Complete the amount of all your other expenses at box G11– this will be all your expenses plus your GST paid account in thebalance sheet. This does not include salary and wages.

! Step 4: Complete box G12 as indicated.



! Step 5: Complete the amount of acquisitions related to making inputtaxed supplies at box G13.

! Step 6: Complete the value of acquisitions with no GST included inthe price (for example donations made to others) at box G14.

! Step 7: Fill in any private or non-deductible acquisitions that havebeen put through the profit and loss statement at box G15

! Step 8: Complete boxes G16 and G17 as indicated.

! Step 9: Complete any adjustments made to acquisitions in previousperiods at box G18.


! The final figure you calculate in box G20 should equal the figure inyour GST paid account.

The final figure you have calculated at box G20 is your GST credit andshould be transferred to box 1B on the front of the BAS. Note this figureshould equal the figure in your GST paid account in the balance sheet. Ifthey do not equal one another, you will need to recheck your figures.

Please refer to the Draft Business Activity Statement Instructions forfurther assistance on how to complete any particular box.

4.2.2 Manual accounting systemsIf you have a manual accounting system you will need to do the following:

! Step 1: Obtain your cash payments book with totals for the relevanttax period.

! Step 2: Complete the value of any capital acquisitions made(inclusive of GST amount) at box G10.

! Step 3: Complete the amount of all your other expenses at box G11 -This does not include salary and wages. It will be the totalacquisitions column less capital purchases and wages.

! Step 4: Complete box G12 as indicated.

! Step 5: Complete the amount of acquisitions related to making inputtaxed supplies at box G13.

! Step 6: Complete the value of acquisitions with no GST included inthe price (for example donations made to others) at box G14.

! Step 7: Fill in any private or non deductible acquisitions that havebeen put through the profit and loss statement at box G15


! Step 9: Complete any adjustments made to acquisitions in previousperiods at box G18.




Cash Payments Book

Name of Business Countryland Tennis Club

Date Details Total Amount Acquisitions with GST in the price Acquitions with no GST in the price Wagesamount of GST Stock Gas Assets Rent Stock Water rates Sundries

2-Jul Rent 2200 200 200012-Jul Gas 330 30 30016-Jul Wages 500 50020-Jul Office chair 418 38 38021-Jul Food 310 10 100 20024-Jul Donation 150 15024-Jul Water rates 325 325

Total 4233 278 100 300 380 2000 200 325 150 500

4 1 8

3 0 5 82 7 8

6 7 5

6 7 5

3 7 3 33 3 1 5

3 0 5 8

The figure you calculate in box G20, should equal the total in your“Amount of GST” column. If not, you need to recheck your figures. Thisfigure is then transferred to box 1B on the front of the BAS.

4.3 The front of the BASThe numbers you have just worked out on your calculation sheet at boxesG9 and G20 should be transferred to Items 1A and 1B respectively asindicated. This is your GST net amount which is reported to the ATO forpayment/refund or offset against other tax obligations on the BAS. Refer tothe Draft Business Activity Statement Instructions or seek professionaladvice if any of these other taxes apply to you.



5 How do I lodge my BAS?You have a few alternatives for lodging your BAS with the Tax Office,including:

! manually: fill in the preprinted form and post to the ATO so thatthey receive it by the 21st day of the month following the end of yourtax period.

! electronically: complete the BAS electronically, and send it overthe Internet to the ATO. (You can contact the ATO at any time toobtain a form to elect to use their Internet based system, or you canelect to deal with them electronically on your ABN RegistrationForm.)

! use a tax agent: give your BAS to your accountant or tax agent tolodge for you.

Further reading❐ Draft Business Activity Statement Instructions

6 Other informationYou should keep copies of all your Business Activity Statements alongwith all the appropriate tax invoices for at least five years, so if the TaxOffice decides to audit you, you will have all the necessary information.

PART 5: MANAGING GST


HOW TO IMPROVE YOUR

Purpose: To give guidance on some standard business practices that willhelp you manage GST and GST-related obligations for your organisation.

!"#$%#$&1. How to plan your cash flow2. How to price your goods and services for GST3. What are the transitional issues?4. How to deal with the Tax Office

1 How to plan your cash flowCash flowplanning

There are many factors which need to be assessed to ensure that your clubdoesn’t suffer from cash flow problems due to the GST. We will look atthe main ones, being:

Cash flowissues

! cash v accrual accounting

! timing of grants

! timing of memberships

! sales - debtor control and timing of invoices

! purchases - creditor control

! purchasing of equipment

! timing of lodgement of BAS.Cash flow tip

TIP: Planning your organisation’s cash flow is critical - if you owe theTax Office money according to your BAS, you will need the cash to paythem within 21 days of the end of the relevant tax period. It may beworthwhile opening up a separate bank account for your GST collected -this way it will ensure that you don’t spend the money which is owed to theTax Office.

1.1 Cash versus accrual accounting for GSTOrganisations with an annual turnover of less than $1 000 000 have achoice of whether they account for GST to the Tax Office on a cash or anaccrual basis. The basis you choose will affect when you have to accountfor GST to the Tax Office and therefore will have implications for yourcash flow. The only way you can decide which option is better for you, is to



understand how it will affect your cash flow based on the supplies andpurchases that you make.

1.1.1 What is “cash accounting” for GST purposes?Cash payments

Cash accounting for GST purposes means that you account for GST whenyou are paid for the supplies you make or pay for your acquisitions.

More information on cash accounting for GST purposes is contained in Part2 of this booklet.

The following two examples show how accounting on a cash basis willimpact your cash flow.

Example 1 - PurchasesThe local hockey club buys stationery on a needs basis. The club receives aninvoice dated 30 September 2000 for $220 (inclusive of $20 GST) with paymentterms of 14 days. The club pays the invoice on 14 October.

It is only when the invoice is paid on 14 October that the entitlement to the credit forthe GST in the purchase price arises (ie the input tax credit is claimable in theOctober monthly or December quarterly tax period rather than the Septembermonthly or September quarterly tax period).

Part paymentWhen you are accounting for GST on a cash basis, if you only pay part ofan acquisition, you can only claim a part of the input tax credit attributableto the purchase, ie 1/11th of what you have paid. Remember that, in anycase, you need to have your tax invoice to claim any input tax credit.

For receipts, it works the same way. Let’s take the following example:

Example 2 - ReceiptsA football club issues invoices for 100 membership subscriptions at the end ofAugust 2000. The invoices are for an amount of $55 (inclusive of $5 GST). Thetotal amount owing to the club is therefore $5500, inclusive of $500 GST.

The club receives $1100 in September, $3300 in October and $1100 in December.

GST is attributable to tax periods as follows:

• $1100 in the September monthly/quarterly tax period

• $3300 in the October monthly or December quarterly tax period, and

• $1100 in the December monthly/quarterly tax period.

Therefore, the liability to remit the GST to the Tax Office is based on whenyou have received the money. In the above example, that is $100 will bepayable on 21 October, $300 on 21 November (or 21 January if you lodgequarterly) and a further $100 on 21 January (along with the $300 forOctober if you lodge quarterly).

Part paymentsUnder cash accounting, if you only receive part payment for a supply, youwill only be liable for 1/11th of what you have actually received.



Cash flow tipTIP: The best plan for your cash flow under cash accounting is to try andpay any expenses out at the end of the tax period, but try and receivepayments for supplies as early as possible in the tax period (even if thismeans issuing invoices earlier). In respect of purchases, this means youwill have been able to hold onto your money for as long as possible but stillbe entitled to the input tax credit in that tax period. In respect of sales, itmeans that you have received the cash early enough and have it ready tomeet your tax liability at the end of the tax period.

1.1.2 What is “accrual accounting” for GST purposes?Accrual accounting for GST purposes means that you account for the GSTon the total amount of the transaction at the earlier of:❒ when any consideration is received/paid for a supply/acquisition (ie

if a part payment is made), or❒ when an invoice is issued in relation to the supply/acquisition.

That is the total liability for GST can arise before something is actuallypaid for.

More information on accrual accounting for GST purposes is contained inPart 2 of this booklet.

Accruals:acquisitions

The following two examples show how accounting on an accruals basiswill impact on your cash flow.

Example 3 - Purchases (acquisitions)The local hockey club buys stationery on a needs basis. It accounts for GST on amonthly basis and uses the accrual system. The club receives an invoice dated 31July for $220 with payment terms of 14 days.

On an accrual system, the transaction would be entered into the system at the endof July when the invoice is received. An entitlement to the input tax credit will arisein the July tax period even though payment has not yet been made.

While the above example may make the accrual system sound veryattractive, you need to look at the reverse (receipts) side.

Accruals:supplies

As the example below demonstrates, once you issue an invoice, you areliable to pay 1/11th of the price on the invoice to the Tax Office.

Example 4 - Receipts (supplies)A football club issues 200 membership invoices at the end of August 2000. Theyare for a full year starting 1st October 2000, and cost $55 (total subscription revenueof $11 000). The club operates on an accrual basis and lodges monthly BusinessActivity Statements.

They receive $5500 in October, $3300 in November and $2200 in December.

The accrual accounting treatment is to account for the GST liability in the tax periodwhen the invoices are issued. That is, the club will have a liability to pay the TaxOffice the total GST amount of $1000 by 21 September. This could cause the clubparticular cash flow difficulties given that it does not receive any of its income fromsubscriptions until October.



It is important to note that it does not matter what accounting system youuse normally for accounting purposes you have the choice between accrualsand cash for GST. As long as your annual turnover is less that $1millionyou have the option to choose the one that suits you.

1.2 Timing and payment of grantsYou may be able to time the payments of grants, depending on who thegrants are from or for. If you receive grants, you will need to find out whatthe grant provider intends to do with their payments, as you will be liablefor GST of 1/11th of grant money received.

Let’s look at the following examples which illustrate the difference thatbeing registered makes.

Unregisteredclub

Example 1A local club receives a $10 000 grant from a national sporting organisation (NSO).The NSO is registered for GST, but the local club is not.

The NSO would still pay $10 000. The local club may want to ask for more than$10 000 because although they will not have a GST liability they cannot claim inputtax credits and therefore they may now need to spend more on goods & servicesfor the club.

Registeredclub

Example 2A local club receives a $10 000 grant from an NSO. They are both registered forGST purposes.

If the NSO pays $10 000, they would be entitled to an input tax credit of 1/11th of$10 000, being $909. Therefore their net position would be $10 000 - $909, whichequals $9091. The grant has cost them less.

The local club would receive $10 000 and be liable to remit 1/11th of the grant to theTax Office; being $909. Their net position would be $9091 so they would be worseoff.

Grossing upTo remedy this situation, when both parties are registered, the grantprovider could consider grossing up the grant by 10%. Neither party wouldbe better or worse off.

Example 3A local club receives a $10 000 grant from an NSO. They are both registered forGST purposes.

The NSO would now pay $11 000 to the local club. They would be entitled to aninput tax credit of $1000, giving them a net position of $10 000.

The local club would receive $11 000, and remit $1000 to the Tax Office, givingthem a net position of $10 000.

It is important to remember that the recipient of the grant has the liabilityfor the GST. The recipient must also supply the grant provider with a taxinvoice so the grant provider can claim any input tax credits (unless the



grant provider is covered by the rules concerning recipient created taxinvoices, referred to in Part 2 of this booklet).

1.2.1 Cash v accrual accounting and their impact on the timingof grants

If you are accounting for the GST on an accrual basis, there are somearrangements you can consider making.

GST liabilityWhen you are receiving grants, the timing of your liability to remit GSTdepends on a number of things:

1. Tax periods. If you have a quarterly tax period and you receivethe grant at the beginning of the period you will obviously havelonger until you are liable to remit the GST to the Tax Office.

2. Cash or accrual accounting. Remember how you account for

GST will determine when your liability to remit the GST will arise.If you account on a cash basis your liability will arise when youactually receive the grant. If you account on an accrual basis yourliability will arise when you receive any of the grant OR you issuean invoice, whichever occurs first.

Grantnegotiations

These factors may be used in negotiating with the grant provider. If thegrant provider has monthly tax periods and accounts for GST on an accrualbasis it may be possible to arrange the timing of the grant for maximumbenefit to both parties.

❐ The grant provider could pay the GST exclusive amount in the firstmonth of the quarter - remember they become entitled to an inputtax credit when any consideration is paid or an invoice is raised.Unless they can produce a recipient created tax invoice, they willneed to hold a tax invoice from you by the time that they lodgetheir Business Activity Statement.

❐ You as the grant recipient with a quarterly tax period would not beliable to remit the GST until 21 days after the end of your taxperiod, a period of at least three months. As the recipient of themoney you would need to supply the grant provider with a taxinvoice so that they could claim their input tax credit.

❐ When they lodged their return at the end of the month they could

claim their credit and receive the refunded tax credit no later than14 days after lodgement date (most likely during the second monthof your quarter).

❐ Once they have received the credit of 1/11th of the grant from the

Tax Office they could pay you the remaining amount (equal to yourGST liability) in time for you to remit it to the Tax Office within 21days of the end of your tax period (the end of the quarter).

1.3 Timing memberships receiptsIt is important to remember when issuing membership renewal notices thatmembership fees are a taxable supply made by the club and therefore theclub will have a GST liability of 1/11th of the fees.



Membershiprenewals

Many clubs have set dates for the renewal of memberships. Notices aresent out in a batch. These renewal notices outline the period of renewal andthe amount that is due. If you account on an accrual basis this is enough totrigger your GST liability. If the batch of renewals is a large percentage ofyour membership, you may be faced with the undesirable situation ofhaving a GST liability on a large portion of your membership fees eventhough not all members will pay by the due date and some might not evenpay at all. If you have rolling memberships, your GST liability will bespread as your invoices will be raised throughout the year, instead of in onebatch.

Cash basisIf you account on a cash basis for GST, your GST liability only arises whenyou receive the payment. Therefore invoicing your members in largebatches would not pose any problems because your liability for the GSTwould only arise once a member has paid.

Invoice timingInvoicing your membership as early as possible in the tax period will giveyou the maximum time to collect the fees before your GST liability is due.If accounting on a cash basis it will allow you to hold the money for longerbefore you must remit it to the Tax Office.

1.4 Managing your debtors - the people who oweyou money

DebtorsYou will have a GST liability on all the taxable supplies you make. As wehave shown with membership, when your liability arises will depend uponthe accounting method you are using.

❐ Cash accounting: If you are accounting on a cash basis yourliability will arise when payment is received. If you receive a partpayment you will only be liable for the amount of GST on that part. 3

❐ Accrual accounting: If you are accounting on an accrual basis,your liability will arise when you receive any part of the paymentor you issue any invoice.

Trackingdebtors

If you use accrual accounting it is especially critical that you have a goodsystem of keeping track of your debtors. As you will have had to pay theGST to the Tax Office for transactions in the previous tax period, you willwant to make sure that the cash from these transactions comes in. Therewill be a great incentive to issue invoices early in the tax period to allowthe maximum time for debtors to make their payments before lodging yourBusiness Activity Statement. Whether you report on a monthly or quarterlybasis, this will be an issue in terms of timing your liability to the TaxOffice. It is important to chase everybody that owes you money



1.5 Managing your creditors - the people that youowe money to

CreditorsCreditors is the reverse of debtors. You will have an entitlement to an inputtax credit on the things you purchase for your business. When you becomeentitled to an input tax credit depends upon whether you account on a cashor an accrual basis.

❐ Cash accounting: If you account on a cash basis, you will becomeentitled to an input tax credit when you make payment. If you onlymake a part payment you will only be entitled to an input tax creditfor that part.

❐ Accrual accounting: If you account on an accrual basis you will

become entitled to an input tax credit when any payment is made oran invoice is raised, whichever occurs first.

TimingIf accounting on a cash basis you may wish to pay towards the end of thetax period as you will be out of pocket for the credit for the least amount oftime. If accounting on an accrual basis, you want to hold off as long aspossible with paying creditors, in the hope that you can claim back yourinput tax credit before you actually pay them. However, you need to becareful that you don’t breach their credit policies.

1.6 Purchasing equipmentCapitalequipment

The points made above in relation to creditors are particularly importantwhen thinking of making a major purchase of capital equipment. Yourinput tax credit entitlement is larger when making a large purchase. Youwill be out of pocket longer for the input tax credit if you make it at thebeginning of your tax period as opposed to the end of your tax period.

1.7 Timing of BAS lodgementPreparing your BAS as early as possible after the period has ended is mostimportant for your cash flow. Obviously if you are in a payable position,you will not lodge your return and pay the Tax Office until the 21st of themonth, the last possible day. Whereas if you are in a refund position youwill lodge your return straight away, so that you get your money back fromthe ATO within 14 days.

Further reading

❐ The GST & Business Skills



2 How to price your goods andservices for GST

ACCCguidelines

Several factors need to be taken into account when repricing the goods andservices you supply. The main concern for most organisations is theAustralian Competition and Consumer Commission (ACCC) guidelines onprice exploitation. These guidelines do not allow an organisation to profitout of the introduction of GST. You must pass on any savings you makeand your margin must not increase as a result of your repricing.

Before taking into account the GST charged on your purchases, your costsshould actually fall due to the removal of wholesales sales tax (WST).Wholesales sales tax is embedded the whole way through the supply chainso even if you are presently sales tax exempt there will be some savingspassed on from your suppliers. It may only be a small amount, but it isthere.

Wholesale sales tax is not the only tax being removed with the impositionof the GST. The removal of other taxes (examples listed in Part 1 Section2.1 of this booklet) should also reduce the costs of your business. So whenthe GST is said to be 10% of the value, it is 10% of the reduced value.Which means, all other things remaining equal, that no current costs shouldincrease by 10%.

If you are registered for GST, your costs will actually drop, as you canclaim the input tax credits for GST on all the purchases you make in thecourse of your business.

ACCCpenalties

When you are setting your new membership or other sale prices, you needto take this into account. Remember the ACCC can impose high penalties;as much as $10 million for a corporation and $500 000 for an individual forprice exploitation.

3 What are the transitional issues?There are a number of issues which involve transactions that span theimplementation date of 1 July 2000. You should seek help if you areunsure how these rules affect you.

Contractsspanning1 July 2000

! Contracts - There are special rules about contracts that span theGST implementation date which determine whether supplies madeunder that contract are subject to tax or GST-free. You shoulddetermine if you have any such contracts and seek furtherinformation on what the effect of the special GST rules on them is.You should also seek advice on any new contracts to determine whatshould be included in the contract about GST

! Memberships spanning 1 July 2000 - As discussed in Part 3, therewill be special rules applying to memberships that span 1 July 2000.Refer back to Part 3 for more information.



! Special credits for sales tax for stock on hand - You can claim aspecial GST credit for the amount of wholesale sales tax you havepaid on any stock on hand for resale as at 1 July 2000. Contact theTax Office for more information if you think you may be entitled tothis special credit.

.Further reading

! Guide to GST

! Sport, Recreation and Gaming

4 How to deal with the Tax OfficeYou may never have had any previous dealings with the Tax Office, but itis important that you know what rights and responsibilities you have whendealing with them.

4.1 Assessing your GST liabilitiesIt is your responsibility to calculate and show all your GST liability andentitlements to input tax credits in your Business Activity Statement.

Assessmentprocedures

Where you have made an error on the GST section of the Business ActivityStatement, or if you believe the Commissioner’s interpretation of the law isincorrect, you may request the Commissioner to make an assessment tocorrect the error on your activity statement or you may ask for anassessment of the net GST amount for a tax period.

Four year ruleYou are required to make your request within four years from the end ofthe relevant tax period or within four years from the time of an importation.However, the Commissioner may allow you more time to make yourrequest in special cases.

Assessments made by the Commissioner are reviewable so you may objectto the assessment made if you are not satisfied with it and exercise yourreview rights.

4.2 Rights to review a Tax Office decisionGST reviewabledecisions

You have a right to lodge an objection and challenge the decisions made bythe Commissioner if they are GST reviewable decisions. These decisionsinclude those:

! about your registration

! about your tax period

! about your accounting basis

! about GST groups, and

! about your GST assessment.



Objectionprocedures

You are required to lodge your objection within 60 days after you havebeen notified of the decision. This time limit applies to most types ofreviewable GST decisions except for GST decisions regarding assessmentsas mentioned above.

Your objection should be made in writing and you need to give full detailsof what you believe is wrong with the decision. The Commissioner is thenrequired to notify you of the decision and provide reasons for making thedecision.

4.3 Requests for a private GST ruling from theTax Office

There are situations where you may need to obtain clarification on aspecific GST issue with the Tax Office. In this regard, you can apply for aGST private ruling specifically for that purpose.

Private rulingprocedures

You can submit a written request for a private ruling containing thefollowing information:

! your name, address and a business telephone number

! your Australian Business Number if you have one, or your Tax FileNumber

! the facts on which your request is based

! the industry you operate in

! whether you are aware of any GST private rulings given to anyoneelse on the topic

! whether you have sought a previous ruling on the matter before, and

! whether the matter to be ruled on is subject of an audit or dispute.Binding forthree years

Ordinarily, a written GST private ruling is binding and will be effective fora set period. Unless otherwise advised, the period will be three years.However, you can also request the Tax Office to withdraw a GST privateruling at any time.

4.4 Where more GST information can be foundThere are many avenues for obtaining more information regarding GST andThe New Tax system.

You can obtain written information or download materials from thefollowing sources:

! the ATO web site - www.taxreform.ato.gov.au This web site contains useful information such as:

➢ published material regarding the tax reform, eg Guide to GST➢ fact sheets



➢ publications on specific industries such as the Sport, Recreationand Gaming industry booklet

➢ draft and final GST rulings➢ legislation in relation to The New Tax System, and➢ other links that are relevant to tax reform, eg the ACCC web site.

The ATO web site also contains a frequently asked questions andanswers section and it allows you to search for information within thetax reform web site which includes materials about GST forindividuals, businesses and tax practitioners.

! email the ATO at [email protected]! write to the ATO at PO BOX 9935 in your capital city, or

! obtain A Fax From Tax on 13 28 60

Where you have specific questions relating to GST or require verbalinformation, you can:

! apply for a private ruling (as discussed above)

! telephone the business Tax Reform Infoline on 13 24 78, or

! seek a advice from your accountant or tax adviser.

Note: All forms of written advice from the Tax Office involving theinterpretation of the GST law, other than GST private rulings, are publicrulings and they are binding on the Commissioner. GST private rulingsare also binding but they are usually effective for a period of three years.

As a result you can rely on the information presented in the ruling.

APPE

ND

IX 3

: TR

ANSA

CTI

ON

MAT

RIX

GST

Man

agem

ent f

or S

port

1.

Tran

sact

ion

Mat

rix

Set o

ut in

the

tabl

e be

low

are

the

maj

or ty

pes o

f sup

ply

(reve

nue)

and

acq

uisit

ions

(exp

ense

s) tr

ansa

ctio

ns th

at a

typi

cal s

porti

ng o

rgan

isatio

n m

ay h

ave.

Eac

htra

nsac

tion

is an

alys

ed to

det

erm

ine

its G

ST tr

eatm

ent.

The

tabl

e de

tails

the

treat

men

t and

the

effe

ct th

at w

ill h

ave

on th

e cl

ub’s

GST

liab

ility

or c

redi

ten

title

men

t. F

inal

ly, a

ctio

n po

ints

are

incl

uded

to h

elp

you

unde

rsta

nd w

hat t

he c

lub

will

be

requ

ired

to d

o fo

r GST

.

Supp

ly (r

even

ue)

Acq

uisit

ion

(exp

ense

s)S1

Gra

nts

A1

Wag

esS2

Mem

bers

hip

fees

/subs

crip

tions

A2

Spor

ting

equi

pmen

tS3

Com

petit

ion

fees

A3

Elec

trici

tyS4

Non

-mem

ber f

acili

ty u

sage

fees

A4

Food

S5D

epos

itsA

5In

sura

nce

S6Fu

ndra

ising

- Ra

ffles

A6

Staf

f & c

lub

unifo

rms

S7D

onat

ions

A7

Clea

ning

, lau

ndry

, was

teS8

Spon

sors

hips

A8

Leas

e pa

ymen

tS9

Resta

uran

t sal

esA

9M

otor

veh

icle

runn

ing

costs

S10

Cate

ring

A10

Priz

e m

oney

S11

Com

miss

ions

- ph

ones

, ven

ding

mac

hine

sA

11A

ppea

ranc

e m

oney

S12

Hou

sie /

bing

oA

12Ra

tes a

nd ta

xes

S13

Pool

tabl

esA

13Re

pairs

and

mai

nten

ance

S14

Faci

lity

hire

- gr

ound

s, ro

oms

A14

Faci

lity

hire

S15

Clot

hing

/ un

iform

sA

15A

dver

tisin

gS1

6In

tere

stA

16Pr

intin

g, p

osta

ge a

nd st

atio

nery

S17

Adv

ertis

ing

A17

Tele

phon

eA

18Se

curit

yA

19Tr

aini

ngA

20A

ccou

ntin

g an

d au

dit f

ees

A21

Lega

l fee

sA

22Su

bscr

iptio

nsA

23Ba

nk c

harg

esA

24In

tere

st ex

pens

eA

25Ca

pita

l im

prov

emen

tsA

26Re

imbu

rsem

ents

A27

Coac

hing

A28

Offi

ciat

ing

/ um

pire

s etc

APPE

ND

IX 3

: TR

ANSA

CTI

ON

MAT

RIX

GST

Man

agem

ent f

or S

port

Key

to a

bbre

viat

ions

TS =

taxa

ble

supp

lyCA

= cr

edita

ble

acqu

isitio

nN

on-C

A =

non

-cre

dita

ble

acqu

isitio

n

1.1

Supp

lies

that

you

mak

e (r

even

ue tr

ansa

ctio

ns)

Supp

lies

No.

Des

crip

tion

GST

trea

tmen

tEf

fect

Stra

tegi

es/a

ctio

nR

efer

ence

s fo

rfu

rthe

r rea

ding

S1G

rant

s:re

ceiv

e gr

ant

fund

ing

that

has

cond

ition

sat

tach

ed

Taxa

ble

❏

Clu

b lia

ble

to re

mit

1/11

th o

f gra

nt to

the

Tax

Offi

ce.

➪

Det

erm

ine

GST

sta

tus

of g

rant

pay

men

t. If

con

ditio

nsar

e at

tach

ed, y

ou a

re li

able

to re

mit

GST

to th

e AT

O.

➪

Ensu

re a

tax

invo

ice

is is

sued

to g

rant

pro

vide

r.

➪

Dis

cuss

con

ditio

ns o

f gra

nt p

aym

ent w

ith p

rovi

der t

ose

e th

ey a

re w

illing

to g

ross

the

amou

nt o

f the

gra

ntup

to in

clud

e th

e G

ST p

ayab

le.

➪

Con

side

r tim

ing

the

issu

e of

tax

invo

ices

to ta

kead

vant

age

of c

ash

flow

if y

ou a

re a

ccou

ntin

g fo

r GST

on a

n ac

crua

l bas

is.

✷

Ref

er to

Sec

tion

3of

Par

t 3 -

“Fur

ther

info

rmat

ion

onpa

rticu

lar s

uppl

ies”

for m

ore

disc

ussi

on.

S2M

embe

rshi

p fe

es/

subs

crip

tions

TS, G

ST-

free

❏

Mem

bers

hips

are

taxa

ble

but s

peci

al ru

les

appl

yto

life

mem

bers

hips

.

❏

For d

iscu

ssio

n on

GST

trea

tmen

t of n

omin

atio

nfe

es (j

oini

ng fe

es),

refe

r to

Sect

ion

3 of

Par

t 3.

❏

Ther

e ar

e al

so s

peci

al ru

les

that

cha

ritab

leor

gani

satio

ns c

an c

onsi

der i

n de

term

inin

g if

afe

e is

taxa

ble

or G

ST-fr

ee.

Plea

se s

eek

advi

cefro

m y

our a

dvis

er fo

r fur

ther

info

rmat

ion.

❏

Clu

b w

ill be

liab

le fo

r 1/1

1th o

f the

mem

bers

hip

fees

if th

ey c

onst

itute

as

taxa

ble

supp

lies.

➪

Iden

tify

diffe

rent

mem

bers

hip

type

s to

det

erm

ine

GST

treat

men

t.

➪

You

may

nee

d to

sep

arat

ely

dete

rmin

e th

e G

ST e

ffect

rega

rdin

g tw

o co

mpo

nent

s (jo

inin

g fe

e +

annu

alre

new

al fe

e) in

the

pric

e of

a m

embe

rshi

p.

➪

Det

erm

ine

if fe

e is

taxa

ble

or G

ST-fr

ee if

the

char

itabl

e ru

les

appl

y to

you

.

➪

Ensu

re G

ST is

incl

uded

in p

rice

of m

embe

rshi

p if

it is

a ta

xabl

e su

pply

.

✷

Ref

er to

Sec

tion

3of

Par

t 3 -

“Fur

ther

info

rmat

ion

onpa

rticu

lar s

uppl

ies”

for m

ore

disc

ussi

on.

✷

Ref

er to

Sec

tion

3of

Par

t 5 -

“Wha

tar

e th

e tra

nsiti

onal

issu

es?”

for a

disc

ussi

on o

f the

rule

s th

at a

pply

to

APPE

ND

IX 3

: TR

ANSA

CTI

ON

MAT

RIX

GST

Man

agem

ent f

or S

port

Supp

lies

No.

Des

crip

tion

GST

trea

tmen

tEf

fect

Stra

tegi

es/a

ctio

nR

efer

ence

s fo

rfu

rthe

r rea

ding

✷

supp

lies

that

spa

n1

July

200

0 (w

hich

will

be re

leva

nt to

mem

bers

hip

subs

crip

tions

whi

ch s

pan

this

date

).S3

Com

petit

ion

fees

TS❏

C

ompe

titio

n fe

es c

olle

cted

by

your

clu

b fo

r aco

mpe

titio

n th

at o

ccur

s af

ter 1

Jul

y 20

00 w

ill be

subj

ect t

o G

ST.

❏

Clu

b lia

ble

to re

mit

1/11

th o

f the

fees

col

lect

ed to

the

Tax

Offi

ce if

regi

ster

ed fo

r GST

.

➪

Iden

tify

all c

ompe

titio

n da

tes

and

incl

ude

GST

in th

efe

es if

the

com

petit

ion

take

s pl

ace

on o

r afte

r 1 J

uly

2000

.

✷

Ref

er to

Sec

tion

3of

Par

t 3 fo

rex

ampl

es o

nco

mpe

titio

n fe

es.

S4N

on-m

embe

rfa

cilit

y us

age

fees

TS❏

Su

pply

of c

lub

faci

litie

s, fo

r exa

mpl

e go

lf co

urse

,te

nnis

cou

rts, t

o no

n-m

embe

rs a

re ta

xabl

e. Y

our

club

is li

able

to re

mit

to th

e AT

O 1

/11th

of t

hefe

es c

olle

cted

.

➪

Incl

ude

GST

in th

e pr

ice

of fe

es p

ayab

le b

y no

n-m

embe

rs.

S5D

epos

itsTS

, GST

-fre

e❏

G

ST tr

eatm

ent o

f dep

osits

dep

ends

on

whe

ther

your

clu

b ho

lds

the

mon

ey a

s a

secu

rity

depo

sit.

❏

The

depo

sit i

s G

ST-fr

ee if

it is

a s

ecur

ity d

epos

it.

❏

If th

e de

posi

t for

ms

part

of th

e co

nsid

erat

ion

for

a su

pply

, GST

sho

uld

be c

harg

ed o

n th

ede

posi

t.

➪

Ensu

re y

our s

taff

unde

rsta

nd w

hen

a se

curit

y de

posi

tar

ises

so

as to

cor

rect

ly c

harg

e G

ST o

n de

posi

ts.

✷

Ref

er to

Sec

tion

3of

Par

t 3 fo

rex

ampl

es a

ndfu

rther

dis

cuss

ions

on d

epos

its.

S6Fu

ndra

isin

g -

raffl

esTS

,G

ST-fr

ee❏

C

lub

is li

able

for G

ST o

n th

e m

argi

n of

runn

ing

the

fund

rais

ing

activ

ity.

That

is, t

he d

iffer

ence

betw

een

the

tota

l am

ount

of c

ash

rais

ed a

nd th

eto

tal c

ash

priz

es.

❏

See

Sect

ion

3 of

Par

t 3 fo

r dis

cuss

ion

whe

reno

n-ca

sh p

rizes

are

raffl

ed.

➪

Whe

re n

on-m

onet

ary

priz

es a

re ra

ffled

by

your

clu

b,m

aint

ain

tax

invo

ices

from

the

acqu

isiti

on o

f the

non

-ca

sh p

rizes

so

that

inpu

t tax

cre

dits

can

be

clai

med

.

✷

Ref

er to

Sec

tion

3of

Par

t 3 fo

rex

ampl

es a

nd m

ore

info

rmat

ion

rega

rdin

gfu

ndra

isin

gac

tiviti

es.

S7D

onat

ions

Out

of

scop

e,TS

❏

If do

natio

ns a

re m

ade

unco

nditi

onal

ly, t

hey

are

not s

ubje

ct to

GST

. H

owev

er, i

f the

re a

reco

nditi

ons

atta

ched

(eg

the

dono

r req

uest

s th

atth

e do

natio

n be

use

d in

a c

erta

in w

ay o

rex

pect

s to

rece

ive

som

ethi

ng o

f val

ue in

retu

rn),

➪

Iden

tify

and

eval

uate

all

situ

atio

ns in

whi

ch d

onat

ions

are

rece

ived

by

your

spo

rting

clu

b.

➪

Whe

re d

onat

ions

are

taxa

ble,

neg

otia

te w

here

poss

ible

for d

onor

s to

gro

ss u

p th

e pa

ymen

t for

the

✷

Ref

er to

Sec

tion

3of

Par

t 3 -

“Fur

ther

info

rmat

ion

onpa

rticu

lar s

uppl

ies”

for m

ore

APPE

ND

IX 3

: TR

ANSA

CTI

ON

MAT

RIX

GST

Man

agem

ent f

or S

port

Supp

lies

No.

Des

crip

tion

GST

trea

tmen

tEf

fect

Stra

tegi

es/a

ctio

nR

efer

ence

s fo

rfu

rthe

r rea

ding

the

dona

tion

may

be

a ta

xabl

e su

pply

and

the

club

will

have

to re

mit

1/11

th o

f the

don

atio

n to

the

Tax

Offi

ce.

amou

nt o

f the

GST

.di

scus

sion

.

S8Sp

onso

rshi

psTS

❏

Clu

b lia

ble

for 1

/11th

of s

pons

orsh

ip p

aym

ent i

fre

gist

ered

for G

ST.

➪

Iden

tify

and

eval

uate

all

situ

atio

ns in

whi

ch m

onet

ary

and

non-

mon

etar

y (“i

n-ki

nd”)

spon

sors

hips

are

rece

ived

by

your

spo

rting

org

anis

atio

n.

➪

Neg

otia

te w

here

nec

essa

ry w

ith s

pons

ors

to g

ross

up

spon

sors

hip

paym

ents

.

✷

See

Sect

ion

3 of

Part

3 fo

r mor

ein

form

atio

n.

S9R

esta

uran

t sal

esTS

❏

A su

pply

of f

ood

for h

uman

con

sum

ptio

n,in

clud

ing

beve

rage

s, fo

r con

sum

ptio

n on

the

prem

ises

from

whi

ch it

is s

uppl

ied

will

be a

taxa

ble

supp

ly.

❏

Your

clu

b re

stau

rant

will

be li

able

for 1

/11th

of

the

amou

nt o

f the

sup

ply

of fo

od w

hich

ista

xabl

e.

➪

Iden

tify

all t

ypes

of f

ood

and

beve

rage

s so

ld a

t you

rcl

ub re

stau

rant

and

det

erm

ine

whe

ther

any

sup

ply

offo

od w

ill be

cla

ssifi

ed a

s G

ST-fr

ee.

➪

Cor

rect

ly p

rice

item

s fo

r sal

e in

the

rest

aura

nt to

incl

ude

the

GST

com

pone

nt.

➪

Che

ck c

ash

regi

ster

or o

ther

poi

nt o

f sal

e sy

stem

sw

here

app

licab

le to

ens

ure

the

corre

ct G

STin

form

atio

n is

cap

ture

d fo

r diff

eren

t foo

d ty

pes.

S10

Cat

erin

gTS

❏

Clu

b lia

ble

for 1

/11th

of t

he p

aym

ent f

rom

the

supp

ly o

f cat

erin

g se

rvic

es.

➪

Ensu

re 1

0% G

ST is

incl

uded

in th

e pr

ice

of th

eca

terin

g se

rvic

e an

d is

sue

tax

invo

ice

whe

reap

prop

riate

.

S11

Com

mis

sion

s- p

hone

s- v

endi

ngm

achi

nes

etc.

TS❏

C

lub

liabl

e fo

r 1/1

1th o

f com

mis

sion

s re

ceiv

ed.

➪

Ensu

re a

tax

invo

ice

is is

sued

.

➪

Neg

otia

te w

here

nec

essa

ry fo

r the

gro

ssin

g up

of

com

mis

sion

pay

men

ts.

✷

Ref

er to

Sec

tion

3of

Par

t 3 re

gard

ing

anal

ysis

on

parti

cula

r sup

plie

sfo

r fur

ther

disc

ussi

on.

S12

Hou

sie

/ bin

goTS

❏

Sim

ilar t

o th

e G

ST tr

eatm

ent o

f fun

drai

sing

activ

ities

, GST

is p

ayab

le o

n th

e m

argi

n of

runn

ing

bing

o/ho

usie

ses

sion

s. T

hat i

s, y

our

club

is re

quire

d to

pay

GST

of 1

/11th

on

the

diffe

renc

e be

twee

n to

tal c

ash

rais

ed a

nd to

tal

cash

priz

es g

iven

out

.

➪

Whe

re n

on-c

ash

priz

es a

re g

iven

, it i

s im

porta

nt to

mai

ntai

n ta

x in

voic

es fr

om th

e ac

quis

ition

of t

he n

on-

cash

priz

es s

o th

at th

e co

rrect

am

ount

of i

nput

tax

cred

its c

an b

e cl

aim

ed.

S13

Pool

tabl

esTS

❏

Clu

b lia

ble

to p

ay G

ST o

n 1/

11th

of t

he re

venu

ere

ceiv

ed fr

om p

ool t

able

s.

APPE

ND

IX 3

: TR

ANSA

CTI

ON

MAT

RIX

GST

Man

agem

ent f

or S

port

Supp

lies

No.

Des

crip

tion

GST

trea

tmen

tEf

fect

Stra

tegi

es/a

ctio

nR

efer

ence

s fo

rfu

rthe

r rea

ding

S14

Faci

lity

hire

-gr

ound

s, ro

oms

TS, G

ST-

free

❏

Clu

b is

liab

le to

pay

1/1

1th o

f the

hire

pric

e.

❏

Spec

ial r

ules

app

ly to

sup

plie

s m

ade

bych

arita

ble

orga

nisa

tions

. Pl

ease

see

k fu

rther

advi

ce if

you

r clu

b is

a c

harit

able

inst

itutio

n.

➪ E

nsur

e 10

% G

ST is

incl

uded

in th

e hi

re c

harg

e.

S15

Clo

thin

g /

unifo

rms

TS❏

C

lub

is li

able

to p

ay G

ST o

n 1/

11th

of m

oney

rece

ived

from

the

sale

of c

loth

ing

/ uni

form

s.➪

Pr

ices

for c

loth

ing

/ uni

form

s w

ill ne

ed to

incl

ude

10%

GST

.

S16

Inte

rest

Inpu

t tax

edsu

pply

❏

Whe

re in

tere

st is

rece

ived

from

a fi

nanc

ial

inst

itutio

n, th

is is

in re

turn

for a

loan

of f

unds

(a“fi

nanc

ial s

uppl

y” w

hich

is in

put t

axed

) tha

t you

ror

gani

satio

n ha

s m

ade.

No

GST

is p

ayab

le o

nin

put t

axed

sup

plie

s.S1

7Ad

verti

sing

TS❏

C

lub

will

be li

able

to p

ay 1

/11th

of a

dver

tisin

gre

venu

e re

ceiv

ed.

❏

Spe

cial

rule

s ap

ply

to s

uppl

ies

mad

e by

char

itabl

e or

gani

satio

ns.

Plea

se s

eek

furth

erad

vice

if y

our c

lub

is a

cha

ritab

le in

stitu

tion.

➪

Ensu

re 1

0% G

ST is

incl

uded

in th

e ad

verti

sing

fee.

You

will

need

to is

sue

a ta

x in

voic

e to

cus

tom

ers

who

requ

est i

t.

APPE

ND

IX 3

: TR

ANSA

CTI

ON

MAT

RIX

GST

Man

agem

ent f

or S

port

1.2

Acq

uisi

tions

that

you

mak

e (P

urch

ases

/exp

ense

tran

sact

ions

)

Acq

uisi

tions

No.

Des

crip

tion

GST

Effe

ctSt

rate

gies

/act

ion

Ref

eren

ces

for

furt

her r

eadi

ngA

1W

ages

Out

of s

cope

❏

No

GST

is p

ayab

le o

n w

ages

, the

refo

re, y

ouca

nnot

cla

im a

n in

put t

ax c

redi

t for

sal

ary

paid

by

your

spo

rting

clu

b.

➪

Ensu

re y

our a

ccou

ntin

g sy

stem

can

iden

tify

diffe

rent

type

s of

exp

ense

s w

here

thos

e ex

pens

es h

ave

no G

STco

nseq

uenc

es.

✷

See

Sect

ion

3 of

Part

3 fo

r fur

ther

deta

il.

A2

Spor

ting

equi

pmen

tC

A❏

Th

e pu

rcha

se o

f spo

rting

equ

ipm

ent f

or u

se in

your

clu

b is

a c

redi

tabl

e ac

quis

ition

and

you

are

entit

led

to c

laim

inpu

t tax

cre

dits

if y

ou h

old

the

tax

invo

ice

and

if th

e su

pply

to y

ou w

as a

taxa

ble

supp

ly.

➪

Obt

ain

tax

invo

ices

from

you

r sup

plie

rs s

o th

at y

ou c

ancl

aim

inpu

t tax

cre

dits

.

➪

Tim

ing

for t

he p

urch

ase

of la

rge

valu

e ite

ms

shou

ld b

eob

serv

ed to

take

adv

anta

ge o

f cas

h flo

w.

For e

xam

ple,

you

may

mak

e ac

quis

ition

s to

war

ds th

e en

d of

the

tax

perio

d so

that

you

can

cla

im b

ack

the

inpu

t tax

cre

dits

soon

er.

✷

Ref

er to

Par

t 5fo

r a d

iscu

ssio

non

cas

h flo

wpl

anni

ngte

chni

ques

.

A3

Elec

trici

tyC

A❏

A

supp

ly o

f ele

ctric

ity is

taxa

ble

and

your

clu

b ca

ncl

aim

inpu

t tax

cre

dits

for e

lect

ricity

exp

ense

.➪

En

sure

you

r clu

b re

ceiv

es a

tax

invo

ice

for t

heac

quis

ition

so

that

inpu

t tax

cre

dits

can

be

clai

med

.

A4

Food

Non

-CA,

CA

❏

Mos

t foo

d pu

rcha

sed

by y

our c

lub

will

be G

ST-

free

beca

use

it is

food

for h

uman

con

sum

ptio

n.Si

nce

you

have

not

pai

d G

ST fo

r the

acq

uisi

tion,

you

cann

ot c

laim

an

inpu

t tax

cre

dit.

❏

How

ever

, if y

ou h

ave

acqu

ired

food

whi

ch is

not

with

in th

e de

finiti

on o

f GST

-free

food

or i

s lis

ted

in S

ched

ule

1 of

the

GST

Act

, eg

pota

to c

hips

,he

alth

food

bar

s, th

e su

pply

to y

ou is

a ta

xabl

esu

pply

and

you

can

cla

im in

put t

ax c

redi

t.

➪

Ensu

re y

our b

usin

ess

syst

em c

an id

entif

y di

ffere

ntty

pes

of p

urch

ases

so

that

you

can

cor

rect

ly c

laim

you

ren

title

men

t to

inpu

t tax

cre

dits

.

➪

Educ

ate

staf

f and

sup

plie

rs re

gard

ing

GST

trea

tmen

t of

diffe

rent

type

s of

food

.

✷

Ref

er to

Sec

tion

3 of

Par

t 3 o

nth

e an

alys

is o

fpa

rticu

lar

supp

lies

for

mor

edi

scus

sion

.

A5

Insu

ranc

eC

A❏

Th

e pr

ovis

ion

of m

ost i

nsur

ance

will

be a

taxa

ble

supp

ly.

You

can

clai

m in

put t

ax c

redi

ts o

n yo

ur in

sura

nce

prem

ium

s.

➪

Not

ify y

our i

nsur

er o

f the

ext

ent t

o w

hich

you

can

cla

imin

put t

ax c

redi

ts o

n yo

ur in

sura

nce

prem

ium

s so

that

you

will

not h

ave

a G

ST li

abilit

y on

an

insu

ranc

ese

ttlem

ent.

✷

Ref

er to

Sec

tion

3 of

Par

t 3 o

nth

e an

alys

is o

fpa

rticu

lar

supp

lies

for

mor

edi

scus

sion

.

APPE

ND

IX 3

: TR

ANSA

CTI

ON

MAT

RIX

GST

Man

agem

ent f

or S

port

Acq

uisi

tions

No.

Des

crip

tion

GST

Effe

ctSt

rate

gies

/act

ion

Ref

eren

ces

for

furt

her r

eadi

ngA

6St

aff &

clu

bun

iform

sC

A❏

Th

e pu

rcha

se o

f uni

form

s fo

r use

in y

our s

porti

ngcl

ub is

a c

redi

tabl

e ac

quis

ition

. Yo

u ca

n cl

aim

an

inpu

t tax

cre

dit e

qual

ling

the

amou

nt o

f GST

incl

uded

in th

e pr

ice

you

paid

for t

he p

urch

ase.

➪

Ensu

re y

our c

lub

rece

ives

a ta

x in

voic

e fo

r the

pur

chas

eso

that

inpu

t tax

cre

dits

can

be

clai

med

.

A7

Cle

anin

g, la

undr

y,w

aste

CA

❏

The

supp

ly o

f cle

anin

g, la

undr

y an

d w

aste

serv

ices

con

stitu

tes

a ta

xabl

e su

pply

to y

ou.

Sinc

e yo

u w

ill pa

y G

ST o

n th

e ac

quis

ition

of s

uch

serv

ices

, you

are

ent

itled

to c

laim

inpu

t tax

cre

dit

equa

l to

the

amou

nt o

f GST

incl

uded

in th

epu

rcha

se p

rice.

➪

Ensu

re y

our c

lub

rece

ives

a ta

x in

voic

e fo

r the

acqu

isiti

on s

o th

at in

put t

ax c

redi

ts c

an b

e cl

aim

ed.

A8

Leas

e pa

ymen

tC

A❏

A

leas

e fo

r the

clu

b pr

emis

es o

r oth

er fo

rms

ofle

ases

or r

enta

l are

taxa

ble

supp

lies

and

are

ther

efor

e su

bjec

t to

GST

. Yo

ur o

rgan

isat

ion

can

clai

m in

put t

ax c

redi

ts fo

r GST

incl

uded

in th

ele

ase

paym

ent.

➪

Rev

iew

all

exis

ting

or fu

ture

leas

e ag

reem

ents

that

span

, or c

omm

ence

afte

r 1 J

uly

2000

and

det

erm

ine

GST

con

sequ

ence

s.

✷

Ref

er to

Sec

tion

3 of

Par

t 5 fo

r adi

scus

sion

on

the

spec

ial r

ule

that

app

lies

tosu

pplie

ssp

anni

ng 1

Jul

y20

00.

A9

Mot

or v

ehic

leru

nnin

g co

sts

CA

❏

Purc

hase

s re

late

d to

the

runn

ing

of a

mot

orve

hicl

e (e

g pe

trol)

are

likel

y to

be

taxa

ble.

You

can

clai

m in

put t

ax c

redi

t for

GST

incl

uded

in th

epr

ice

of th

e ru

nnin

g co

sts

to th

e ex

tent

that

the

acqu

isiti

on re

late

s to

car

ryin

g on

the

busi

ness

of

your

org

anis

atio

n.

➪

Ensu

re y

our c

lub

rece

ives

a ta

x in

voic

e fo

r the

acqu

isiti

on s

o th

at in

put t

ax c

redi

ts c

an b

e cl

aim

ed.

Spec

ial r

ules

app

ly w

here

you

reim

burs

e an

em

ploy

eeor

age

nt fo

r exp

ense

s in

curre

d on

an

entit

y’s

beha

lf.

✷

Ref

er to

A26

:R

eim

burs

emen

tbe

low

for a

nex

plan

atio

n of

the

rule

sap

plyi

ng to

re-

imbu

rsem

ent o

fex

pens

e to

empl

oyee

s or

agen

ts.

A10

Priz

e m

oney

CA

❏

Whe

re y

our c

lub

give

s aw

ay p

rize

mon

ey o

n a

recr

eatio

nal b

asis

eg

bing

o ni

ght (

ie p

rize

win

ner

rece

ives

the

mon

ey w

ith n

o co

nnec

tion

with

his/

her b

usin

ess)

, priz

e m

oney

will

be G

ST-fr

ee.

Sinc

e no

GST

is p

ayab

le o

n th

e pr

ize

mon

ey,

your

clu

b ca

nnot

cla

im in

put t

ax c

redi

ts.

❏

Whe

re y

our c

lub

give

s aw

ay p

rize

mon

ey to

regi

ster

ed s

ports

pla

yers

in th

e co

urse

of t

heir

spor

ting

busi

ness

, priz

e m

oney

will

be s

ubje

ct to

➪

Iden

tify

in w

hich

of t

he tw

o ci

rcum

stan

ces

your

clu

b is

payi

ng o

ut p

rize

mon

ey (i

e re

crea

tiona

l bas

is o

r to

are

gist

ered

spo

rts p

laye

r) so

that

GST

can

be

char

ged

acco

rdin

gly.

APPE

ND

IX 3

: TR

ANSA

CTI

ON

MAT

RIX

GST

Man

agem

ent f

or S

port

Acq

uisi

tions

No.

Des

crip

tion

GST

Effe

ctSt

rate

gies

/act

ion

Ref

eren

ces

for

furt

her r

eadi

ngG

ST o

n th

e ba

sis

that

the

priz

e m

oney

form

s pa

rtof

the

spor

ting

pers

on’s

bus

ines

s in

com

e. Y

our

club

is th

en e

ntitl

ed to

inpu

t tax

cre

dits

.

A11

Appe

aran

cem

oney

CA

❏

Appe

aran

ce m

oney

pai

d to

regi

ster

edsp

orts

pers

ons

and

othe

rs w

ho a

re c

arry

ing

on a

busi

ness

, and

who

are

regi

ster

ed fo

r GST

, will

bea

cred

itabl

e ac

quis

ition

and

you

will

be e

ntitl

ed to

an in

put t

ax c

redi

t for

the

amou

nt o

f GST

incl

uded

in th

e am

ount

that

is c

harg

ed to

you

for

the

appe

aran

ce.

➪

Ensu

re y

our c

lub

rece

ives

a ta

x in

voic

e fo

r the

acqu

isiti

on s

o th

at in

put t

ax c

redi

ts c

an b

e cl

aim

ed.

➪

Ensu

re th

at y

our o

rgan

isat

ion

is a

ble

to d

istin

guis

hbe

twee

n su

pplie

s m

ade

to y

ou b

y re

gist

ered

(abl

e to

clai

m in

put t

ax c

redi

t) ve

rsus

non

-regi

ster

ed e

ntiti

es (n

otab

le to

cla

im in

put t

ax c

redi

t).

A12

Rat

es a

nd ta

xes

Non

-CA

❏

GST

will

not b

e ch

arge

d on

mos

t gov

ernm

ent

rate

s an

d ta

xes,

(inc

ludi

ng w

ater

and

sew

erag

era

tes)

ther

efor

e, y

ou c

anno

t cla

im in

put t

axcr

edits

.

➪

Ensu

re y

our b

usin

ess

proc

ess

syst

ems

can

iden

tify

diffe

rent

type

s of

GST

sup

plie

s to

kno

w w

hen

to c

laim

an in

put t

ax c

redi

t.

A13

Rep

airs

and

mai

nten

ance

CA

❏

A su

pply

of r

epai

r and

mai

nten

ance

ser

vice

s by

an e

xter

nal p

arty

(not

an

empl

oyee

) who

isre

gist

ered

for G

ST w

ill be

a ta

xabl

e su

pply

toyo

u. T

here

fore

, you

can

cla

im a

n in

put t

ax c

redi

tfo

r the

GST

incl

uded

in th

e pr

ice

paid

for t

hese

rvic

e.

➪

Ensu

re y

our c

lub

rece

ives

a ta

x in

voic

e fo

r the

acqu

isiti

on s

o th

at in

put t

ax c

redi

ts c

an b

e cl

aim

ed.

A14

Faci

lity

hire

CA

❏

Whe

re y

our c

lub

hire

s a

faci

lity

from

a re

gist

ered

entit

y w

ho in

clud

es G

ST in

the

pric

e of

the

char

ge, y

ou c

an c

laim

inpu

t tax

cre

dits

equ

al to

the

amou

nt o

f GST

incl

uded

in th

e pr

ice.

➪

Ensu

re y

our c

lub

rece

ives

a ta

x in

voic

e fo

r the

acqu

isiti

on s

o th

at in

put t

ax c

redi

ts c

an b

e cl

aim

ed.

A15

Adve

rtisi

ngC

A❏

Yo

u ar

e en

title

d to

inpu

t tax

cre

dits

for G

ST p

aid

in re

latio

n to

adv

ertis

ing

expe

nse

for y

our

spor

ting

club

.

➪

Ensu

re y

our c

lub

rece

ives

a ta

x in

voic

e fo

r the

acqu

isiti

on o

f adv

ertis

ing

spac

e so

that

inpu

t tax

cre

dits

can

be c

laim

ed.

A16

Prin

ting,

pos

tage

and

stat

ione

ryC

A❏

Th

e su

pply

of p

rintin

g, p

osta

ge a

nd s

tatio

nery

good

s an

d se

rvic

es b

y a

regi

ster

ed p

erso

n w

illco

nstit

ute

a ta

xabl

e su

pply

. Th

eref

ore,

you

can

clai

m in

put t

ax c

redi

t for

the

GST

incl

uded

in th

epr

ice

of th

e pu

rcha

ses.

➪

Ensu

re y

our c

lub

rece

ives

a ta

x in

voic

e fo

r the

acqu

isiti

on s

o th

at in

put t

ax c

redi

ts c

an b

e cl

aim

ed.

A17

Tele

phon

eC

A❏

W

here

you

r clu

b ha

s pa

id G

ST o

n te

leph

one

expe

nses

, you

are

ent

itled

to c

laim

inpu

t tax

cred

its fo

r the

pur

chas

e.

➪

Ensu

re y

our c

lub

rece

ives

a ta

x in

voic

e fo

r the

acqu

isiti

on s

o th

at in

put t

ax c

redi

ts c

an b

e cl

aim

ed.

APPE

ND

IX 3

: TR

ANSA

CTI

ON

MAT

RIX

GST

Man

agem

ent f

or S

port

Acq

uisi

tions

No.

Des

crip

tion

GST

Effe

ctSt

rate

gies

/act

ion

Ref

eren

ces

for

furt

her r

eadi

ngA

18Se

curit

yC

A❏

A

supp

ly o

f sec

urity

ser

vice

s is

a ta

xabl

e su

pply

to y

ou, t

here

fore

, you

can

cla

im in

put t

ax c

redi

tfo

r GST

incl

uded

in th

e pr

ice

paid

for t

he s

ervi

ce.

➪

Ensu

re y

our c

lub

rece

ives

a ta

x in

voic

e fo

r the

acqu

isiti

on s

o th

at in

put t

ax c

redi

ts c

an b

e cl

aim

ed.

A19

Trai

ning

CA,

Non

-CA

❏

The

supp

ly o

f tra

inin

g co

urse

s fo

r clu

b m

embe

rsor

em

ploy

ees

are

likel

y to

be

taxa

ble.

The

refo

re,

you

may

cla

im in

put t

ax c

redi

ts.

❏

Som

e co

urse

s m

ay b

e cl

assi

fied

as ‘e

duca

tiona

lco

urse

s’ w

hich

are

GST

-free

. Pl

ease

refe

r to

Sect

ion

3 of

this

par

t for

furth

er d

iscu

ssio

n. Y

ouw

ill be

ent

itled

to in

put t

ax c

redi

t for

pay

men

tsm

ade

for s

uch

cour

ses.

➪

You

will

need

to id

entif

y w

hich

cou

rses

you

pur

chas

ear

e ta

xabl

e an

d w

hich

are

GST

-free

. Yo

u w

ill on

ly b

een

title

d to

cla

im a

n in

put t

ax c

redi

t on

thos

e co

urse

sw

hich

are

taxa

ble.

Ens

ure

that

you

obt

ain

a ta

x in

voic

efo

r tho

se s

uppl

ies

whi

ch a

re ta

xabl

e.

✷

See

Sect

ion

3 of

Part

3 re

gard

ing

anal

ysis

of

parti

cula

rsu

pplie

s fo

rm

ore

deta

il.

A20

Acco

untin

g an

dau

dit f

ees

CA

❏

You

are

entit

led

to c

laim

inpu

t tax

cre

dits

for

acco

untin

g se

rvic

es a

cqui

red

by y

our

orga

nisa

tion

from

a re

gist

ered

ent

erpr

ise.

➪

Ensu

re y

our c

lub

rece

ives

a ta

x in

voic

e fo

r the

acqu

isiti

on s

o th

at in

put t

ax c

redi

ts c

an b

e cl

aim

ed.

A21

Lega

l fee

sC

A❏

Yo

u ar

e en

title

d to

cla

im in

put t

ax c

redi

ts fo

r leg

alse

rvic

es a

cqui

red

by y

our o

rgan

isat

ion

from

are

gist

ered

ent

erpr

ise.

➪

Ensu

re y

our c

lub

rece

ives

a ta

x in

voic

e fo

r the

acqu

isiti

on s

o th

at in

put t

ax c

redi

ts c

an b

e cl

aim

ed.

A22

Subs

crip

tions

CA

❏

A su

pply

of s

ubsc

riptio

n to

you

r spo

rting

clu

b is

ata

xabl

e su

pply

.

❏

Sin

ce s

ubsc

riptio

ns a

re li

kely

to b

e su

pplie

dpr

ogre

ssiv

ely

or p

erio

dica

lly, y

ou m

ay c

laim

inpu

tta

x cr

edits

in th

e ta

x pe

riod

whe

n yo

u re

ceiv

e a

tax

invo

ice

from

you

r sup

plie

r.

➪

Ensu

re y

our o

rgan

isat

ion

rece

ives

a ta

x in

voic

e fo

r the

acqu

isiti

on s

o th

at in

put t

ax c

redi

ts c

an b

e cl

aim

ed.

✷

As s

ome

subs

crip

tions

will

span

1 J

uly

2000

, ref

er to

the

spec

ial r

ules

in P

art 5

for

info

rmat

ion

rela

ting

totra

nsiti

onal

issu

es.

A23

Bank

cha

rges

Non

-CA

❏

Fina

ncia

l sup

plie

s ar

e in

put t

axed

and

no

GST

isch

arge

d on

suc

h su

pplie

s. S

ince

you

do

not p

ayG

ST, y

ou c

anno

t cla

im in

put t

ax c

redi

ts o

n ba

nkfe

es p

aid

by y

our o

rgan

isat

ion.

A24

Inte

rest

exp

ense

Non

-CA

❏

Sam

e as

abo

ve.

You

cann

ot c

laim

inpu

t tax

cred

its o

n in

put t

axed

sup

plie

s.

APPE

ND

IX 3

: TR

ANSA

CTI

ON

MAT

RIX

GST

Man

agem

ent f

or S

port

Acq

uisi

tions

No.

Des

crip

tion

GST

Effe

ctSt

rate

gies

/act

ion

Ref

eren

ces

for

furt

her r

eadi

ng

A25

Cap

ital

impr

ovem

ents

CA

❏

Cap

ital i

mpr

ovem

ents

to y

our o

rgan

isat

ion’

sbu

ildin

gs a

nd o

ther

fixt

ures

will

repr

esen

t tax

able

supp

lies.

You

are

ent

itled

to c

laim

inpu

t tax

cred

its fo

r GST

pai

d in

rela

tion

to th

ese

purc

hase

s.

➪

Ensu

re y

our o

rgan

isat

ion

rece

ives

a ta

x in

voic

e fo

r the

acqu

isiti

on s

o th

at in

put t

ax c

redi

ts c

an b

e cl

aim

ed.

A26

Rei

mbu

rsem

ents

CA

❏

Whe

re y

ou m

ake

reim

burs

emen

ts to

em

ploy

ees

or a

gent

s w

ho in

cur e

xpen

ses

dire

ctly

rela

ted

toth

eir a

ctiv

ities

in th

at c

apac

ity, y

ou a

re g

ener

ally

entit

led

to in

put t

ax c

redi

ts e

qual

to 1

/11th

of t

heac

tual

reim

burs

emen

t.

➪

Ensu

re y

our e

mpl

oyee

s re

tain

tax

invo

ices

or r

ecei

pts

so th

at y

our c

lub

can

clai

m in

put t

ax c

redi

ts fo

r the

reim

burs

emen

ts.

A27

Coa

chin

gC

A, o

ut o

fsc

ope

❏

If th

e ac

quis

ition

of c

oach

ing

serv

ices

is fr

om a

regi

ster

ed e

ntity

, org

anis

atio

n m

ay c

laim

inpu

t tax

cred

its fo

r GST

pai

d fo

r the

coa

chin

g se

rvic

e.

❏

If th

e co

achi

ng s

ervi

ce is

sup

plie

d by

an

unre

gist

ered

pro

vide

r, th

e tra

nsac

tion

will

not b

ea

taxa

ble

supp

ly a

nd th

eref

ore

wou

ld b

e ou

tsid

eth

e sc

ope

of th

e G

ST s

yste

m.

Unr

egis

tere

den

titie

s ca

nnot

cha

rge

GST

so

you

cann

ot c

laim

an in

put t

ax c

redi

t on

thes

e ac

quis

ition

s.

❏

Plea

se re

fer t

o Se

ctio

n 3

of P

art 3

for i

ssue

sre

latin

g to

PAY

G.

➪

You

will

need

to e

nsur

e th

at y

ou c

an d

istin

guis

hbe

twee

n di

ffere

nt ty

pes

of p

rovi

ders

- ie

. tho

se w

ho a

rere

gist

ered

and

thos

e w

ho a

re n

ot s

uch

that

you

onl

ycl

aim

inpu

t tax

cre

dits

on

acqu

isiti

on o

f coa

chin

gse

rvic

es fr

om re

gist

ered

ent

ities

.

➪

Ensu

re y

our o

rgan

isat

ion

rece

ives

a ta

x in

voic

e fo

r the

acqu

isiti

on s

o th

at in

put t

ax c

redi

ts c

an b

e cl

aim

ed.

➪

Talk

to y

our s

uppl

iers

of t

hese

type

s of

ser

vice

s to

dete

rmin

e if

they

will

be re

gist

erin

g fo

r an

ABN

.

➪

Con

sult

your

acc

ount

ant o

r adv

iser

for f

urth

er d

etai

lsre

gard

ing

PAYG

.

✷

See

Sect

ion

3 of

Part

3 fo

r fur

ther

disc

ussi

on.

A28

Offi

ciat

ing

/U

mpi

res

etc

CA,

out

of

scop

e❏

As

abo

ve, i

f the

sup

ply

of th

e se

rvic

e is

mad

e by

a re

gist

ered

ent

ity, y

our o

rgan

isat

ion

can

clai

min

put t

ax c

redi

ts fo

r GST

pai

d in

rela

tion

to th

eac

quis

ition

.

❏

If th

e se

rvic

e is

sup

plie

d by

unr

egis

tere

d en

titie

s,yo

u ca

nnot

cla

im in

put t

ax c

redi

ts.

❏

Plea

se re

fer t

o Se

ctio

n 3

of P

art 3

for i

ssue

sre

latin

g to

PAY

G.

➪

You

will

need

to e

nsur

e th

at y

ou c

an d

istin

guis

hbe

twee

n di

ffere

nt ty

pes

of p

rovi

ders

- ie

. tho

se w

ho a

rere

gist

ered

and

thos

e w

ho a

re n

ot s

uch

that

you

onl

ycl

aim

inpu

t tax

cre

dits

on

acqu

isiti

on o

f coa

chin

gse

rvic

es fr

om re

gist

ered

ent

ities

.

➪

Ensu

re y

our o

rgan

isat

ion

rece

ives

a ta

x in

voic

e fo

r the

acqu

isiti

on s

o th

at in

put t

ax c

redi

ts c

an b

e cl

aim

ed.

✷

Ref

er to

Sec

tion

3 of

Par

t 3 fo

rm

ore

info

rmat

ion.

APPE

ND

IX 3

: TR

ANSA

CTI

ON

MAT

RIX

GST

Man

agem

ent f

or S

port

Acq

uisi

tions

No.

Des

crip

tion

GST

Effe

ctSt

rate

gies

/act

ion

Ref

eren

ces

for

furt

her r

eadi

ng➪

Ta

lk to

you

r sup

plie

rs o

f the

se ty

pes

of s

ervi

ces

tode

term

ine

if th

ey w

ill be

regi

ster

ing

for a

n AB

N.

➪

Con

sult

your

acc

ount

ant o

r adv

iser

for f

urth

er d

etai

lsre

gard

ing

PAYG

.

APPENDIX 4: GLOSSARY


HOW TO

UnderstandGST TerminologyAcquisition

Acquisition includes goods and services you buy to conductyour enterprise. It also includes many other transactions, suchas getting advice or information, taking out a lease of businesspremises or hiring business equipment.

Adjustments

Adjustments are the changes you may need to make on yourBusiness Activity Statement to increase or decrease youramount of GST payable or refundable for a tax period.

Adjustment note

Adjustment notes detail changes to consideration for a supply.You will need an adjustment note from the supplier before youcan claim additional input tax credits for an acquisition forwhich you have been required to pay more.

Adjustment period

This is the tax period in which you may need to make someadjustments for acquisitions or importations. These are theadjustments to claim more or pay back some input tax creditsbecause your planned use of an acquisition or importation inyour enterprise has changed. The adjustment period for theseadjustments is the period which ends as close as possible to 30June. All other adjustments are done in the tax period inwhich you find out about the need to make the adjustment.This may not be the tax period which ends on 30 June.

Australian Business Number

The Australian Business Number is the new identifier for yourdealings with the Tax Office.

Business Activity Statement

This is the form you use to account for GST and some othertaxes. A Business Activity Statement (BAS) must be lodgedby a registered entity for each tax period.


Consideration

Consideration has a wide meaning for GST purposes. Anypayment (in money or kind) made in return for a supply isconsideration. It also includes doing something or not doingsomething in response to a supply, or to get someone to makea supply.

Creditable acquisition

You make a creditable acquisition if:

• you acquire a thing for a creditable purpose• the supply of a thing to you is a taxable supply• you provide, or are liable to provide, consideration for

the supply, and• you are registered or required to be registered.

Creditable purposeYou acquire something for a creditable purpose if you acquireit to carry on your enterprise. An acquisition made for aprivate purpose is not for a creditable purpose.

Enterprise

An enterprise includes an activity or series of activities done inthe form of a business or in the form of an adventure orconcern in the nature of trade.

Entity

An entity is an individual (for example a sole trader), a bodycorporate (a company), a corporation sole, a body politic, apartnership, an unincorporated association or body of persons,a trust or a superannuation fund.

GST-free supply

If a supply is GST-free you do not charge GST on the supply,but you are entitled to input tax credits for anything acquiredor imported for use in your enterprise.

Input Tax Credit

You are entitled to an input tax credit for the GST included inthe price you pay for an acquisition if:

• the acquisition was for a creditable purpose,• you are registered,• you provide consideration for the acquisition, and• the supply to you was a taxable supply.

Input taxed supply

If a supply is input taxed you do not charge GST on thesupply, but neither are you entitled to input tax credits foranything acquired or imported to make the supply.

APPENDIX 4: GLOSSARY


Supplies

Supplies include the goods and services sold in yourenterprise. Not all supplies are taxable supplies.

Supply

Supply is a very broad term and includes selling goods andservices, providing advice or information, and a range of othertransactions.

Taxable supply

A supply is a taxable supply if:

• you make a supply for consideration• you make the supply as part of carrying on your

enterprise• the supply is connected with Australia, and• you are registered or are required to be registered.

Tax invoice

A tax invoice is a document generally issued by the supplier.It shows the price of a supply and indicates whether it includesGST and may show the amount of GST. It must show otherinformation, including the Australian Business Number of thesupplier. You must have a tax invoice before you can claim aninput tax credit.

Tax period

A tax period is the length of time you account for GST on yourBusiness Activity Statement. It may be quarterly or monthly,depending on your annual turnover. Quarterly tax periods areperiods of three months ending on 31 March, 30 June, 30September and 31 December. Monthly tax periods end on thelast day of each calendar month. A Business ActivityStatement must be lodged for each tax period

Documents

ABOUT THIS BOOKLET - Complete Performance Solutions · HOW TO USE THIS BOOKLET 4 GST Management for Sport Guide to GST Produced by the Australian Taxation Office in November 1999