This article explains all the different types of GST categories. Each of your existing codes will be assigned a GST category. This is how Agrimaster determines if the code is subject to GST or is GST free. The GST categories used in Agrimaster are not the official ones used by the Australian Tax Department but they do correspond.
Standard (Included in BAS)
For all codes that will attract GST that can be claimed or needs to be paid to the ATO except for Capital Purchases.
GST must be added to sales (Output Tax). The tax received must then be sent to the ATO. GST is paid with purchases (Input Tax). This tax paid can be claimed back from the ATO if used in your business.
Examples: Wool Sales, Canola, Fertiliser, Stock Expenses, and Insurance.
Capital (Included in BAS)
Capital is a non-official category used by Agrimaster to mark "Capital Acquisitions" which must be listed separately on the 'GST Calculation Sheet' section of the Business Activity Statement (BAS). If it were not for the reporting requirements of the ATO then these codes would be “Standard” (This category is used for payment codes only).
Examples: Plant Purchase and New Buildings.
Capital - GST Free (Included in BAS)
Capital-GST Free is a non-official category used by Agrimaster to mark “Capital Acquisitions” which are GST Free. If it was not for the reporting requirements of the ATO these codes would be “GST FREE”. As this category is seldom used it is available only in the “default/override” option in the transactions window (This category is used for payment codes only).
Example: Land Purchases.
* WE RECOMMEND YOU SEEK YOUR ACCOUNTANTS ADVICE BEFORE USING THIS CATEGORY
Capital-Input Taxed (Included in BAS)
Capital-Input Taxed is a non-official category used to mark input taxed “Capital Acquisitions” which must be reported in the “Capital acquisitions” and “Input taxed acquisitions” sections of the Business Activity Statement. This category has a tax rate of 0%. As this category is seldom used it is available only in the “default/override” option in the transactions window.
Examples: A solar hot water system or a stove for a residential rental property.
GST Free (Included in BAS)
GST Free applies to all business related transactions that do not, by law, have GST included in the price. In farming this will apply to such things as foods ready for human consumption. E.g. Yabbies, fruit, vegetables and grapes, Rates and taxes.
Examples: Land Sales, Diesel Fuel Rebate, and Insurance Claims.
Input Taxed (Included in BAS)
The only input taxed transactions to be entered here, that most farmers will come in contact with are payments in regard to residential rental property. Residential rental properties are Input Taxed. This means that no GST can be charged on the rent and no GST refunds can be claimed on payments made in connection with the property.
Examples: Rent Received Rental Property Expenses, and Credit Interest.
Financial (Included in BAS)
Use this category for all financial supplies. Even though these would normally be listed under “Input Taxed” they are reported on the BAS in a separate section so need their own category. Bank fees and interest are the most likely items in this category. Remember that not all charges made by your bank will be input taxed and GST free to you. Some services will have a GST component. Do not enter any cash movements here (see “Loans, Tax” category below).
Examples: Share Sales & Purchases, Dividends, Debit Interest.
Wages (Not included in BAS)
Wages are categorised separately as they are not reported on the GST calculation of the Business Activity Statement. Enter all codes that record wages paid superannuation payments etc. Do not include codes that record tax deductions (see “Loans, Tax” category below).
Examples: Salaries & Wages, Staff Superannuation.
No Claim (Not Included in BAS)
No Claim is a non-official category used by Agrimaster to mark transactions that are not part of your business. This category would not be required if farmers did not use their business accounts to pay private expenses. No transaction bearing this category will be included in the Business Activity Statement.
Examples: Private Insurances (Vehicle & Household), Drawings, Medical.
Exported (Included in BAS)
"Exported" is a non-official category used by Agrimaster to mark direct exports. These exports must be listed separately on the 'GST Calculation Sheet' section of the Business Activity Statement and Agrimaster uses this category to identify them. If it were not for the BAS reporting requirements these codes would be “GST Free”. To be classified as “Exported” you or your agent must be directly responsible for the export of the goods or services. This is not the case if you first sell your grain to AWB Ltd or your wool at auction.
Examples: Export Hay, Export Shippers.
Loans, Tax (Not Included in BAS)
Enter all codes that deal with the receiving or repaying of a loan or any other capital movements in cash. Also any amounts paid as a tax (income tax, tax deduction, tax withholdings, PAYG, BAD, etc.).
Examples: PAYG Income Tax, Chattel Payments, and Wages Tax.
As a registered business:
- When you sell taxable supplies you must include 10% GST on the selling price.
- When you purchase goods and services you can claim credits on the GST paid in the purchase price.
What is a supply?
A supply is everything that you sell such as: goods, services, provision of advice or information, grant, assign or surrender of real property, create, transfer, assign or surrender any right and agreeing to do or refraining from doing something.
For a supply to be subject to GST it must meet the following criteria: There has to be a taxable supply.
- A supply is made for consideration
- A supply is made in the course of business
- A supply is connected to Australia
- A supplier must be registered
There are three major types of supply:
- Taxable supply: There is GST on the supply and you can claim credits on all purchases used in its production. g. Cattle not directly exported.
- GST-Free Supply: There is NO GST on the supply and you can claim credits on all purchases used in its production. g. Fruit and vegetables.
- Input Taxed Supply: There is NO GST on the supply and you can NOT claim credits on the purchases used in its production. g. Rent received from rental properties and costs associated with the up keep of the properties.
GST: The Goods and Services Tax is an indirect broad-based consumption tax levied on goods and services rather than income. This means the ultimate tax burden is on the consumer, not on the producers/supplier.
It is important that you check with you Accountant on the GST status of supplies and acquisitions.
What is an Acquisition?
Acquisitions are simply your purchases or expenditure. For example: goods, services, acquisition of advice or information, acceptance of a grant, assignment or surrender of real property, create, acceptance of a transfer, assignment or surrender of any right and acquisition of the right to require another person to do or refrain from doing something.
You are entitled to claim GST credits on an acquisition when:
- You are registered for GST.
- GST is included in the price of the purchase.
- The acquisition is required for use in your business. g. Repairs and Fertiliser.
You are NOT entitled to claim GST credits on an acquisition when:
- The purchase is for private use. g. Personal insurance on private vehicles.
- The purchase is for the production of Input Taxed Supplies. g. Purchases for and improvements to rental properties.
- You do not have a Tax Invoice for acquisitions over $75.00 (ex. GST) – as per current ATO recommendations
You do not have to pay GST on acquisition if the supplier is not registered. Businesses do not need to register if their annual turnover is less than $75,000.00. These businesses will be registered with an ABN but not registered for GST. All financial records should be kept for a period of 5 years after they are written, obtained or the transaction completed.
If a supplier does NOT have an ABN, you must withhold 47% of payment. See withholding tax.