[ABKA533: ASSESSMENT]

Understanding GST
Read through the requirements below, and then complete all parts of the assessment and
then save your work as either a Word document or a PDF file. Once you have saved your
work click on the Assessment submission link within this topic and upload your completed
assessment to your tutor for marking.

Learning Outcomes
By the end of this assignment you should be able to:

 Identify an overview of GST in Australia.

 Recognise the major principles of GST.
 Identify when GST registration is required.
 Recognise the obligations a business has once they are registered for GST.
 Identify the components of a valid sales invoice.
 Identify what the term attribution means and how this affects the GST returned to the
ATO.
 Compare and contrast the cash basis and accrual basis for reporting GST.
 Calculate the GST on a product or service.
 Complete a basic BAS return.

Question One
There are two methods for accounting for GST; Cash basis and accrual basis. Refer to the
course material and other external resources and provide a comprehensive table which
compares both of these methods. Be sure to include the advantages, disadvantages, and
suggest any two types of business that would use each method.

Cash Basis Accrual Basis

Definition
Account for GST on the business activity
statement that covers the period in which
you receive or make payment for your sales
and purchases.
Advantages
You account for GST in the taxable period in
which you make or receive payments. • You
only pay GST to the ATO after you've
received payment from your customers, and
you only claim GST for the purchases and
expenses you've paid for. • Money flowing
through the business is better aligned with
your activity statement liabilities, so it's
easier to manage your cash flow
Definition
Account for GST on the business activity
statement that covers the period in which
you issued the tax invoice or received any
payment for a sale or received the invoice
from your supplier or made any payment for
a purchase.
Advantages
you claim GST when you receive/issue an
invoice or receive/make payments,
whichever comes first • You may claim GST
on purchases and expenses before making
payment to suppliers, except for second-
hand goods

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Disadvantages
You may only claim GST on purchases and
expenses after making payment to suppliers.
Businesses that could use the Cash
method
Businesses with an aggregated turnover of
less than $10 million can choose to account
for their GST using the cash accounting
method. • If you are not carrying on a
business, but your enterprise's GST turnover
is $2 million or less. • You run a kind of
enterprise regardless of your GST turnover,
that is: A government school.
Disadvantages
You may have to account for GST before
receiving payment. • You need to keep a list
of debtor and creditor transactions for the
tax period to account for items that you've
received or issued invoices for, but do not
yet appear in your cashbook.
Businesses that could use the Accrual
method
Most larger businesses must use the non-
cash accounting method.

Question Two
Explain why the principle of supply is critical to the enforcement of GST legislation.

Taxable supply is central to the operation of the GST regime. GST is payable in respect of
a taxable supply, and a GST credit cannot be made without a taxable supply.

Question Three
Below are the transaction values of several transactions that took place for a GST registered
enterprise last quarter. Using the information provided calculate the missing figure, and
include your calculations:

GST Inclusive GST content GST Exclusive

1,500.00 136.36 1,363.63

356 32,36 323.64

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459.00 41.73 417.27

1988.00 180.73 1.807.27

20,544.00 1.867.64 18676.36

16221.00 1474.64 14,746.36

Calculations:
1,500.00/11 = 136.36
32.36+323.64 = 356.00
459.00/11 = 41.73
459.00-41.73 = 417.27
1,807.27x10% = 180.73
1,807.27+180.73 =1,988.00
20,544.00-1,867.64 = 18,676.36
14,746.36x10% = 1,474.64
14,746.36+1,474.64 = 16,221.00

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Question Four
In your own words explain what the term attribution means in relation to GST and provide an
example of how attribution affects the GST returned to the ATO.

Attribution determines when an entity is required to pay GST and when it is entitled to
receive a refund and what period should the taxable supply be recorded in. Entities that
account for GST on a cash basis attribute GST to the period in which consideration is
received but only to the extent that the consideration is received in that period. Entities
that account for GST on an accrual basis attribute GST to the period in which they receive
any of the consideration for the supply or before any consideration is received, the
period in which an invoice is issued for the supply.

Question Five
A summary of the transactions that were entered into by ABC Pty Limited during the quarter
ended 30 September are presented below. You have been asked to prepare the Quarterly
BAS for ABC Pty Limited using this information:

You will need to first complete the GST Calculation sheet (template provided below) for the
period and then fill in the BAS fields presented in the table below, and determine whether a
refund or a liability exists, and what this amount is. Make sure you show all workings.

All the figures shown are GST inclusive where applicable. An estimated amount of
purchases for private use has been determined to be $25 000.

Total sales $350 000

Export sales $ 50 000

Input taxed sale $ 10 000

Adjustments (Sales only) $ 30 000

Capital purchases $150 000

Non-capital purchases $10 000

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Purchases for making input taxed sales $10 000

GST calculation worksheet for BAS

GST Amounts you owe the Tax Office owes from sales

G1 Total Sales (including any GST) G1 350,000

G2 Export Sales G2 50,000

G3 Other GST-free sales G3

G4 Input taxed sales G4 10,000

G5 G2 +G3 + G4 G5 60,000

Total sales subject to GST (G1

G6 G6 290,000
minus G5)

G7 Adjustments (if applicable) G7 30,000

Total sales subject to GST after

G8 G8 320,000
adjustments (G6+G7)

GST on sales (G8 divided by

G9 1A on BAS G9 29,091
eleven)

GST Amounts the Tax Office owes you from purchases

Capital purchases (including

G10 G10 150,000
any GST)
Non-capital purchases
G11 G11 10,000
(including any GST)

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G12 G10 + G11 G12 160,000

Purchases for making input

G13 G13 10,000
taxed sales
Purchases without GST in the
G14 G14
price
Estimated purchases for private
G15 G15 25,000
use
G16 G13 + G14 + G15 G16 35,000

Total purchases subject to GST

G17 G17 125,000
(G12 minus G16)

G18 Adjustments G18

Total purchases subject to GST

G19 G19 125,000
after adjustments (G17 + G18)
GST on purchases (G19 divided
G20 1B on BAS G20 11,364
by eleven)

Is there a GST refund for the period or is there GST to pay? How much is the refund or amount to
pay?

GST Payable
GST Liability is $11,364.00

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