|
TAX TIDBITS
Issue Forty One, June 2010
GST CHANGES TO 15%
COMING UP IN AUGUST 2010 TAX TIDBITS
DID YOU KNOW?
GST CHANGES TO 15%
On the 1st of October 2010 GST will change to 15% from it’s current rate of 12.5%. According to the Government’s calculations the increase in the GST rate will raise an additional $2.2 billion of tax revenue in the 2011 – 2012 year.
The GST rate last changed back in 1989 from a 10% tax to it’s current 12.5% rate. Since 1989 the business environment has changed dramatically, so expect some challenges with the adoption of the new rate.
What happens if a transaction spans 1 October?
The GST rate is the rate applicable at the ‘time of supply’. Time of supply is determined as the earlier of a payment being received or the issuing of an invoice.
What happens if you have a recurring or successive supply?
In this situation you will need to consider the time of supply for each payment made or the falling due of the payment.
What happens if you are GST registered on a payments basis?
There are already rules in place in the GST legislation to deal with a change in the GST rate. For taxpayers registered for GST on a payments basis there will be a calculation required for transactions that straddle 1 October. Further details of this calculation will be advised closer to 1 October.
Example of a change in the GST rate;
Price of a TV if the GST rate increase is passed on to the consumer;
|
Current Price
|
GST Calc
|
Price from 1 October 2010
|
GST Calc
|
| $1,499.00 |
|
$1,532.31 |
|
made up of:
$1,332.44 (GST Exclusive) |
8/9
|
made up of:
$1,332.44 (GST Exclusive) |
20/23
|
plus:
$166.56 (GST Amount) |
1/9
|
plus:
$199.87 (GST Amount) |
3/23
|
Price of a TV if the GST rate increase is borne on to the retailer;
|
Current Price
|
GST Calc
|
Price from 1 October 2010
|
GST Calc
|
| $1,499.00 |
|
$1,532.31 |
|
made up of:
$1,332.44 (GST Exclusive) |
8/9
|
made up of:
$1,303.48 (GST Exclusive) |
20/23
|
plus:
$166.56 (GST Amount) |
1/9
|
plus:
$195.52 (GST Amount) |
3/23
|
COMING UP IN THE NEXT TAX TIDBITS - AUGUST 2010
We will present a summary of points that all businesses should consider regarding the change in the GST rates.
|
DID YOU KNOW?
|
|
HWI can help you check your accounting software to ensure that you account for the change in the GST rate correctly.
HWI is happy to assist you with preparation of your GST returns.
|
Disclaimer Information contained within this document is of a general nature and does not constitute advice. Readers are cautioned not to act or reply on it without first seeking professional advice. The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.
|
| |
