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You use an activity statement to report your business tax entitlements and obligations, including GST, pay as you go instalments, pay as you go withholding and fringe benefit tax instalments.
If you report GST annually, you use an annual GST return to report actual amounts for GST, wine equalisation tax (WET) and luxury car tax (LCT). If you use option 3, you also use your annual GST return to account for the difference between the total of your instalment amounts and your actual GST liability.
Annual or 'aggregated' turnover is your business yearly turnover plus the yearly turnover of any businesses you are connected or affiliated with.
Annual turnover is used to work out whether you can:
Your Australian business number (ABN) is your identifier for dealings with us and other government departments and agencies.
An enterprise includes a business. It also includes other commercial activities but does not include:
It includes the activities of entities such as charities, deductible gift recipients, religious and government organisations and certain non-profit organisations.
A business asset is a thing you use for purposes of your business, for example, manufacturing equipment, a delivery van or an office computer. Intangible items, such as goodwill, may also be business assets. You generally incur a GST liability when you sell a business asset.
If you make financial sales without exceeding the financial acquisitions threshold - for example, you make both financial and other sales and your financial sales are only a small part of your total sales - you can claim GST credits for your purchases that relate to making those financial sales (providing you have a tax invoice).
For more information refer to GSTR 2003/9External Link Goods and services tax: financial acquisitions threshold.
Financial sales (supplies) are input taxed. Provided certain requirements are met, examples of financial sales (supplies) include:
Some goods and services are not subject to GST and are sold without GST in their price. These sales are referred to as GST-free sales.
Examples of GST-free sales include basic food, exports, sewerage and water, the sale of a business as a going concern, non-commercial activities of charities and most education and health services.
If you sell GST-free goods or services you are entitled to credits for the GST included in the price of your 'inputs' (the goods or services you used to make the goods or services you sold).
See also Input taxed sales and Taxable sales.
You can claim a credit for the GST included in the price of goods or services you buy for use in your business, unless you use the purchase to make 'input taxed sales'.
If you use the purchase partly for private purposes, you will not be able to claim a credit for the full amount of GST, only for the amount that relates to business use.
See also Input taxed sales, Taxable sales and Tax invoice.
GST turnover thresholds are used to work out whether you:
Goods or services you use in your business to make the goods or services you sell.
See GST credits.
Some goods and services are sold without GST in their price, even though GST was included in the price of the inputs used to make or supply them. These sales are referred to as input taxed sales.
If you make an input taxed sale you are not entitled to credits for the GST in the price of your 'inputs' (the goods or services you used to make the goods or services you sold).
Two of the most common types of input taxed sales are:
In special cases, you may be entitled to a GST credit for a purchase that relates to making financial supplies.
You can choose to use the margin scheme when you make a taxable sale of property. GST to be paid is one-eleventh of the margin for the sale and not the normal one-eleventh of the sale price. However, you cannot use the margin scheme if your sale of the property is ineligible to use the margin scheme, for example, if you purchase the property through a taxable sale where the GST was worked out without applying the margin scheme.
You cannot claim a GST credit for a purchase made under the margin scheme even though you may have paid GST on the margin.
Payment for GST purposes is anything you receive for providing goods, services or any other sale. It is usually money, but can be some other form of payment such as goods or services provided instead of money, for example, as in barter transactions. Payment may also be made by way of refraining from doing something.
For GST, a purchase or acquisition includes an acquisition of goods or services such as trading stock, a lease, consumables and importations.
Reduced credit acquisitions are purchases (acquisitions) of some types of things that relate to making input taxed financial supplies. You can claim a reduced GST credit on reduced credit acquisitions.
A business is sold as a going concern if:
For GST, a sale or supply includes:
A sale will be:
Self assessment for indirect taxes commenced on 1 July 2012. When you lodge an activity statement for tax periods that commence on or after that date, you will still need to include the indirect tax payable amounts and any credits that make up your net amount. The Commissioner is taken to have made an assessment based on that net amount on the day you lodge the return. Your return is treated as a notice of assessment signed by the Commissioner and issued on the day the return is lodged.
For more information about the self-assessment system that started on 1 July 2012, refer to Self assessment for indirect taxes - overview
The sale of goods and services that are subject to GST (that is, things that must have GST included in their price) are referred to as 'taxable sales'.
You make a taxable sale if you are registered or required to be registered for GST and:
If you make a taxable sale you must include GST in your price and you are entitled to claim credits for the GST in the price of your 'inputs' (the goods or services you used to make the goods or services you sold).
See also GST-free sales, Input taxed sales.
A tax invoice is a document generally issued by the seller. It shows the price of a sale, indicating whether it includes GST and may show the amount of GST. You must have a tax invoice before you can claim a GST credit on your activity statement for purchases of more than $82.50 (including GST).
For GST purposes a tax period may be a month, a quarter or a year and refers to how frequently you lodge your activity statement (see When to report and pay GST)
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