Worked example

Carlo owns a hot bread shop and has an old cash register that only records the total money received. Carlo's records show that for the current quarterly tax period, his:

  • total stock sales are $120,000
  • total stock purchases are $95,000.

The business norms percentages for hot bread shops are 50% for GST-free sales and 75% for GST-free purchases.

Using these percentages, Carlo works out that, for the quarter, his:

  • GST-free sales are $60,000 (50% x $120,000)
  • GST-free purchases are $71,250 (75% x $95,000).

If Carlo wants to work out his GST-free sales and purchases for the whole year, he applies the same percentages to his annual figures, that is, if his:

  • total annual stock sales are $520,000, his GST-free sales would be $260,000 (50% x $520,000),
  • total annual stock purchases are $412,000, his GST-free purchases would be $309,000 (75% x $412,000).

Carlo then chooses one of the following three options for calculating and reporting GST:

    Last modified: 22 May 2014QC 19056