• Worked example

    Andrew runs a supermarket in which he resells all his goods – he does not convert any GST-free goods into taxable products.

    Andrew looks at his records to check his total stock purchases for quarters 1 and 2 and works out the percentage of GST-free purchases, based on a sample of two four-week periods (June–July). The percentage will be the same for GST-free sales.

    Purchases

    Andrew works out that his:

    • total stock purchases for quarter 1 are $203,000
    • percentage of GST-free purchases is 49%
    • total GST-free purchases for quarter 1 are $99,470 (49% x $203,000).

    Sales

    Andrew works out that his:

    • total stock sales for quarter 1 are $219,500
    • percentage of GST-free sales will also be 49%
    • total GST-free sales for quarter 1 are $107,555 (49% x $219,500).

    Other quarters

    Andrew works out that his:

    • GST-free percentage is for quarter 2 is also 49%
    • GST-free purchases for quarter 2 are $105,350 (49% x $215,000)
    • GST-free sales for quarter 2 are $122,500 (49% x $250,000).

    After examining his purchases for quarters 3 and 4, Andrew works out that 45% of his stock purchases are GST-free, rather than 49%. He works out his GST-free purchases and sales for quarters 3 and 4 using this new percentage.

    Andrew records the results for these quarters, and for the whole year, in a summary (see the table Andrew's purchases and sales record for the whole year).

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

    • calculating and reporting quarterly (or monthly)
    • paying or claiming quarterly but lodging a report annually
    • reporting annually and paying a GST instalment amount quarterly.

    The following pages show what would happen if Andrew selected:

      Last modified: 20 May 2014QC 19057