Maria is a convenience store owner who sells a variety of items, including groceries, newspapers, fresh fruit, vegetables, sandwiches and other takeaway food. She decides to use the snapshot method to calculate her GST-free sales and purchases.
Maria has taken a snapshot of her stock purchases in quarter 1 and knows that 78% of them are GST-free. She works out that 72% of her stock sales are GST-free.
Maria's records show the following:
- total stock purchases for the quarter = $121,140
- GST-free stock purchases for the quarter = $94,489 (78% x $121,140)
- total stock sales for the quarter = $160,000, and
- GST-free stock sales for the quarter = $115,200 (72% x $60,000).
Maria's figures for quarter 2 are the same as for quarter 1; that is, the GST-free percentage of her stock purchases is 78% and the GST-free percentage of her stock sales is 72%.
However, when Maria takes another snapshot of her stock purchases and stock sales for quarters 3 and 4, there has been some seasonal fluctuation:
- GST-free percentage of stock purchases for quarters 3 and 4 is 72%
- GST-free percentage of stock sales for quarters 3 and 4 is 64%.
Maria's figures for the whole year are as follows:
- annual stock purchases = $559,140
- annual stock sales = $770,000
- annual GST-free purchases = $417,769
- annual GST-free sales = $520,000
Maria then chooses one of the following three options for calculating and reporting GST: