Note: A reference to 'sales' in this section means sales of trading stock and any other trading income but not sales of capital assets or other supplies you might make solely in ceasing or scaling down your business. Trading income includes things like receipts from services.
You can only use the Snapshot method if you meet all of the following conditions:
- Nature of business – reseller or converter. Available to most food retailing businesses.
- Point-of-sale equipment – inadequate.
- Same premises – sell both taxable and GST-free food at the same premises.
- Turnover threshold – SAM turnover of $2 million or less.
You may be eligible to use the Snapshot method if you operate a:
- grocery shop or supermarket
- convenience store or milk bar
- fish and chip shop
- health food shop
- continental delicatessen
- cake shop
- hot bread shop or bakery
- restaurant (dine-in and takeaway)
- sandwich bar
- kiosk or canteen
- tuckshop that is not input-taxed.
This is not a complete list – there are other businesses that may be eligible.
How it works
There are three ways you can use the Snapshot method:
- Two sample periods – you use percentages from sample periods to estimate both your GST-free sales and trading stock purchases.
- Every tax period – you work out your GST-free trading stock purchases from tax invoices but estimate your GST-free sales using sample period percentages.
- The 5% GST-free stock estimation basis – you use the mark-ups on your trading stock purchases to estimate your GST-free sales. You either work out your actual GST-free trading stock purchases or use sample period percentages to work out your GST-free trading stock purchases.
Two sample periods
If you use the Snapshot method option, you work out the percentages of GST-free sales and trading stock purchases in sample periods in a financial year. You then apply the applicable sample period percentages to your total sales and trading stock purchases to estimate your GST-free sales and trading stock purchases for a tax period.
To work out your GST-free trading sales:
- Step 1 – Work out sample period percentages for your sales and trading stock purchases (if not worked out already) for the relevant financial year
- choose your sample periods for sales and trading stock purchases
- for sales, it must be a continuous two week period
- for trading stock purchases, it must be a continuous four week period
- they should be between
- 1 June and 31 July to cover tax periods from 1 July to 31 December
- 1 December and 31 January to cover tax periods from 1 January to 30 June.
- Work out
- the percentage of your GST-free sales for the two-week sample period
- the percentage of your GST-free trading stock purchases for the four-week sample period.
Sampling is done at these times to allow for seasonal fluctuations. However, if you have recently started your business, your first sample period should be in the first two months of trading.
- Step 2 – Apply the sample period percentages
- work out your GST-free sales for a tax period by applying the applicable sample period percentage to your total sales for that tax period
- work out your GST-free trading stock purchases for a tax period by applying the applicable sample period percentage to your total trading stock sales for that tax period
- apply this percentage to each tax period until the next sample period.
Every tax period
Under this method, you use the Snapshot method-two sample periods to work out your GST-free sales.
You work out your actual GST-free trading stock purchases based on your invoices.
You choose this method if you believe using the four-week sample period percentages does not accurately represent GST-free trading stock purchases.
5% GST-free stock estimation basis
Retailers of mainly taxable goods may be able to use the 5% GST-free stock estimation basis to estimate their GST-free sales.
You estimate your total GST-free sales by applying your mark-ups to the product lines you buy and resell GST-free. You then add these together to work out your total estimated GST-free sales.
You can either work out your actual GST-free trading stock purchases from tax invoices or estimate your GST-free trading stock purchases using the Snapshot method-two sample periods.
You may use this option if it is reasonable to conclude that your projected GST-free sales don't make up more than 5% of your total sales.
The following food retailers are likely to be able to use this estimation basis:
- cafes and restaurants with takeaway sales of some GST-free items
- other takeaway food retailers (such as fish and chip shops)
- kiosks or canteens
- tuckshops that are not input-taxed.
If you are purely a reseller and not a converter, see 5% GST-free stock estimation basis under the Stock purchases method.
Example: 5% GST-free stock estimation basis
Vera's Diner has GST-free sales of $1,200 (made up of $600 of bottled water and $600 of milk) in a tax period.
For the same tax period, Vera's total sales are $30,000, so her GST-free sales are only 4% of this total. This tax period is representative of her sales.
Vera can use this estimation basis because the percentage of her GST-free sales is less than 5%.
End of example
If you are eligible to use this option, you work out your GST-free trading stock purchases by either:
- working out your actual GST-free purchases every tax period from your tax invoices
- in the same way as in the Snapshot method-two sample periods.
Estimate your GST-free sales in the following steps:
- Step 1 – identify product lines or trading stock that you buy GST-free and resell GST-free.
- Step 2 – work out for each product line in step 1 the total acquisitions you made for a tax period.
- Step 3 – apply your mark-ups to the totals from step 2 to estimate total GST-free sales for each product line.
- Step 4 – add your estimated GST-free sales for each product line to calculate your total GST-free sales for a tax period.
If your mark-up is the same for each product line, you don't have to separately record the totals for each product line. Only record the total amount of GST-free trading stock purchases. Apply your mark-up to this amount to calculate your total GST-free sales.
Example: Calculating GST-free sales
Lee's Lunch Spot buys a number of GST-free products in the tax period. Lee examines her records and notes that her GST-free trading stock purchases for the tax period are bottled water ($500) and milk ($1,000).
Lee converts $200 worth of the milk purchases into taxable milkshakes and resells $800 worth of this milk GST-free.
Lee works out her GST-free sales as follows:
End of example
- Steps 1 and 2 – the GST-free product lines she bought GST-free and will resell were bottled water ($500) and milk ($800 – that is, $1,000 reduced by $200).
- Step 3 – she applied mark-ups of 60% for bottled water ($500 + 60% = $800) and 30% for milk ($800 + 30% = $1,040).
- Step 4 – her GST-free sales totalled $1,840 ($800 for bottled water + $1,040 for milk).
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