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  • Sales percentage method

    If you use this method, you work out the GST-free percentage of your total sales. You then apply this percentage to your trading stock purchases for the tax period to estimate your GST-free purchases.

    The Sales percentage method assumes that if you only resell goods that you purchase, the percentage of your GST-free sales will be similar to the percentage of your GST-free trading stock purchases.

    You can use this method if you meet all of the following conditions:

    • Nature of business – reseller, or converter whose conversions are 5% or less of total sales, for example, supermarkets and convenience stores. Not available to petrol stations.
    • Point-of-sale equipment – adequate.
    • Same premises – not applicable.
    • Turnover threshold – GST turnover of $2 million or less.

    Example: Sales percentage method

    Anita owns a small supermarket. She resells most of her goods and converts only about 2% of items into taxable sales (mostly cooked chickens). She decides to use the Sales percentage method to calculate her GST.

    In a quarterly tax period, Anita works out the supermarket has a total of $200,000 in sales. Her records from her point-of-sale equipment indicate the total amount of GST-free sales is $60,000. She has a total of $100,000 for trading stock purchases for the period.

    • Step 1 – Total sales = $200,000
    • Step 2 – Total GST-free sales = $60,000
    • Step 3 – Percentage of GST-free sales
      ($60,000 ÷ $200,000 × 100) = 30%
    • Step 4 – Total GST-free trading stock purchases
      ($100,000 × 30%) = $30,000

    Anita has to do the above calculation every tax period using this method.

    End of example

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      Last modified: 23 Oct 2019QC 16262