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FNSBKG404 1: Activity 1

Goods and services tax (GST) is a 10% broad-based tax on most goods, services, and other items sold or consumed in Australia. Businesses must register for GST if their turnover exceeds $75,000 or is likely to exceed it. Cash accounting tracks actual cash inflows and outflows, while accrual accounting records expenses and sales when they occur regardless of cash flow. Tax invoices must include the seller's identity, ABN, date issued, item descriptions and prices, and GST amount to claim GST credits.

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94 views

FNSBKG404 1: Activity 1

Goods and services tax (GST) is a 10% broad-based tax on most goods, services, and other items sold or consumed in Australia. Businesses must register for GST if their turnover exceeds $75,000 or is likely to exceed it. Cash accounting tracks actual cash inflows and outflows, while accrual accounting records expenses and sales when they occur regardless of cash flow. Tax invoices must include the seller's identity, ABN, date issued, item descriptions and prices, and GST amount to claim GST credits.

Uploaded by

natty
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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FNSBKG404 1

 
Activity 1
1. What is GST?
 Goods and services tax, often known as GST, is a broad-based tax of 10% on
most goods, services and other items sold or consumed in Australia. GST applies
to most Australian businesses and it's highly likely that your business will be
affected by the tax.

2.    When do I need to register?


 As a business owner, it's your responsibility to register for GST if your turnover
exceeds the $75,000 threshold or is likely to exceed it. The ATO advises that if
you've just started a new business and expect it to earn $75,000 or more in its first
year of operation, you should register for GST.
 (https://www.business.gov.au/info/run/tax/register-for-goods-and-services-tax-gst)

 
3. When is the cash system used?
 The cash system is generally suited to smaller businesses that mostly handle
transactions in cash, for example a hairdresser's or a grocery store.
(https://www.business.gov.au/finance/accounting/cash-vs-accrual-accounting)

 
4. What is the main difference between cash and accrual accounting?
  Cash accounting tracks the actual money coming in and out of your business,
while, if you use accrual accounting, you record expenses and sales when they take
place, instead of when cash changes hands.
(https://www.business.gov.au/finance/accounting/cash-vs-accrual-accounting)

5. List at least 5 GST free supplies.


      a) Beverages
b) Doctors
c) Food
(https://www.homeaffairs.gov.au/busi/duty/indi/brokers/gst-exemptions-(non-
taxable-importations)

  
4.    Describe a Tax Invoice and list the information that must be included on a tax
invoice.
 Tax invoices for taxable sales of less than $1,000 must include enough
information to clearly determine the following seven details:

1. that the document is intended to be a tax invoice


2. the seller's identity
3. the seller's Australian business number (ABN)
4. the date the invoice was issued
5. a brief description of the items sold, including the quantity (if applicable) and
the price
6. the GST amount (if any) payable – this can be shown separately or, if the
GST amount is exactly one-eleventh of the total price, as a statement such as
'Total price includes GST'
7. the extent to which each sale on the invoice is a taxable sale (that is, the
extent to which each sale includes GST)
1. Example 1 meets this requirement because the sale is clearly identified
as being fully taxable by the words 'total price including GST'
2. Example 2 meets this requirement in two ways: it shows the GST
included in each line item (see column with the GST amount), and the
sale is clearly identified as being fully taxable by the words 'the total
price includes GST'.
2.  In addition, tax invoices for sales of $1,000 or more need to show:
1. the buyer's identity or ABN

If your tax invoices meet the requirements for sales of $1,000 or more, you
can also use them for sales of lesser amounts.     

 Example 1: Tax invoice for a sale under $1,000

Example 2: Tax invoice for a sale of more than $1,000


End of example

If you supply or receive an invoice which only has a figure at a wine


equalisation tax-goods services tax (WEG) label, you will need to obtain
further information to be able to claim GST credits and for it to be considered
a valid tax invoice.

https://www.ato.gov.au/Business/GST/Issuing-tax-invoices/

 
 
 

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