Wouldn’t it be great if GST applied equally to all goods and services? Here are some examples of where the rules are different.
Taxis Drivers, Chauffers and other ‘Ride-Sourcing’ Providers
If you provide “ride sourcing or sharing services” (taxi etc) then you MUST register for GST. No $75k threshold – you are in!
ATO – Ride Sourcing and GST
Pre-Establishment Costs (before the company exists)
Any costs that a person incurs before setting up the legal company may include GST. You can claim that GST back (in the company) after registering the company for GST once it is registered.
ATO – Special Rules for Pre-Establishment Costs
Second Hand Goods
Perhaps it’s not fair to call it warped because to me it sort of makes sense. If you buy second hand goods to then on-sell, you can (in effect) claim back GST on the purchase even if the person you bought them off didn’t charge you GST.
ATO – Second Hand Goods
Grants
If you are registered for GST and another entity is registered for GST and they “grant” you funds then there is no GST on that transaction if you do not supply anything to the giver.
ATO – Grants and Sponsorship
Insurance Settlements
If you are able to claim GST credits for the item of insurance you are now being paid for, i.e., it was all related to your GST turnover business activities, and you have informed the insurer that you are able to claim GST credits THEN you DO NOT have to pay GST on the amount of the insurance settlement
ATO – Insurance Settlements
Car Insurance Settlements/Payments
It depends on who the insurer pays and whether the insurer has a contract with the repairer. Generally, no GST is claimable for payments the insurer makes directly to the repairer when they have a contract with that provider, as the policy holder has not made any payment. BUT if the insurer pays a provider on your behalf, then you can claim GST.
ATO – Car Insurance Settlements
GST Groups
If your entities are in a GST group then transactions between them do not have GST on them
ATO – GST Groups
Non-profit Sub-Entities
A non-profit entity can have one set of GST registrations and set up a GST sub-entity which is NOT treated the same for GST. That is, the sub-entity might choose not to be registered and therefore NOT charge GST.
ATO – NFP Sub-Entities
Concessional GST for Commercial Accomodation
If an individual stays 28 days or more in eligible commercial accommodation, they pay 5% GST instead of 10%.
ATO – GST and Property
Restaurant Tips
Voluntary tips do not attract GST if the tips are passed on to the staff…if they are not paid to the staff, then GST must be declared. Non-voluntary tips do attract GST.
ATO – GST and Restaurant Tips
Water and Bread Sold in Restaurant or Venue
Water and bread are normally GST free items, but if sold in a restaurant they attract GST. In fact all food that is normally GST free attracts GST if it is consumed in the place of purchase. BUT if the place of sale is a not-for-profit entity involved in fundraising or similar activities, GST does not need to be charged.
ATO – GST and Food
GST Free Food Delivered
Similarly, retail food that is normally GST free if it is delivered with prepared food, attracts GST. The whole supply is considered to be catering and therefore the whole order attracts GST. This does not apply to wholesale deliveries, where mixed supply may be delivered.
ATO – GST and Food
Voluntary Withholding for Contractors
If the contractor is registered for GST, then whether they charge GST or not is governed by whether or not the paying business is entitled to a GST credit. If the business IS entitled to a GST credit then the contractor should NOT charge GST.
ATO – PAYGW Voluntary Agreements
Property Bought Before GST
If you are selling property that was bought before 1 July 2000, GST applies, even though it didn’t when you bought it. What’s more, there are two different methods you can choose between in calculating the GST amount.
ATO – Margin Scheme
Expenses On-Charged to Client or Reimbursed
Financial supplies, property water and rates are generally GST free, but may have GST added if another entity pays for these services. Office supplies, contractors, materials and travel costs may already have GST in the price, and may have GST added again on top if it is deemed that a service has been supplied. BUT is it a reimbursement or is it an oncost? Have you paid for something on behalf of another (reimbursement), or have you provided a service, (oncost)? Often the decision will come down to the agreement between the parties.
ATO – Principal and Agent
Agents Charging for Performing Artists
Even though a performing artist may engage an agent to bill on their behalf, the artist is still the entity who is making the supply to the end user and can therefore charge and claim GST if registered, assuming the supply is not subject to PAYG withholding. If PAYG withholding applies then GST does not apply. BUT the name on and ABN on the tax invoice to the customer can be either the agent’s or the artist’s.
ATO – Performing Artists
Simplified Accounting Method
The simplified accounting method (SAM) for food retailers is meant to be simple…but we’re not so sure. There are five methods to choose from, based on an average percentage, “snapshot” sample of business, or standardised percentages (“business norms”). But you have to know whether you are a “reseller” or a “converter” or both. What’s more, the SAM can only be used for the food part of the business, so if the business has other aspects to it then GST must be calculated as usual; SAM does not apply. Whichever method you choose, you must stick to it for a year, so if it turns out you pay more GST too bad.
ATO – Simplified Accounting Methods for Food Retailers
