Correcting GST errors and making adjustments on your business activity statements

If you identify any error in identifying a goods and in a service tax for a previous period or on an already lodged business activity statement (BAS), there is always scope to make a correction.

The ATO has understood the necessities of these adjustments for businesses, which can easily come about because of change of circumstances or facts. These can include:

• Modifying  the price of taxable sale or purchase
• Cancellation of taxable sale or purchase
• GST-free export supplies that are not exported within the required time (and therefore become taxable)
• Changes in creditable purpose  and bad debits

If your business overstated its GST liability, then ATO imposes a four year time limit for making changes, which is considered down from when the error was made. For the mistakes on which not enough GST has been accounted for, then in that condition there is an added factor relating to business’s turnover. If the annual turnover for the business is less than $20 million, then in that scenario adjustment must be made within 18 months. If the annual turnover is more than $20 million then it must be paid within 12 months In General, it can be much easier to correct a GST error on a later activity statement rather than revising the earlier statement. But being able to make an adjustment can be important to avoid liability to any penalties or general interest charge.As adjustments relate to changed facts or circumstances, which will have an impact on the subsequent GST outcome of a transaction, the resulting change in need of an adjustment will generally have resulted in a business having either claimed too much GST, or not claimed enough.

Claiming too much GST

 How does business claim too much GST on a BAS? Whoever provides the information in order to include the BAS could have:

• Missed to include a sales invoice
• Coded a sale as GST free however it includes GST
• Error has been made in coding transactions
• A payment has been included in a purchase that is not claimable as a GST credit

Not calming enough GST

 There are some scenarios in which this might be the case include where a business:

• The error was made in coding the transactions
• Whoever filled out the BAS coded a GST sale as taxable but it was actually GST free

At Absolute Accounting Solutions we can elimimate all your errors in limited time and budget. So contact us at 1300 488 330 or visit www.absoluteaccountingsolutions.com.au

GST for Overseas businesses and Small business company tax rate cut

For your 2016 tax return, the small business company tax rate has been reduced from 30% to 28.5%. This lower rate likewise applies to small businesses that are corporate unit trusts and public trading trusts. If you complete your own company tax return, use the new rate of 28.5% when working out the ‘Tax on taxable or net income’ (T1) in the ‘Calculation statement’

The franking credit top stays unaltered at 30% (even if you are eligible for the reduced company tax rate of 28.5%)

You are a small business if you are a sole trader, partnership, company or trust that has an aggregated turnover less than $2 million.

From 1 October 2016 there is good news for overseas business clients as they are no longer subject to GST. Overseas businesses supplying Australian businesses don't need to register for GST if they:

• Only produce GST-free  supplies through an enterprise carried on outside Australia
• Have a business presence in Australia of less than 184 days in a 12-month period
• Have a GST turnover below the GST registration threshold of AUD $75,000 (because certain supplies will no longer be included in the GST turnover).

 So if you are in Epping and running a small business and looking for someone to discuss about GST and tax. Then look no further Absolute Accounting Solutions is there for you. We with the help of our expert team provide the best solution to all your queries.  Our dedicated team of specialists will take the stress out of your bookkeeping, accounting and taxation.

 At Absolute Accounting solutions we make accounting an absolute breeze.  So for more information Call us at 1300 488 330 or visit http://www.absoluteaccountingsolutions.com.au/

The Sharing Economy and Tax

There are various sharing economy websites and applications working in Australia. The general populations who give merchandise or services through any of them have to consider how GST and wage charge applies to their income.

What is the Sharing Economy?

The Sharing economy connects users and suppliers through a facilitator who usually operates an app or website.

Generally Sharing Economy includes?

• Leasing a room or an entire house or unit for a short timeframe premise
• Giving taxi travel Services (called 'ride-sourcing') for a charge
• Giving individual Services, for example, such as creative or professional services like graphic design, creating websites, or odd jobs like deliveries and furniture assembly
• Leasing an auto parking spot.

The Sharing economy and tax

 If you are involved in the sharing economy, you need to consider the following things:

• If you are carrying on an enterprise whether you need an ABN or you need to register for GST and lodge activity statements
• If the price of the goods and services you are providing includes GST
• If and when you are supposed to provide tax invoices for your sales
• Whether you are Supposed to declare your income in your income tax return or not
• How your sharing economy activities effect your GST  and tax obligations

Providing taxi travel services: If you are a part of organisation providing ride-sourcing services then according to law you need an ABN and you need to be registered for GST and you need to account for GST on the full amount of every fare regardless of how much you earn.

Leasing out a room or all of your house: If you are renting out a room or a whole house then GST wouldn’t be the part of that as GST doesn’t apply to residential rents,so you are not liable for GST on the rent you charge and you cannot claim any GST credits for associated costs.

Renting goods and services: If you are already registered for GST, and you are earning extra money providing services through a sharing economy app or website, you need to account for GST on that extra money through your existing ABN and GST registration.

Leasing an auto parking spot: If you rent out a car parking space it can mean that you are running an enterprise. You will need to get an ABN and register for GST if either:

• You earn, or are likely to earn, $75,000 or more per year renting out the car parking space(s)
• You have an existing enterprise for which you are registered for GST
• Your turnover is, or is likely to be, $75,000 or more a year for all of the goods and services you provide while carrying on a number of enterprises.

For further information about Sharing Economy and how to avoid tax debt you need to contact 1300 488 330

Fringe Benefit Tax (FBT) is a Federal Government tax imposed on employers on the value of certain fringe benefits that have been provided to employees in respect of their employment. The FBT year runs from 1 April to the following 31 March. The current rate of FBT is 49% (2015/2016) and this is calculated on the grossed-up value of the benefit.

Fringe benefit tax payments are different to salary or wages. It's a benefit provided with respect to employment. There are a variety of benefits and these include entertainment, private use of a company car, cheap loans provided to employees, gym memberships, school fees and child care fees. In addition, most employers/salary packaging providers will allow you to claim personal expenses which have been paid in the last 6 months.

Therefore, for those commencing employment in January or towards the end of any FBT year, you should look to claim your full entitlement for the FBT year which ends on 31 of March allowing you to receive $9,094. 80 plus any meals tax-free up to this date. Often referred to as FBT, the Fringe Benefit Tax is imposed on non-cash benefits that employees receive from employers. The tax first came to be in 1986 with the release of the Fringe Benefits Tax Assessment Act of 1986. The ATO can be a little vague in describing Fringe Benefit Tax (FBT): “FBT is paid by employers on certain benefits they provide to their employees or their employees’ associates (typically family members) in respect of the employee's employment. FBT is separate from income tax and is based on the taxable value of the fringe benefits provided”.

Even though the employer is the one that pays a Fringe Benefit Tax, the employee must still report it on their PAYG statement if the benefits exceed $2,000. Despite the requirement to report the benefits, the employee will not be responsible for paying any taxes on the items. Despite these benefits, there are some important things to bear in mind when considering salary packaging. Fringe benefits paid for using salary sacrificing may be subject to Fringe Benefit Tax, although there is a range of exceptions included for employees of not-for-profit organisations and public hospitals.

The Tax Office has several different categories of fringe benefits, which include:
• car fringe benefit
• debt waiver
• loan fringe benefit
• expense payment
• housing fringe benefit
• living away from home allowance
• airline transport
• board (accommodation)
• entertainment
• tax-exempt body entertainment
• car parking
• property fringe benefit, and
• residual benefits (that is, other benefits not covered by the above).

If you need more information in regards to this please call 1300 488 330 and talk to our professionals at Absolute Accounting Solutions.

DISCLAIMER: All information provided in this publication is of a general nature only and is not personal financial or investment advice. It does not take into account your particular objectives and circumstances. No person should act on the basis of this information without first obtaining and following the advice of a suitably qualified professional advisor.