GPB Partners Pty Ltd - Accountants & Business Advisors

Frequently Asked Questions

Answers provided below are general in nature only and do not take into account specific circumstances which may impact on the tax affect of the transaction. They should not be relied upon as specific advice. Neither the firm nor any of its employees accepts any liability for any loss or damage to any person as a result of reliance on the answers set out on the web site.

The following are answers to commonly asked questions from other clients. Scroll down to review these questions or open this page in a separate window and use the find function on your browser to search for keywords.

I have heard about non commercial losses and how they can be claimed in the future. Can you explain the situation quickly?

Like most tax issues a quick explanation is not always easy. This new legislation applies for the 2001 and following tax years and applies to individuals who claim a tax loss from a business (it does not relate to negative gearing) against other income. The most common example locally is that of primary production enterprises run by people who derive other income. Generally the losses can only be claimed if the business meets one of the following criteria:
a) the sales or turnover of the business exceeds $20000 per year,
b) the tax written down value of plant and equipment and stock is more than $100000, or
c) the value of real property (land and buildings) is more than $500000 (this value excludes any private use portion eg. the house and surrounding land on a farm not used for primary production).
There are also special rules applying to primary production businesses if the off farm income is less than $40000. The new rules then do not apply.
The affect of this legislation is to only allow the losses to be claimed against the profits made from the venture in future years.
If you believe these new rules may apply to you please contact us to discuss the matter in further detail.

I have been under the impression that as the price of stamps didn’t go up past 45 cents when GST was introduced there was no GST input credit available. Is this correct?

The simple answer is that you are able to claim input tax credits on stamps even though the price was still 45 cents. There was initial confusion in this area as the federal government announced it would absorb the GST on stamps.

What types of medical services are GST free ?

The following medical services are GST-free:

Services for which a Medicare rebate is applicable

Treatment provided to a patient funded by compensation insurers

Preventative services such as checkups, immunisations, pap smears

Investigations such as pathology and diagnostic imaging

Infection control (such as treatment of needle stick injuries of hospital employees)

HIV testing

Services rendered to veterans and their dependents under DVA LMO appointments

What types of medical services are subject to GST ?

The following services are subject to GST :

Medico-legal services (such as medico-legal reports and attendance at court as an expert witness)

Services which involve preparation of reports to third parties (such as insurance medicals, pre-employment medicals, professional driving or flying license checks)

Provision of training to other health professionals (for example, supervision of a trainee, teaching in a commercial course)

Services of an administrative nature (for example being paid to be on call)

Services rendered by a medical officer under VMO non-salary contracts

Contract services similar to those of a VMO

Services rendered to obtain government grants

Some allied health services to veterans and their dependents as specified in the DVA table.

I am registered for GST and receive money on behalf of another enterprise (which has an ABN). Do I charge GST when I remit the money collected to the other enterprise ?

No. You should have a written agency agreement between yourself and the other enterprise. You would then remit the money collected without deducting any GST. However, if you receive a commission, one-eleventh of the commission amount will be deemed to be the GST and must be remitted to the tax office.

I am registered for GST and, as a result of an arrangement with another enterprise, receive reimbursement of various costs. Am I required to charge GST on these reimbursements?

Yes. The reimbursement is considered to be a taxable supply. If the other enterprise is registered for GST they would be able to claim an input tax credit of the GST included in the reimbursement.

I have received an invoice from a business which quotes their ABN but does not state it is a tax invoice, the amount of GST or whether the price is GST inclusive. Am I required to withhold 48.5% of the payment?

No. You are only required to withhold 48.5% of the payment if the other business does NOT provide you with their ABN. In the above case it would appear that the other business does have an ABN but is not registered for GST. In this situation they can not charge GST and are not able to issue a tax invoice.

I operate my business through a company. Can I quote the company ABN on company documents rather than the ACN?

Yes. The Australian Securities and Investments Commission (ASIC) has confirmed the use of ABNs (Australian Business Numbers) on company stationery. Companies with an ABN can use it in place of their ACN, on the condition that the ABN includes the company's ACN as the last nine digits. Stationery not requiring an ABN can still be used quoting the ACN for at least 1 year to use up existing stocks of stationery.

I am a medical practitioner, is there a list of items which shows the GST implications?

Not as far as we are aware. However the general rule is that if the item is covered by Medicare then you will not charge GST. Items such as insurance reports, hospital contracts and medico/legal work will be subject to GST and you will have to add GST to your charge for these services. It is our understanding that the public hospital system will be creating Recipient Created Invoices so you do not need to send them a Tax Invoice.

I account for GST on a cash basis. Does the cheque have to be presented on my bank statement to claim an input tax credit?

No. The drawing of the cheque is sufficient for the claim to be made.

How will cattle be sold at auctions after the GST is introduced?

This will depend on the agent. Auctions for any goods, including cattle, will be held as GST inclusive or GST exclusive depending on the terms of the auction. It is our belief that the better way would be to conduct the auction on an exclusive basis and then if the vendor is registered for GST an additional amount will be payable. An input tax credit would also be available to registered purchasers.

I am a GST registered primary producer and sell my livestock. Do I have to charge GST on the sales?

Yes. GST will be payable, irrespective of the who the purchaser is, as it is the sale of live animals. This is because live animals are not defined as food fit for human consumption.

I live on acreage and am going to sell part of it. I only use the land for my private use, do I have to pay GST when I sell part or all of it?

If a private person sells land that has been used for private purposes then they will not have to pay GST on the sale. This is because private individuals are not in business nor carrying on an enterprise and will not have to register for GST. If the land is subdivided and roads and services are built and supplied then this alone would amount to carrying on an enterprise and would then require registration and GST would be payable on the sale of the land.

My business purchases several items from hobbyists not in business. Do I have to deduct 48.5% if they don't supply their ABN?

Hobbyists are not entitled to have an ABN. They can however supply you with a declaration stating they are hobbyists and there will be no need to deduct the withholding tax. The Taxation Office is currently designing a declaration to be used in these circumstances. If you do not have one in time we suggest you design your own ensuring it includes the name and address of the supplier, the date, description of the goods supplied, a statement to say the supplier is a hobbyist and some proof of identity (eg a photo license number).

I am involved in a not for profit organisation that is registered for GST. Does the organisation have to charge GST on its membership fees.

Yes. In paying a membership fee, an individual acquires the rights of membership (generally set out in the constitution). Whilst nothing tangible may be provided by the not for profit organisation a taxable supply (the rights of membership) has occurred. If the organisation is registered for GST, GST must be included in the membership fee.

Does my business need an Australian Business Number (ABN)?

More than likely. Only businesses that turn over less than $50000 and don't sell to other businesses will not need an ABN. The consequence of no ABN could be 48.5% tax deducted from sales.

I turn over less than $50000 in my business. Do I need to register for GST?

No. It is not compulsory to register although you can choose to register if you wish. If you do register for GST you must charge GST on your sales so any business customers can claim the GST input tax credits. However, if you choose not to register you can not claim back any GST you pay.

I am the treasurer for a local not for profit association. Does my association need have an ABN and register for GST?

If your association receives income from businesses it probably is worthwhile obtaining an ABN. If, however, all your income comes from your members there is not a need to obtain an ABN (unless you are required to register for GST).

GST registration for associations and other non profit organisations is only required if the turnover is more than $100,000 per annum.

Will GPB Partners Pty Ltd do all the GST forms for my business?

No. Unfortunately we do not have sufficient resources to be able to offer this service. We will however assist with computer solutions and with education to help you complete the forms required yourself.

Will I have to charge GST on the sale of my home?

No. GST doesn't apply to residential properties unless you are in the building or developer business.

When do I have to deduct 48.5% from payments to my suppliers?

This is a part of the new tax system and from 1 July 2000 if you purchase items from another business for your business and they don't supply you with an ABN you will have to deduct 48.5% from their total payment and send it to the tax office.

Do I have to charge GST on all my commercial lease rentals?

You will only need to register for GST and charge it on the rent if you turn over more than $50000 from rental and other business income.

Will I have to charge GST on the sale of my commercial property?

Yes. However there is a scheme known as the Margin Scheme which allows for a reduced amount of GST to be charged. You should seek specific advice regarding this matter with your client contact at the firm.

GPB Partners Pty Ltd
Accountants & Business Advisors
ACN 072 733 987
216 Victoria Street, Taree NSW 2430
admin@gpb.com.au

Last Updated : 13 May 2009

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Frequently Asked Questions
Answers provided below are general in nature only and do not take into account specific circumstances which may impact on the tax affect of the transaction. They should not be relied upon as specific advice. Neither the firm nor any of its employees accepts any liability for any loss or damage to any person as a result of reliance on the answers set out on the web site.
The following are answers to commonly asked questions from other clients. Scroll down to review these questions or open this page in a separate window and use the find function on your browser to search for keywords.
I have heard about non commercial losses and how they can be claimed in the future. Can you explain the situation quickly? Like most tax issues a quick explanation is not always easy. This new legislation applies for the 2001 and following tax years and applies to individuals who claim a tax loss from a business (it does not relate to negative gearing) against other income. The most common example locally is that of primary production enterprises run by people who derive other income. Generally the losses can only be claimed if the business meets one of the following criteria: a) the sales or turnover of the business exceeds $20000 per year, b) the tax written down value of plant and equipment and stock is more than $100000, or c) the value of real property (land and buildings) is more than $500000 (this value excludes any private use portion eg. the house and surrounding land on a farm not used for primary production). There are also special rules applying to primary production businesses if the off farm income is less than $40000. The new rules then do not apply. The affect of this legislation is to only allow the losses to be claimed against the profits made from the venture in future years. If you believe these new rules may apply to you please contact us to discuss the matter in further detail. I have been under the impression that as the price of stamps didn’t go up past 45 cents when GST was introduced there was no GST input credit available. Is this correct? The simple answer is that you are able to claim input tax credits on stamps even though the price was still 45 cents. There was initial confusion in this area as the federal government announced it would absorb the GST on stamps. What types of medical services are GST free ? The following medical services are GST-free: Services for which a Medicare rebate is applicable Treatment provided to a patient funded by compensation insurers Preventative services such as checkups, immunisations, pap smears Investigations such as pathology and diagnostic imaging Infection control (such as treatment of needle stick injuries of hospital employees) HIV testing Services rendered to veterans and their dependents under DVA LMO appointments What types of medical services are subject to GST ? The following services are subject to GST : Medico-legal services (such as medico-legal reports and attendance at court as an expert witness) Services which involve preparation of reports to third parties (such as insurance medicals, pre-employment medicals, professional driving or flying license checks) Provision of training to other health professionals (for example, supervision of a trainee, teaching in a commercial course) Services of an administrative nature (for example being paid to be on call) Services rendered by a medical officer under VMO non-salary contracts Contract services similar to those of a VMO Services rendered to obtain government grants Some allied health services to veterans and their dependents as specified in the DVA table. I am registered for GST and receive money on behalf of another enterprise (which has an ABN). Do I charge GST when I remit the money collected to the other enterprise ? No. You should have a written agency agreement between yourself and the other enterprise. You would then remit the money collected without deducting any GST. However, if you receive a commission, one-eleventh of the commission amount will be deemed to be the GST and must be remitted to the tax office. I am registered for GST and, as a result of an arrangement with another enterprise, receive reimbursement of various costs. Am I required to charge GST on these reimbursements? Yes. The reimbursement is considered to be a taxable supply. If the other enterprise is registered for GST they would be able to claim an input tax credit of the GST included in the reimbursement. I have received an invoice from a business which quotes their ABN but does not state it is a tax invoice, the amount of GST or whether the price is GST inclusive. Am I required to withhold 48.5% of the payment? No. You are only required to withhold 48.5% of the payment if the other business does NOT provide you with their ABN. In the above case it would appear that the other business does have an ABN but is not registered for GST. In this situation they can not charge GST and are not able to issue a tax invoice. I operate my business through a company. Can I quote the company ABN on company documents rather than the ACN? Yes. The Australian Securities and Investments Commission (ASIC) has confirmed the use of ABNs (Australian Business Numbers) on company stationery. Companies with an ABN can use it in place of their ACN, on the condition that the ABN includes the company's ACN as the last nine digits. Stationery not requiring an ABN can still be used quoting the ACN for at least 1 year to use up existing stocks of stationery. I am a medical practitioner, is there a list of items which shows the GST implications? Not as far as we are aware. However the general rule is that if the item is covered by Medicare then you will not charge GST. Items such as insurance reports, hospital contracts and medico/legal work will be subject to GST and you will have to add GST to your charge for these services. It is our understanding that the public hospital system will be creating Recipient Created Invoices so you do not need to send them a Tax Invoice. I account for GST on a cash basis. Does the cheque have to be presented on my bank statement to claim an input tax credit? No. The drawing of the cheque is sufficient for the claim to be made. How will cattle be sold at auctions after the GST is introduced? This will depend on the agent. Auctions for any goods, including cattle, will be held as GST inclusive or GST exclusive depending on the terms of the auction. It is our belief that the better way would be to conduct the auction on an exclusive basis and then if the vendor is registered for GST an additional amount will be payable. An input tax credit would also be available to registered purchasers. I am a GST registered primary producer and sell my livestock. Do I have to charge GST on the sales? Yes. GST will be payable, irrespective of the who the purchaser is, as it is the sale of live animals. This is because live animals are not defined as food fit for human consumption. I live on acreage and am going to sell part of it. I only use the land for my private use, do I have to pay GST when I sell part or all of it? If a private person sells land that has been used for private purposes then they will not have to pay GST on the sale. This is because private individuals are not in business nor carrying on an enterprise and will not have to register for GST. If the land is subdivided and roads and services are built and supplied then this alone would amount to carrying on an enterprise and would then require registration and GST would be payable on the sale of the land. My business purchases several items from hobbyists not in business. Do I have to deduct 48.5% if they don't supply their ABN? Hobbyists are not entitled to have an ABN. They can however supply you with a declaration stating they are hobbyists and there will be no need to deduct the withholding tax. The Taxation Office is currently designing a declaration to be used in these circumstances. If you do not have one in time we suggest you design your own ensuring it includes the name and address of the supplier, the date, description of the goods supplied, a statement to say the supplier is a hobbyist and some proof of identity (eg a photo license number). I am involved in a not for profit organisation that is registered for GST. Does the organisation have to charge GST on its membership fees. Yes. In paying a membership fee, an individual acquires the rights of membership (generally set out in the constitution). Whilst nothing tangible may be provided by the not for profit organisation a taxable supply (the rights of membership) has occurred. If the organisation is registered for GST, GST must be included in the membership fee. Does my business need an Australian Business Number (ABN)? More than likely. Only businesses that turn over less than $50000 and don't sell to other businesses will not need an ABN. The consequence of no ABN could be 48.5% tax deducted from sales. I turn over less than $50000 in my business. Do I need to register for GST? No. It is not compulsory to register although you can choose to register if you wish. If you do register for GST you must charge GST on your sales so any business customers can claim the GST input tax credits. However, if you choose not to register you can not claim back any GST you pay. I am the treasurer for a local not for profit association. Does my association need have an ABN and register for GST? If your association receives income from businesses it probably is worthwhile obtaining an ABN. If, however, all your income comes from your members there is not a need to obtain an ABN (unless you are required to register for GST). GST registration for associations and other non profit organisations is only required if the turnover is more than $100,000 per annum. Will GPB Partners Pty Ltd do all the GST forms for my business? No. Unfortunately we do not have sufficient resources to be able to offer this service. We will however assist with computer solutions and with education to help you complete the forms required yourself. Will I have to charge GST on the sale of my home? No. GST doesn't apply to residential properties unless you are in the building or developer business. When do I have to deduct 48.5% from payments to my suppliers? This is a part of the new tax system and from 1 July 2000 if you purchase items from another business for your business and they don't supply you with an ABN you will have to deduct 48.5% from their total payment and send it to the tax office. Do I have to charge GST on all my commercial lease rentals? You will only need to register for GST and charge it on the rent if you turn over more than $50000 from rental and other business income. Will I have to charge GST on the sale of my commercial property? Yes. However there is a scheme known as the Margin Scheme which allows for a reduced amount of GST to be charged. You should seek specific advice regarding this matter with your client contact at the firm.

GPB Partners Pty Ltd Accountants & Business Advisors ACN 072 733 987 216 Victoria Street, Taree NSW 2430 admin@gpb.com.au	Last Updated : 13 May 2009
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