The New Tax System

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SMALL BUSINESS, EDUCATIONAL AND COMMUNITY ADVISER
EDUCATION PROGRAMME
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EDUCATIONAL BODIES COURSE 3 Questions Answers
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Question 1
Q

• We are a small educational body and the total
  amount we receive for all the goods and services
  that we supply is under the registration
  threshold of 100,000.
• Is there any benefit for us if we register for
  GST?

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Answer 1
A

• Most approved educational bodies, including those
  that provide pre-school, primary, and tertiary
  education, will benefit by registering for GST

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Question 2
Q

• As an educational body, should we choose to lodge
  our Business Activity Statement monthly, or
  quarterly?

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Answer 2
A

• Educational bodies have the option to file
  monthly or quarterly returns.
• Some non profit organisations will find that
  quarterly returns are the better option

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Question 3
Q

• We understand that the cash basis of accounting
  for GST is easier.
• Can educational institutions register on a cash
  basis?

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Answer 3
A

• Yes, if its annual turnover is 1 million or
  less.
• The government has indicated that all charities
  may use the cash basis regardless of turnover.

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Question 4
Q

• Will the various associations allied to
  educational institutions have to register for GST?

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Answer 4
A

• Unless their turnover exceeds 100,000 they may
  choose not to register.
• If they are not registered they cannot claim
  input tax credits.
• Obtain an ABN even if they choose not to register
  for GST

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Question 5
Q

• If we operate more than one campus do we need to
  register each one separately?

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Answer 5
A

• Register each campus separately to become a
  distinct entity for GST purposes.
• Remain as one entity for GST purposes.
• Avoid the need to include GST on inter-campus
  transactions

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Question 6
Q

• Do we have to order new stationery?

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Answer 6
A

• Tax invoices comply with GST requirements and the
  correct Adjustment Notes

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Question 7
Q

• We have calculated that it will cost us a great
  deal to modify our systems and provide our staff
  with training.
• Is there any assistance available?

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Answer 7
A

• The Government has provided funding to various
  bodies to assist you with implementing the new
  system.
• Information is available from the ATO and the GST
  Start Up Assistance Office.

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Question 8
Q

• We use an accrual system and allow customers to
  pay in installments.
• Is GST payable and when?

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Answer 8
A

• GST will be payable
• on the full value of all taxable supplies
• from the date the tax invoice
• is issued or the first payment is made whichever
  is the earlier

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Question 9
Q

• What happens if a transaction amount alters after
  it has been accounted for in a Business Activity
  Statement?

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Answer 9
A

• Adjustments will occur if
• goods are returned by you to a supplier or to you
  by a customer
• the original purchase price is altered
• discounts
• debts become uncollectible or are recovered
  subsequent to an adjustment

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Question 10
Q

• Can I claim an Input tax credit equivalent to
  1/11th of ALL my purchases?

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Answer 10
A

• No, acquisitions may be input taxed or
  GST-free.
• Otherwise Input tax credit in respect of all
  purchases that are creditable acquisitions.

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Question 11
Q

• Are salaries and wages and superannuation
  contributions subject to GST?

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Answer 11
A

• NO
• PAYE withheld on salaries and wages, and FBT may
  be offset against any GST owing by the ATO.

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Question 12
Q

• If a supplier such as a tutor or contractor is
  not registered for GST, can we claim an Input Tax
  Credit?

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Answer 12
A

• No, a non-registered enterprise does not issue
  GST Tax Invoices.
• Withhold tax at 48.5 if the business does not
  provide you with an ABN

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Question 13
Q

• We use Petty Cash for small purchases. Can we
  claim Input Tax Credits even if we do not have a
  Tax Invoice

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Answer 13
A

• YES
• If purchases were each 50 or less.
• Documentary evidence is required to support the
  claim.

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Question 14
Q

• If our Input tax credits exceed the GST payable
  to the ATO in a Tax period -
• Will we receive a refund?

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Answer 14
A

• Yes
• Transfer the refund into your nominated bank
• within 14 days of lodging your
• Business Activity Statement
• if you do not have any other tax debts to be
  offset against this amount.

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Question 15
Q

• Do we have to pay GST on insurance premiums?

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Answer 15
A

• Yes, if they are an expense in providing your
  services.
• You will be entitled to the relevant Input tax
  credit.

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Question 16
Q

• We outsource many of our maintenance and catering
  activities.
• Will we be charged GST by the suppliers?

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Answer 16
A

• Yes, if they are registered for GST.
• You can claim an input tax credit.

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Question 17
Q

• We have budgeted to purchase a new motor vehicle
  for educational use in July.
• Will we be entitled to an Input tax credit in
  respect to the GST paid?

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Answer 17
A

• Yes, provided it is an input into the approved
  educational services you are providing.
• Transitional rules do not concern you.

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Question 18
Q

• If we supply books, computers, musical
  instruments etc. to students will we have to
  charge GST?

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Answer 18
A

• Yes, if they become the property of the students,
  they are taxable supplies.
• If you retain ownership of the items, and merely
  loan them to students, there will be no GST
  payable.

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Question 19
Q

• If we decide not to charge our customers GST on
  non GST-free goods and services do we escape
  paying GST?

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Answer 19
A

• No, you will be liable for GST on all relevant
  transactions, taxable supplies
• even if you do not collect it from your
  customers.
• 1/11th of all the invoices must be paid to the
  ATO.

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Question 20
Q

• Are fees charged for all education courses GST -
  free?

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Answer 20
A

• Most educational courses offered as part of an
  approved curriculum by Government accredited
  institutions will be GST free.
• If in doubt,
• seek confirmation from the ATO.

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Question 21
Q

• We provide full board and lodging for staff in
  our own residences.
• What GST is payable?

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Answer 21
A

• This is a complex area.
• Basically the accommodation for staff will be an
  input taxed supply.
• No GST is payable by the staff
• but neither will you be able to claim any input
  tax credits.

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Question 22
Q

• We recruit some of our students from countries
  outside Australia? The bills are sent to their
  parents who usually pay us in foreign currency?
• Do we charge them GST?

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Answer 22
A

• Supplies made in Australia
• means that
• all the rules that apply to resident students
  will apply to foreign parents.
• All tuition fees will still be GST-free.

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Question 23
Q

• We bill staff annually for parking facilities on
  the campus.
• Do we charge GST?

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Answer 23
A

• Yes, on that portion of the invoice which relates
  to the period starting 1 July 2000.

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Question 24
Q

• We provide full board and lodging for students in
  our own residences.
• What GST is payable?

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Answer 24
A

• The is a complex area.
• Basically the accommodation for students will be
  a GST-free supply if the students are attending
  a primary, secondary or special education school
  (both remote and rural areas).
• Cost of meals - some of which is GST-free and
  the rest is subject to GST.

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Question 25
Q

• We organise regular excursions for our students
  locally, nationally and internationally.
• Do we collect GST on the cost?

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Answer 25
A

• Excursions
• which directly relate to the approved curriculum
  organised by the educational institution will be
  GST-free

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Question 26
Q

• If a third party sponsors a scholarship for a
  student, will it be subject to GST?

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Answer 26
A

• Yes,
• if it benefits the sponsor in the form of
  advertising.

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Question 27
Q

• Will donations received by an institution be
  subject to GST?

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Answer 27
A

• GST will not be payable
• provided that
• the donation is unconditional.

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Question 28
Q

• Is GST payable on the grants received from the
  government?

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Answer 28
A

• If it is for specific purposes,
• then it will be subject to GST.
• The ATO is issuing specific ruling.
• Grants received from the government are subject
  to GST.

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Question 29
Q

• Parents often accompany groups on excursions.
• Will they have to pay GST on their costs?

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Answer 29
A

• No,
• unless there is a
• separate charge to them.

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Question 30
Q

• We have entered into a service contract which
  spans July 1.
• What are the GST implications?

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Answer 30
A

• A complex area.
• Requires careful consideration and/or specialist
  advice.
• Services to be rendered after
• 30 June 2000
• are subject to GST.

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Question 31
Q

• We collect membership fees from students and
  others in respect of various associations
  connected to the institution.
• Must we charge GST on these fees?

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Answer 31
A

• Yes
• Membership joining
• and
• Renewal fees
• will usually be subject to GST.

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Question 32
Q

• We operate a tuckshop on the campus.
• Do we need to charge GST on all sales?

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Answer 32
A

• Provided that your registered entity runs the
  tuckshop
• you can elect to treat all sales as
• input taxed.
• This means that
• you do not charge GST
• but neither can you claim GST on your
  acquisitions.

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Question 33
Q

• We charge a separate
• Subject Levy for specialist subjects.
• Is this fee GST-free?

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Answer 33
A

• You will not
• have to charge any GST
• if the subject is
• part of the approved
• educational curriculum

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Question 34
Q

• Must we include GST in the fee we charge staff
  for the provision of tea and coffee?

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Answer 34
A

• No, but be sure that
• only
• GST-free beverages and food
• are provided

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Question 35
Q

• Is GST payable on the cost of Fringe Benefits
  supplied to staff?

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Answer 35
A

• New legislation is expected to clarify the GST
  and FBT interaction

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Question 36
Q

• We present evening and weekend classes for the
  community to learn new skills.
• Will the fees be subject to GST?

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Answer 36
A

• Yes
• These classes
• are not
• of the approved educational curriculum offered
• by the institution.

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Question 37
Q

• Goods such as uniforms and stationery purchases
  prior to July 1 and held for resale at that date
  include wholesale sales tax paid by us and yet
  we have to charge GST thereon.
• Is there any relief for this?

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Answer 37
A

• Yes
• Take stock at June 30 and
• claim a refund of the Sales Tax
• paid on that stock.
• The amount you charge your customers will be the
  reduced cost, plus your normal dollar value
  mark-up plus 10 GST.

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Question 38
Q

• We run a shop which sells second-hand uniforms
  and books.
• Do we charge GST on the sales even if we have
  paid no GST to acquire the goods?

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Answer 38
A

• Yes
• You must charge GST on all sales

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Question 39
Q

• Do we need to consider GST when setting fees
  payable for 2000?

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Answer 39
A

• Yes
• Tuition fees are GST-free
• but some items on bills which are not directly
  linked to the curriculum may be subject to GST
  from July 1.

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Question 40
Q

• We have been exempt from income tax and have been
  able to receive tax deductible donations for
  specific purposes.
• What is the situation from 1 July 2000?

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Answer 40
A

• You must apply specifically
• for endorsement as an
• income tax exempt charity (ITEC) as well as
• for endorsement as a
• deductible gift recipient (DGR)
• prior to 1 July 2000.

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Question 41
Q

• What is the situation if we are a registered
  entity and we acquire goods or services from a
  non registered business?

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Answer 41
A

• If a business is not registered
• for GST,
• it cannot charge you GST.
• No Input tax credit
• is available to you.

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Question 42
Q

• We are registered and we acquire goods or
  services from a supplier who does not provide us
  with an ABN.
• What are our obligations?

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Answer 42
A

• Withhold tax at 48.5
• of the invoice value
• and
• remit this to the ATO
• in your next return
• as part of the new PAYG regime.

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Question 43
Q

• We are a very small institution and yet we have
  been told that we have to submit our BAS
  electronically to the ATO.
• Is this correct?

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Answer 43
A

• ATO will only refund
• net credits in respect of GST to you
  electronically and not by cheque,
• unless
• your annual turnover is 20 million or more you
  are not obliged to submit your BAS electronically.

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Question 44
Q

• We are required to pay deposits for various
  services at the time we enter into an arrangement
  with the service provider.
• Are these subject to GST?

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Answer 44
A

• If the deposit is held as security,
• no GST is payable.
• If it constitutes an instalment payment, you will
  be charged GST.
• If deposit is forfeited
• then GST is payable.

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Question 45
Q

• We provide accredited training courses on our
  campus.
• We allow outsiders to attend some of our classes
  for a fee.
• Do we need to charge them GST?

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Answer 45
A

• Accredited courses are normally GST-free for
  students who are studying for a recognised
  qualification.
• Other members of the public who choose to enrol
  for specific courses will be charged GST.

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Question 46
Q

• We run personal development programmes for our
  senior students and as part of our professional
  development for staff.
• Can we claim tax inputcredits on the cost?

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Answer 46
A

• Two separate issues
• Students
• Able to claim input tax credits as part of the
  overall accredited educational curriculum.
• Staff
• Able to claim input tax credits if the
  professional development is accepted as a normal
  part of operating your institution.
• Check with the ATO

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Question 47
Q

• Staff sometimes purchase goods for the college
  and request reimbursement.
• Are we entitled to input tax credits on these
  items

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Answer 47
A

• To claim an input tax credit
• you must have the
• relevant tax invoice.
• Item must be used in the provision of accredited
  educational programmes.

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Question 48
Q

• We purchase safety equipment for our maintenance
  staff.
• Are we entitled to claim input tax credits in
  respect of the purchases?

97
Answer 48
A

• Yes
• If they are purchased from a registered supplier
  and provided in your capacity as an employer, you
  may claim input tax credits.
• If employees are required to pay for them, no
  input tax credits can be claimed.

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Question 49
Q

• We frequently pay for staff to attend conferences
  and professional development courses supplied by
  private providers.
• Do we have to pay GST on the cost?

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Answer 49
A

• Yes
• You are acquiring taxable supplies.
• In certain cases, expenses may be considered to
  be a fringe benefit.
• Advice should be sought
• if you are in doubt.