Information on GST

Origin of GST

Implementation of GST

What Knowledge is required?

Documentation of GST Procedures

Assistance for GST Setup

The origin of GST

Australian GST is derived from the first VAT system (value added tax) devised by a French Public Servant in 1955. Since then many countries have taken on variations of the system. The UK introduced VAT in 1973 and New Zealand introduced GST in 1986. Articles published in those countries, suggest that the compliance requirements have been accepted with mixed feelings. Many smaller organisations found that instead of preparing their books once every six months they now had to do so every one or two month. This required some extra effort, however many of those businesses have now more up to date figures, and consequently, a better understanding of their business.

The Australian GST is administered by all suppliers of Goods and/or Services. This is the key point. It that it is the responsibility of the supplying company to collect the tax and remit it to the taxation office. Remember this principle - the supplier collects the tax.

Implementing GST

The key to a good GST implementation is planning, appropriate setup, knowledgeable administration and focused reporting. Your accounting system is, strictly speaking only one of the links in this chain. Obviously, your system will provide you with the main source of information and reporting. The centre of your accounting system will be the tax rate table. Whichever system you use, you will be required to set up a list of tax rates to be used in your transactions. These tax rates are then the basis for subsequent tax reports. Obviously, if these tax rates are incomplete or not appropriate, you will not generate the necessary reports to comply with the legislation.

The next step is to understand how the relationship works between your transaction records and the relevant masterfiles. The master files are inventory, customer, supplier and general ledger. What happens when we make a sale or purchase an inventory item. What if it is tax exempt? What if it is a capital item? What if the Customer is overseas? What if we are importing the item.

Now looking outside your system we need see what level of knowledge is required to successfully, implement and manage a GST environment.

What knowledge is required?

One person in the organisation should obtain a reasonable understanding of the legislation and the impact that it has on the organisation. The legislation in the main is simple to understand. It is a tax on any supply made at 10%. This covers 80% of situations. Unfortunately, it is the last 20 % of the knowledge that takes up 80% of our time. (Damn Pareto!).

Document Procedures

Draw up procedures for both manual processes and your accounting system to make the processes clear to all your staff. This documentation should cover the following: Handling of items taxable and non taxable.

Assistance for GST setup

Acctek can setup your Pastel system to produce the right information to complete you business activity statement.

Using the setup parameters and the powerful reporting tools we can create a detailed GST report that will assist you in completing your GST obligations.  Once the setup has been completed it would not inconceivable that you could complete your return in a matter of minutes.