As most of you are aware the rate of GST increased from 1 October 2010 from the current rate of 12.5% up to the new rate of 15%. Transition Rules applying to everyone
For most of you, 30 September 2010 will be the end of a GST period. In October, you will most likely be entering invoices (dated 30 September or earlier) for goods and services supplied in September. You have until 11 October 2010 to issue your September invoices. After this date you are obliged to start using the 15% rates. Time of Supply Time of Supply is the critical determinant as to which GST rate you should use. There are a number of situations which could span period either side of the date of change of the GST rate. These may require specific advise from us. Some examples are: a) Lay-by Sales which are not completed by 1 October 2010. b) Construction contracts with progress payments. c) Hire purchase contracts entered after 1 October 2010 for sales contracts entered before 30 September 2010. d) Land transactions where purchase and settlement span the date change. e) Other contracts being paid over a term spanning the date change. If any of these apply to you, please contact us to ensure you are accounting for the GST correctly.
GST on an Invoice Basis This should pretty much be business as usual as you all GST on Goods and Services received or supplied up to 30 September 2010 is returned in that period. Please contact us if you have any concerns. GST on a Payments Basis This return will be a bit more of a challenge. In effect you will have goods and services received or supplied before 1 October at the old rate of 12.5% which are not paid for until after 30 September and will therefore be accounted for at 15% in future GST periods. To compensate for this future adjustment, you will need to make a GST rate change adjustment in the September 2010 return. This adjustment is the GST change on the difference between Accounts Receivable/Debtors and accounts Payable/Creditors. You must prepare a listing of your Accounts Receivable and Accounts Payable as at 30 September 2010 and retain this as part of your GST workings. The GST return form will include provision for this adjustment. A an adjustment calculation form (GST 105) will be included with your usual GST return form. Please note it is essential that all workings be retained and a copy provided to us when we complete your financial statements. If you need assistance with any of these please contact us. Otherwise, please refer to the attached GST Adjustment Letter and forms. GST Adjustment Letter.pdf Copy of GST Adjustment Accounts Payable Sheet.xls Copy of GST Adjustment Accounts Receivable Sheet.xls
