• Private use of exempt motor vehicles for FBT

ATO has released a draft practical guideline on the private use of eligible motor vehicles by employees. Where private use of these vehicles by your employees is limited, some fringe benefits tax (FBT) car-related exemptions may apply.

The guideline explains when the Commissioner will not apply compliance resources to determine if the private travel was limited to travel:

  • between employees’ home and workplace; and
  • that is minor, infrequent and irregular

for the purposes of the car-related FBT exemptions.

When finalised, this guideline will apply from the 2018 FBT year and onwards.

 

  · Can you claim GST credits?

If you are registered for GST and you charge GST on supplies of property you make – eg sales of new residential premises, subdivided vacant land, sale or lease of commercial property – you may be entitled to claim GST on your related costs.

If your supplier is GST registered and charged you GST on things purchased in order to make those property supplies, you will be entitled to claim GST credits (refunds).

You can check if your suppliers are registered for GST through the:

  • ABN Lookup External Link tool which can be accessed through ato.gov.au
  • ATO app which can be downloaded and is compatible with most smart phones and tablets.

If you are claiming GST credits in your BAS or annual GST return, you must hold a valid tax invoice for your purchase.

There are also special rules for specific GST credit claims, including purchases of vacant land under standard land contracts, property acquired under the margin scheme, or if you intend to make supplies of residential rent.

What you intend to do with the property affects your eligibility to claim GST credits, so if in doubt, seek advice.

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  • Time limits on GST credits and refunds

If you’re entitled to a GST credit or indirect tax refund, you need to claim it within four years.

Your entitlement to a GST credit ends four years from the due date of the earliest activity statement in which you could have claimed it (setting aside any requirement to hold a tax invoice). You can claim the credit in any activity statement lodged in this period.

Generally, if you have a refund resulting from a GST error, you can:

  • revise the activity statement you made the error in
  • request an amendment in writing
  • correct the error in a later one.

You have four years and one day from when you lodged the activity statement to do this. This time limit is called the period of review.

Different time limits apply to refunds for tax periods starting before 1 July 2012.

 

  · GST for food retailers – simplified accounting methods

Five simplified accounting methods (SAMs) have been designed for food retailers who buy and sell a mixture of products, where some are taxable and some are GST-free. You use a SAM to estimate your GST at the end of each tax period.

You cannot use the averaging involved in these methods to set your prices – set your prices in line with the Australian Competition and Consumer Commission’s (ACCC’s) guidelines.

 

  • Stock purchases method

 

The stock purchases method is designed for businesses that are resellers, not converters.

You can only use the stock purchases method if you meet all of the following conditions:

  • GST registration: Required
  • Required transactions: Sell both taxable and GST-free food
  • Turnover threshold: SAM turnover of $2 million or less
  • Point-of-sale equipment: Inadequate
  • Nature of business: Reseller only.

If you are a converter (you buy GST-free ingredients and convert them into taxable items), you cannot use this method.

You may be eligible to use this method if you operate a business such as a:

  • grocery store or supermarket
  • convenience store or milk bar
  • video hire outlet
  • health food shop
  • continental delicatessen
  • butchery
  • service station
  • newsagency
  • greengrocer’s store.

How it works

Using the stock purchases method, the percentage of your GST-free sales is taken to be the same as the percentage of your GST-free purchases.

There are three ways you can use the stock purchases method:

  1. Every tax period – you work out your percentage of GST-free purchases accurately then use this percentage to estimate your sales.
  2. Two four-week sample periods – you reduce your administrative workload further by estimating both your GST-free sales and purchases.
  3. 5% GST-free stock estimation basis – you track only the GST-free goods that you purchase and resell (such as bottled water, pure fruit juice, milk or fresh fruit). This reduces your administrative workload even further as you only track your GST-free purchases and estimate your GST-free sales.

You must complete a daily worksheet detailing your transactions. If you choose to use every tax period or two four-week sample periods, this worksheet should contain a breakdown of your total purchases for the period. It should distinguish between your taxable and GST-free purchases.

If you choose to use the 5% GST-free stock estimation basis, your worksheet should show only the GST-free purchases that you resell GST-free for each tax period.

Every tax period

Using this option, you calculate the GST credits on your purchases but only estimate the GST you are liable to pay on your sales. You do this in four steps:

  • Step 1 – record your total stock purchases.
  • Step 2 – record your total GST-free stock purchases.
  • Step 3 – divide your GST-free stock purchases by your total stock purchases to calculate your percentage of GST-free purchases.
  • Step 4 – apply this percentage to your total stock sales to estimate your total GST-free sales for the period.

You must complete these four steps for every tax period.

 

Source: ATO website