THE INSTITUTE OF CERTIFIED BOOKKEEPERS.
P: 1300 85 61 81
F: 1300 85 73 93
e: admin@icb.org.au w: www.icb.org.au
September 2013
Click here for the
Online version
News, views and things you need to know
Welcome to the ICB's September 2013 Members Newsletter. You can read the newsletter online by clicking
here.
Contents (for Members)
Important News.
2 Guidelines for ATO contacting your clients
4 The challenges of taking on a 'Shoebox' client
5 Converting Accounting Software Systems
6 Find that information you thought was in an ICB newsletter
Best Practice Bookkeeping.
7 Definition of employment status
9 Withholding Tax for Casual Workers
11 Template to advise employees of tax free threshold regulations
11 Stocktake Rules
12 High Income Threshold
12 Emailing Payslips
13 Annual Adjustment of GST for Private Use
The BAS Agent World.
14 PAYG Withholding Registration via BAS Agent Portal
15 Reconciling the BAS
16 BAS preparation checklist
18 BAS Reconciliation
22 Converting Cash to Accrual
26 Concessional GST on Commercial Accommodation
28 Deferred GST Scheme for Importers
32 Fuel Tax Credits
35 National Disability Insurance Scheme and GST
36 Is a Guest Speaker’s Token of Appreciation Considered a Taxable Supply?
Continued Professional Education
36 ICB's 2014 National Conference - Bookings now open for Full ICB Members
36 This month from the ICB CPE webpage
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ICB Network Meetings
38 Question for you to discuss this month??
39 Upcoming Network Meetings
Other Things Happening in the world
40 Small Business Victoria HR manual and checklist
From the ICB
43 Supervising BAS Agent Program
44 Client Newsletter - eBrief - September 2013
44 What's new this month
From the ATO
45 Correct an instalment or business activity statement
ICB Links
ICB Membership Statistics
ICB Supporters and Sponsors
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Important News for you
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Guidelines for contacting your clients
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The ATO has updated their guidelines on contacting clients of tax or BAS agents.
All ATO initiated correspondence should comply to a set procedure. However, these guidelines do not apply
to correspondence in reply to taxpayer initiated contact.
From the ATO: “Tax practitioners play a vital role in influencing the willing participation of their clients in the
tax and superannuation systems. These guidelines recognise the role of the tax practitioner as the taxpayer's
appointed representative to support them with their tax and superannuation affairs”.
The guidelines have been revised in consultation with the ATO Tax Practitioner Forum with the aims of
ensuring recognition of the role of registered agents, education and compliance of taxpayers, and a more
streamlined approach to ATO initiated contact.
Where a taxpayer is represented by a registered agent, correspondence will be sent to the listed address—
often that of the agent.
What does it mean for registered agents?
When the ATO contacts a taxpayer directly, the agent must be informed by the ATO at least one week
before the correspondence is sent, detailing the title of the document, the purpose of the communication, the
name/s of the taxpayer/s involved, whether any action is required of either the taxpayer or the agent, and the
required time frame or key dates involved.
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Situations where the ATO may contact the taxpayer directly without informing the agent:
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Educational information not requiring action
Marketing and research
Previous letter to the registered agent on the same issue has not resulted in action—therefore the
ATO will send the same request directly to the taxpayer
Legal documents required by law to be served personally on a taxpayer
Large business taxpayers where there is an administrative arrangement in place with a key client
manager
The registered agent has formally notified the ATO the client’s preference for direct communication
No evidence of a relationship with the registered agent for more than two years
High risk situations for example where a taxpayer is suspected of serious non-compliance or fraud
From the ATO Debt and Payment agent helpline regarding external collection agencies contacting
your clients:
Selected agencies have been authorised to attempt to secure payment for tax debt on behalf of the ATO.
The debt is not sold to the agency—it remains a debt to the ATO. Once the debt has been referred to a
mercantile agency (otherwise known as a debt collector or recovery service), they are responsible for the
collection and monitoring of the debt.
The privacy and security of the customer’s information is protected in accordance with Commonwealth
privacy and security requirements while their account is with the collection agency. The agent only requires a
minimum of personal information (including TFN) in order to collect the debt.
If the customer wants to discuss the debt, once it has been referred to the agency they must communicate
directly with the mercantile agent, not the ATO.
Within 10 days of receiving the referred case from the ATO, the agency will issue a demand letter to the
customer that is identified with a case ID number. The customer should wait to receive this letter and
subsequent telephone call from the agent, before taking any action. The ATO considers carefully before
referring a tax debt to an agency, and each matter is assessed on a case by case basis—there are no
blanket rules for when a tax debt will be referred to an agency. However, most cases that are referred are
smaller debts of $25,000 and below—larger debts tend to be handled directly by the ATO.
Interesting note: a tax debt, (even if it is not paid), does not affect an individual’s credit rating.
For more detail on the ATO’s policy regarding external collection agencies click here.
ICB note that this procedure system now stated by the ATO therefore means that you will receive
correspondence before the debt collection agent contacts you to discuss a clients debt. Therefore when they
ring - you know they are going to ring and they should be able to refer to the correspondence received.
ICB have been making the ATO aware for a considerable period of time that the behaviour of debt collection
agents on the phone has not been appropriate and the debt collectors ringing and demanding that the agent
prove who they are and prove they act for the client is inappropriate.
The above steps by the ATO appear to be a good step in resolving part of these issues.
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The challenges of taking on a 'Shoebox' client
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We’ve all had them! And they drive us crazy, yes?!
What is the best way to handle the shoebox ‘rescue job’? What are the hazards and challenges of
dealing with the shoebox?
Factors to consider when taking on a new client:
1. Time. It is always time-consuming and inefficient to process a box full of receipts by manual data
entry.
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2. Cost. Because of the time needed and the messiness of the business records, it will cost the client
more than they think. You need to advise the client clearly with your estimate of time and update the
client frequently, particularly if it is a big catch-up job.
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3. Risk of error. A large amount of manual data entry done in a short period invites a greater chance of
errors when entering the transactions.
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4. Missing and damaged receipts. This can be problematic particularly for the cash payments where
there is no bank statement to verify amounts spent.
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5. Owner drawings and contributions. When there are a lot of cash receipts and records dating back
over years, the client may not have any records or memory of whether cash payments were made
from petty cash or their own funds. Equally, it may be unclear whether cash receipts were banked,
taken as owner drawings, or used for expenses.
Things you can do to make it easier:
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When dealing with receipts over several years, it may be acceptable (with the accountant’s approval),
to enter all transactions as spend and receive money as per the records of the bank statement/s.
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See if you can get the client involved to help with the sorting process into appropriate tax periods —
this can save them time and money (and your sanity!)
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See if you can get hold of the QIF files from the bank-different banks have different historical periods
available for download. This will make data entry MUCH faster if you can access the QIF files.
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You will need to take care of the GST amounts—make sure this is in your letter of agreement. Where
there is any doubt about the GST amount and you are unable to verify it because of missing records,
do not claim it, but code it as ‘query’ or similar to be dealt with by the accountant at end of year. Doing
this will reduce the time taken to enter all the transactions. The receipts still need to be held by the
client as business records. You can check with the client at the time of agreeing to the work exactly
how much detail is required when entering in back-dated transactions.
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At the end of each period run GST reports, and check the reasonableness of the figures given the
business situation for that period.
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Consider using an A-Z document sorter if you are given a huge pile of receipts! This can help with
your own work efficiency and filing at the end of the job.
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Consider using an outsourced service to scan and electronically file the receipts such as Invitbox and
Shoeboxed.
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Consider creating a separate data file for each financial year—particularly if payroll is involved and
you are unable to roll over the file but want to continue working over several years—check with the
accountant before doing this, but it may help to get the work processed quicker.
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If doing this, keep all the other data in the one file, as this won’t usually need rolling over. When the
payroll years are completed, you can use journal entries to bring in the payroll totals.
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Enter statement total per week/month rather than each invoice where appropriate. This can save on a
lot of data entry.
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If retail receipts are involved, use a spreadsheet to track whether z till reads have been received and
entered for each day.
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If there are many missing z-reads and cash information, do not enter figures but make notes for the
accountant on what is missing. In some cases the ATO will use average benchmark figures to account
for the missing information.
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Are there any previous BAS lodgements or end of year lodgements that the accountant can provide
you details of to prevent re-entering of work?
ICB advice is to get pre-payment for big ‘rescue’ jobs. Bill in chunks of 5 - 10 - 20 hours or whatever is
appropriate for the size of the business, and do not continue work until the next payment is made for the next
agreed number of hours. We hear too many stories of bookkeepers ‘helping out’ and taking on rescue jobs,
only to be left with a big unpaid bill.
Other useful resources:
ICB Guide to Cash Reporting
Does the ATO expect that you check every invoice
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Converting Accounting Software Systems
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Things to Consider in the Conversion Process
Moving to another accounting system requires planning and understanding of the transition. The
transition not only includes training but the conversion of data from the old accounting system.
It is recommended that the transition is done at either a new financial year or end of BAS period, and if there
is a lot of data to be transferred, plan for it in several stages.
1. Planning is critical in the transition to the new accounting system as there are many areas and
questions to consider.
2. What is the motivation for the conversion?
3. What will the business gain and lose in software functions by the conversion?
4. What data needs to be moved?
5. What data can be moved?
6. What data does the client want to move, ie history of sales and purchases?
7. Is there a conversion tool available and how reliable is it?
8. At what point in time to start the new file?
9. Consider running the two systems side by side for a period of time e.g., a month or a week to ensure
all is working
10. New authorisation is required for bank feeds with the bank
11. If there is a lag time between old and new bank feeds being activated, use QIF file or manually enter
data to capture transactions not brought in by bank feeds
12. What functions need to be setup first, second and third—do the transition in manageable stages—for
example setup payroll first, then bring in creditors and lastly start invoicing from the new system?
13. Consider how much training the business owner/staff need for the new software and whether you are
able to offer this or if you need a specialist
14. All of the above processes will depend on the specific needs of the business
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Some clients’ data is critical to convert (or manually key) in order for the business to operate. This includes
the following list and should be done before using the new software:
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Names and addresses of customers and suppliers
Names, addresses and employee details
Stock items
Stock on hand at ‘point in time’
Outstanding balances of customers and suppliers
Balances of all balance sheet accounts at ‘point in time’
Bank reconciliation for all bank, loan and credit card accounts
Check GST status and setup
Note that the ‘point in time’ may be different for different functions if you are doing the conversion in
stages
It is imperative that you finalise the old system’s financials before moving to the new system. Reconcile GST,
PAYG, superannuation and all bank accounts before converting.
Use reports from the old system and compare to the same reports in the new system (after bringing in
opening balances), to check that the financials are all correct. (Refer to ICB’s checklist).
Moving accounting systems is not a simple process and we recommend you engage or include a consultant
in the process if you feel it is out of your scope. If for example, the client only wants the opening balances in
the new software, you would be fine to do this yourself. If however, the client wants the entire history of the
business transferred over, then you would consider using a conversion tool or engaging a specialist
consultant to do the conversion process for you.
ICB have designed a checklist to help the transition and hopefully capture all information that the client
requires.
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Find that information you thought was in an ICB newsletter
.
ICB provide quick and easy access to past Member newsletters.
Download and / or access the Newsletter PDF index for 2011, 2012 and 2013
(January - June). The PDF documents contain hyperlinks to the underlying articles
for quick access.
You think you had seen it, check the contents pages and connect straight to it, OR,
you can search for a keyword, press Ctrl and F, enter the word and all listings
containing that word will be highlighted for you......
You will find the indexes on the ICB Members newsletter webpage
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Best Practice Bookkeeping
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Definition of employment status
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What are the Categories?
There are four categories of employment – Permanent Full Time, Permanent Part Time, Casual
and Temporary. Determining which category applies to your employees can be confusing. Below
is an explanation of each category.
Permanent Full Time Employee
A full time employee is an employee that has been employed to work on an ongoing basis for an average
maximum of 38 ordinary hours per week.
Full time employees are entitled to all of the conditions of the National Employment Standards which include:
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Paid annual leave
Paid personal leave
Public holidays
Parental leave
Long service leave (if length of service requirements is met)
Period of notice if terminating job
Permanent Part Time Employee
A part time employee is an employee who is employed to work a reasonably predictable number of hours
and days during the week that is less than 38 hours.
Part time employees are entitled to all of the conditions of the National Award as per a full time worker
however are paid pro rata depending on the hours that they work. Entitlements include:
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Paid annual leave
Paid personal leave
Public holidays
Parental leave
Long service leave (if length of service requirements is met)
Period of notice if terminating job
When hiring a part time employee you must come to an agreement with the employee in writing and this
should include:
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The numbers of hours to be worked daily
Specific days of the week they will work
The start and finish time of each day
The specific times and duration of meal breaks
Or the regular pattern of engagement as agreed by both parties
Any changes to this agreement must be made in writing.
Casual Worker
A casual employee is someone that doesn’t usually have regular hours of work and is not guaranteed
particular hours and is not on a regular roster.
They are paid for the hours of work they perform and receive a casual loading on their rate of pay giving
them a higher rate. This loading is to compensate for not receiving some of the benefits of full time and part
time workers and is usually 25%; you must check the relevant award for the exact rate.
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Most awards state the minimum number of hours to be paid per shift, for example, the Fast Food Industry
Award is 3 hours.
Casuals may also be entitled to penalty rates, loadings and allowances for working on weekends, early or
late in the day, public holidays and overtime. Again this can depend upon your award.
Casuals are entitled to the following under National Employment Standards:
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2 days unpaid carers leave per occasion
2 days compassionate leave per occasion
Community service leave (except paid jury service)
Unpaid parental leave
2 days unpaid adoption leave
A day off on public holidays unless asked to work by the employer in a reasonable manner
A maximum of 38 hours per week, plus reasonable additional hours
If a casual has been employed regularly for at least 12 months and expects to keep working they are entitled
to request flexible working hours and parental leave.
Casuals may also be entitled to long service leave and paid parental leave under the Australian Government
Paid Parental Leave Scheme.
If your casual employee has a reasonable expectation of continuing employment or employed on a regular
systematic system then they would probably be deemed as a permanent employee (full or part time) and
would receive all the normal entitlements and without the casual loading.
If you incorrectly classify an employee as casual and the employee takes it to Fairwork then you could be up
for payment of annual and personal leave for the term of his employment. This could also include fines and
penalties from Fairwork and you would are not able to offset the casual loading already paid to the employee
against this cost so it can end up being quite a costly exercise.
It is important to review casuals to ensure that they continue to be deemed genuine casual employees as
conditions can change over time.
When Must You Make a Casual a Permanent Employee?
The Fair Work Act does not cover this subject. Employers need to check the applicable modern award or
enterprise agreement. Some modern awards like the Fast Food Industry are silent on this issue which means
an employer does not have to offer a genuine casual a permanent position after a specific time period.
Other awards state that a casual can be made a permanent employee after a certain period on employee
request.
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Temporary Employee
Temporary employees are engaged for a matter of days, weeks or months on a fixed term contract or for a
particular purpose or project. Workers engaged to replace permanent employees who might be on long
service leave, maternity leave or workers compensation would also be considered to be temporary. Workers
engaged through an agency would also be temporary.
The key is that the job is not expected to be ongoing - the workplace may have a need for regular and
possibly full time hours but for a short term only. There is no guarantee of work once the agreed
project/purpose/replacement period is completed.
A temporary resident, for example on a 457 visa can be a permanent employee - temporary employment
refers to the job not the immigration status.
Award Finder:
A great tool to use for determining what you award states in regards to the above categories is the Award
Finder on the Fairwork website. This tool allows you to search for your award by job title, occupation, award
code or industry.
To use this tool click on the link below:
https://www.fairwork.gov.au/awards/award-finder/pages/default.aspx
For more information:
http://www.fairwork.gov.au/employment/casual-full-time-and-part-time-work/Pages/default.aspx
http://www.fairwork.gov.au/employment/national-employment-standards/pages/what-are-the-10-nesentitlements.aspx
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Withholding Tax for Casual Workers
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Claiming the Tax Free Threshold from More than One Employer
If you or your client has a casual employee who works for more than one business then they can
potentially claim the Tax Free Threshold (TFT) from more than one employer. This is a change to
the regulations, as previously an employee could only claim the tax free threshold from one employer.
If the employee is certain that their total income for the year will be less than the current tax free threshold of
$18,200 then they can claim the tax free threshold from all their employers, therefore not paying any tax.
The important thing to remember here is that if an employee’s situation changes and they start earning more
money and are likely to earn more than the threshold amount in the year, then they must notify their
employers so that the employee can be taxed correctly.
If the employee’s circumstances change they must advise their employers by completing a new Withholding
Declaration (NAT 3093).
If the employee is earning above the Tax Free Threshold
If the employee earns more than $18,200 in the financial year, then they can only claim the Tax Free
Threshold from one employer. You would expect them to choose the employer that they expect to earn the
most from over the year and claim this from them. They would then claim the No Tax Free Threshold for all
of their other employers.
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What happens if they claim it when they shouldn’t?
If the tax free threshold is claimed incorrectly then the issue is with the employee not the employer. It is the
employee’s responsibility to submit a new declaration if they either leave the current employer and start with
a new employer, and/or their circumstances change, for example, they start working more and therefore are
likely to earn over the tax free threshold of $18,200 for the financial year. If this happens, the employee is
required to start paying tax. If they do not notify the employer and no tax is withheld, then the employee will
be liable for a tax debt to the ATO.
Bookkeeper Process
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Receive the form from the casual employee; check all fields have been completed correctly; if the
employee has claimed the TFT, question the employee regarding other jobs and check that they
understand the requirement to notify the employer of any changes to their working situation.
If appropriate, provide ICB Tax Free Threshold Information Sheet or customise to your business
needs.
Question the employer regarding whether the employee is a genuine casual worker.
Flag to revise the classification as casual every 3-6 months—question the employee and/or employer
as appropriate, to ascertain if there have been any changes that will affect the casual worker status or
Tax Free Threshold.
Set up employee in software with correct employment status and basis, and correct tax tables
selected.
Submit the TFN declaration to the ATO.
o Fill in the paper form manually and mail to ATO
o Fill in via your software, e.g., Xero allows the TFN to be filled and lodged directly from within
the software
o Fill in manually online or upload file and lodge via GovReports or other SBR provider
NOTE: Currently the ATO will accept TFN declarations via the BAS portal, however, it needs to be created
from within the software. Check if your software can create the TFN file.
The Tax File Number Declaration Form
This form has been updated by the ATO to be an editable and saveable PDF file. This allows you to fill in the
form and save electronically. The PDF is not able to be lodged with the ATO via the BAS portal at this time.
http://www.ato.gov.au/Business/PAYG-withholding/In-detail/TFN-and-withholding-declarations/Withholdingdeclaration/
For related information:
ICB Guide to Privacy
ICB Guide to Employer Obligations
ICB Guide to Using GovReports
ICB New Employee Checklist
ICB Guide to Employment Status
ICB Business Information Sheet for Tax Free Threshold
ATO Lodging TFN electronically
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Template to advise employees of tax free threshold regulations
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Employer Business Name:
Employer ABN:
(Date)
Dear (Employee Name)
We are writing to inform you of changes to the Australian Taxation Office regulations regarding
the Tax Free Threshold.
The current Tax Free Threshold is set at $18,200 per financial year.
An employee is now allowed to claim the Tax Free Threshold from more than 1 employer at a
time.
If you work at several jobs and you are certain that your combined income will be less than
$18,200 for the year, you are allowed to claim the Tax Free Threshold from all of your
employers. This means that none of your employers will withhold tax from your earnings.
PLEASE NOTE: It is important that you notify us if your situation changes and your earnings
increase so that you may earn more than $18,200 in total from all employers this year. You will
need to fill in a new Tax File Number Declaration form. Once you earn more than $18,200 you
may only claim the Tax Free Threshold from 1 employer at a time.
What happens if you don’t tell us your total earnings may exceed $18,200?
You must pay tax once you start earning over $18,200. If you don’t tell us your situation has
changed, then you may receive a tax bill from the ATO after you have submitted your annual tax
return. It is your responsibility to pay this to the ATO.
Yours sincerely,
(Business Owner name)
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Stocktake Rules
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Did you know........
There are certain circumstances when a business may not be required to perform a full stocktake each year?
If you are a small business you can use the Simplified Trading Stock Rules if the change in stock value per
year is less than $5000. Simplified Rules means there is no requirement to do a stocktake or account for
changes in the value of stock. You can simply make “a reasonable estimate”.
If the change is more than $5000 in value, then you must use General Trading Stock Rules, and perform at
least 1 annual stocktake to account for changes. The value of the stock must be recorded as at the last day
of the financial year and the first day of the following financial year--and these values should be the same.
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You can choose to use the general rules if you prefer, and account for all stock value changes, even if you
are eligible to use the simplified rules.
If you are not registered for Small Business Concessions then you must use the general trading stock rules.
Keep this in mind, however — in order to use the simplified trading stock rules, the business must have
performed at least one stocktake at some point to establish the initial stock value. And how is a business
going to make a “reasonable estimate” without doing some kind of stocktake? So it’s an interesting one. If
the business were to be audited the ATO would want some records to prove how they arrived at the
“reasonable estimate” and decided that the change was less than $5,000 worth.
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High Income Threshold
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The new high income threshold for 2013-2014 is $129,300
From eTAPS payroll news
The high income threshold affects 3 main entitlements:
1. employees who earn more than the high income threshold and who aren't covered by a modern
award or enterprise agreement, can't make an unfair dismissal claim
2. employees who are covered by a modern award and have agreed to a written guarantee of annual
earnings that is more than the high income threshold, don't get modern award entitlements. However,
they can make an unfair dismissal claim
3. the maximum amount of compensation payable for unfair dismissal is capped at either half the high
income threshold, or 6 months of the dismissed employee's wage - whichever is less.
Information taken from TAPS newsletter - TAPS newsletters available for ICB Members
here
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Emailing Payslips
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Do you need specific authority to email the payslip? It’s a question that is regularly asked. An
employer must give each employee a payslip within 1 working day of their pay day.
Payslips can be issued on paper or electronically.
The electronic version must:
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have the same information as the paper version
be in an easily printable format
be issued securely and confidentially, i.e., to a personal email address, not to a generic work address
that is accessed by many people
be able to be accessed and printed in private by the employee. If for example an employee has no
computer or printer at home, the employer must make available the means to privately view and print
the payslips, or if this is not possible, the employer must issue a paper payslip instead.
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Note that neither FairWork nor the ATO require specific authority to be given by the employee. It is the
employer’s responsibility to ensure that:
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the payslip meets all the current requirements, regardless of whether it is paper or electronic
and the employee has the means to access the payslip if it is issued electronically.
The same protocol is required for issuing payment summaries electronically.
However, an employer may choose to get specific authority from employees to issue electronic payslips—
this may be useful in organisations where there are many employees that have historically always been
issued paper payslips, and the business wishes to swap to electronic versions.
Click here for a template you can use
Further resources:
http://www.icb.org.au/resources/payslip_obligations/
http://www.icb.org.au/resources/employer-obligations
http://www.fairwork.gov.au/pay/pay-slips/pages/default.aspx
Providing electronic payment summaries to payees
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Annual Adjustment of GST for Private Use
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Some small businesses may be able to account for the private portions of expenses once a year
instead of every transaction and therefore on every BAS.
What this means is that when the BAS is lodged you are able claim the full amount of GST in an
expense without deduction of any private portion.
To be eligible for this option the business needs to:
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be a small business with an annual turnover of less than $2 million
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be an enterprise with a GST turnover of less than $2 million
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be reporting BAS monthly or quarterly — i.e., they do not pay GST by instalments or report GST
annually
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they need to assess their eligibility annually.
If the business chooses to do this then they must account for the private portion as an increasing adjustment
in a future BAS.
This adjustment can be made in any BAS up to the due date of lodging their income tax return.
As the bookkeeper it is important that you remember to make this adjustment prior to their income tax being
lodged.
This adjustment covers all purchases that are made partly for private and business (for example, car
expenses 60% business / 40% private) unless the business portion of the purchase relates solely to an input
tax credit.
For more information:
GST and annual private apportionment
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BAS Agent Information
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PAYG Withholding Registration via BAS Agent Portal
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BAS Agents are often asked to register a client for PAYG Withholding when they take on
employees or to de-register them from GST due to changes in the business. You are now able to
complete this through the ATO BAS Agent Portal. This will be more efficient than trying to register
via phone with the ATO.
Steps to Follow
The following steps are the same whether you are registering or de-registering with the ATO:
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Log in to your BAS Portal
Select the client
Select Registrations and click next
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Select Activity Statement
Click on Tax Type Summary
Select Add or Cancel Tax Type (whichever is applicable)
Complete the details on the next screen (eg: start date, number of employees etc)
OR cancel registration
Click next to finalise registration
Re-sign in with your AusKey
ICB recommends that you get signed authority from your client before making any changes in this area and
check with the Tax Agent first to ensure that the registration or de-registration is appropriate for the business
at the time.
For Further Information:
ATO Registration - PAYG Withholding
ICB Guide to Employer Obligations
ICB Guide to Leaving the GST System
Page 14
AUTHORITY TO REGISTER ELECTRONICALLY FOR PAYG OR GST
Client Details:
Entity Name:
Entity ABN:
Registration Effective Date:
Entity’s Declaration
I declare that:
I am authorised to make this declaration.
I authorise the BAS Agent to register for PAYG/GST with the Commissioner of Taxation.
Signed___________________________ Name:
Capacity: (Self / Director / CEO / Partner) Date:
BAS Agents Details:
I declare that:
I am authorised by the entity to give the information required for registration of PAYG/GST to the
Commissioner of Taxation.
Signed__________________________ Name:
Capacity: (Self / Director / CEO / Partner) Date:
BAS Agent Name (Company or trading name):
Contact Name:
BAS Agent Number:
Contact Phone Number
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Reconciling the BAS
.
Do you routinely reconcile the BAS each quarter?
We hear stories of bookkeepers who DO and are abused by the accountant for doing so. Then we
hear of bookkeepers who DON’T and are abused by the accountant for not doing it.
Should we reconcile every BAS?
We believe the answer is YES!!
Best practice bookkeeping would expect that each BAS is reconciled to your Balance Sheet, and that you
have all supporting reports and documents to prove how you arrived at the figures on the BAS.
But what if the client or the accountant doesn’t want you to reconcile? What if you have inherited a “messy”
file that needs help, you query the accounts that are out of balance, and are told not to worry about it?
Or what if the accountant has made adjustments to the file that affect your PAYG and GST accounts?
Page 15
You have a couple of options.
1. As always, ask questions and raise issues—then make your notes accordingly, but do not alter the
file. With this option, you can make a note of the amount of the difference in the relevant accounts,
and each quarter check that the difference amount has not changed. If it has changed in the current
period, you can look for the transaction/s involved and adjust as needed. But you are not making
adjustments to the transactions in the previous.
.
2. Create an expense account called “To Be Explained by the Accountant” or similar. You can then
make the adjustments you need in order to bring the accounts into balance, but allocate all the
‘mysteries’ to this account, which will hopefully make the accountant deal with it at the end of the year.
We realise that not all training organisations that run the Certificate IV in Bookkeeping assess practical
knowledge on reconciling the BAS, so we have a toolkit designed to assist you in learning how to do it or to
refresh your process—and for those who do routinely reconcile the BAS—you can check your process
against our recommendations.
We are interested in your feedback—what are your processes? What do you do if you inherit an interesting
file? Let us know your thoughts here.
ICB references:


EOY and BAS Errors
EOY resources (particularly #8)
Return to top
BAS preparation checklist
.
BAS CHECKLIST
Check for Following in BAS Period

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
Purchase and/or trade in of vehicle (check if luxury car)
Purchase of equipment or property
Overseas purchases and customs invoices
Insurances claims and refunds (including Workcover)
Any fuel tax credits (if applicable)
Hire purchase/financial agreements
Payroll terminations – tax calculations
Directors/owners loans
Government grants
Review all Data Entered and Accounts Reconciled

All banks, credit cards and loans are reconciled
o Bank:o Credit card:-
Page 16

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All purchases are entered
Cash expenses are entered
Petty cash/cash drawer are reconciled
Outstanding debtors and creditors are correct
Electronic and payroll clearing accounts (justify why not zero?)
Clear suspense and POS clearing (justify why not zero?)
Undeposited/cash funds (justify why not zero?)
Reconcile superannuation and PAYG liability accounts
Complete data file auditing process for your software
Check different reports against each other
Check private usage journals are entered if needed
Review and Check Tax Codes



RUN and REVIEW GST Summary Report for prior BAS to ensure no changes
has been made to affect the result of the prior BAS.
RUN and REVIEW Tax Code Exception Report for both CASH and
INVOICES
CLEAR QUE Tax Code
Reconcile GST With Reports


For Cash: RECONCILE GST REPORTS with income from P&L report
For Accrual: RECONCILE GST REPORTS with balance sheet accounts ie
banks, GST collected and paid
Prepare BAS
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Run and review GST detail report and check all tax code allocations are correct
PRINT and/or save GST cash or accrual DETAIL report for BAS period and
keep copy
Run and review GST summary report and save copy
If deferred GST scheme, check that liability has been added and is correct
If FBT, WET or fuel tax – fill in amounts
RECONCILE all accounts as per above
LOCK PERIOD to ensure no changes are made to data for BAS preparation
If PAYG”W” section-print and/or save payroll register summary for BAS period
and keep copy
If PAYG”I” section-print and/or save profit and loss accrual for the BAS period
and keep copy
Prepare BAS and check all balances equal to reports
PRINT BAS transaction report (If applicable)
FILL in BAS and photocopy ORIGINAL completed BAS and keep copy if using
paper
Backup file and store labelled correctly, eg, ‘CompanyNameJun20xxBAS’
If lodging BAS, obtain signed authority from client and save to client file
If lodging electronically, ensure copy of lodgement and receipt is emailed to
client and yourself
Page 17
Enter BAS Payment


Enter the payment using the full values from GST reports and allocating the
rounding to bank charges or allocated rounding account
CHECK that the remaining balances on the balance sheet are either zero if
ACCRUAL or if CASH the tax amounts on the receivables and payables
summary of tax report
For more information:
EOY and BAS Errors
BAS Reconciliation Process
Return to top
BAS Reconciliation
.
Reconciling for CASH BASIS
Page 18
Reconciling for ACCRUAL BASIS
See below for Sample Reports
Preparing Quarter 4 BAS
1. Review prior BAS’s for the year to ensure any changes that were made to transactions after
lodgement of the BAS are picked up and reported in this quarter. Also to re-check that no mistakes
were made. Correcting mistakes in prior BAS’s is allowed by increasing or decreasing GST paid or
collected, see these links for more detail:
a. Reprint/display the summary report of either CASH or ACCRUAL and compare the reports with
the lodged BAS reports for Q1, Q2 and Q3
b. Print the GST report for the whole year and compare the totals to BAS’s paid in Q1, Q2 and Q3
plus Q4. If this balances then it confirms no changes have been made to GST.
c. In no change, prepare the Q4 BAS.
d. If changed, compare the current GST report with the lodged GST report printed at time of BAS.
Recommend export the report to excel to help find the change.
e. Check the bank reconciliation screen to see if any additional transactions have been added to
prior periods.
2. Correct mistakes in prior BAS's is allowed by increasing or decreasing GST paid or collected, see
these links for more detail:
http://www.ato.gov.au/General/Correct-a-mistake-or-dispute-a-decision/Correct-an-instalment-orbusiness-activity-statement/
http://www.ato.gov.au/Business/Bus/Making-adjustments-on-your-activity-statements/
3. Correct the mistake by manually decreasing or increasing 1A or 1B in the Q4 BAS
4. Before preparing the Q4 BAS, reconcile GST accounts as above for either cash or accrual.
5. Prepare Q4 BAS.
6. Copy all four BAS’s for Accountant (comment if any changes have been, made including detailed GST
reports to back up the BAS reports).
Page 19
Enter BAS Payment
Enter the BAS payment using the full values from GST reports and allocating the rounding amounts to a
rounding account—usually set up as an expense account.
Payment to ATO – BAS July to Sep 20XX — see below example
ALLOCATION
DEBIT
GST Collected
$773.64
GST Paid
PAYG Withholding
CREDIT
$776.50
$1,180
Rounding;
TOTAL PAYMENT FROM BANK;
$0.14
$1,177
Troubleshooting—where to look if the reports don’t balance

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
Changed transactions in previous periods, not picked up and adjusted/corrected in subsequent BAS
periods.
Some out of balance amounts may be due to rounding—journal the amount to a rounding account. If
for example the file has been in use for many years but never reconciled, the rounding amount might
be substantial.
Direct allocation of journals/purchases/expenses to GST control accounts—enter or edit transactions
to the correct accounts.
Changing the amount of GST calculated by software—check these adjustments and if necessary
allocate difference to rounding account.
Incorrectly linked accounts.
Changed linked accounts partway through a reporting period.
Negative amounts on tax summary reports—for example for No ABN Withheld or Voluntary
Withholding amount. These amounts are accounted for on a CASH basis only and reported when
payment is made.
Make sure they have recognised payment breakup correctly: PAYG (4), Fuel Tax Credits( 7a or 7b),
PAYG Income tax instalments (5a or 5b), WEG/WET. Check that these amounts have been
distributed to their correct balance sheet accounts.
SAMPLE REPORTS IN SOFTWARE
1. Sample – MYOB GST Receivables and Payables with Tax Report.
Page 20
2. Sample – Intuit and Reckon GST Sales/Receivables with Tax Report
Customise Sales by Customer Detail Report (or Purchases by Supplier) Modify > Display >Tick Tax
Amount and Tax Code > Untick Balance, Sales Price, UM and Qty > Change Date Range
3. Sample – Xero GST Reconciliation Report
4. Sample – Reconcile GST to Bank Calculation
Related ICB references:
EOY Errors
BAS Preparation Checklist
Explanatory Support Notes – See #8
Page 21
For related software help:
http://myobaustralia.custhelp.com/app/answers/detail/a_id/33132
http://myobaustralia.custhelp.com/app/answers/detail/a_id/10463
http://myobaustralia.custhelp.com/app/answers/detail/a_id/9209
http://help.xero.com/Help/howto/Q_GSTRec.htm
http://help.xero.com/Help/AU/Report_BAS.htm
https://community.xero.com/business/
http://help.saasu.com/tax/australia/
http://blog.saasu.com/
https://qbouk.custhelp.com/app/answers/detail/a_id/5411/kw/GST/r_id/104113
https://qbouk.custhelp.com/app/answers/detail/a_id/5799/kw/BAS/r_id/104113
http://www.quickbookshelp.com.au/forum/
http://www.reckonhelp.com.au/Help_RAB.htm
Return to top
Converting Cash to Accrual
.
Cash Reporting
Cash reporting is available to businesses with a turnover of less than $2 million and in some other
situations such as being a government school or a charitable institution, regardless of turnover.

This system requires you to account for the GST on your sales and purchases in the tax
period that payment is made and received.
Accrual Reporting
If the business turnover is greater than $2 million, you must use accrual reporting. You may choose to use
accrual reporting even if your turnover is less than $2 million.

This system requires you to account for the GST on your sales and purchases in the tax period that
the transaction takes place—regardless of the tax period that payment is made and received.
How do you change the method of reporting?
It is most common that a business will need to change from CASH to ACCRUAL reporting as the turnover
increases. Note that specific permission must be granted by the ATO to convert from accrual back to cash
reporting.
There are two ways of requesting a change to reporting method.
1. The authorised client representative (owner or you as the BAS agent), can contact the Australian
Taxation Office either by phone on 13 28 66 or in writing to P O Box 3424 Albury NSW 2640
Request the Tax Agent to make the change on your client’s behalf via their portal.
When changing from CASH to the ACCRUAL Method:
The change can only take effect from the first day of the tax period.
In that first BAS period you will need to account for the creditors and debtors that have not been previously
claimed or accounted for. These will include purchases and sales where payments or receipts have yet to be
made. If part payments have been made on either sale or purchase you need to also account for the balance
still remaining.
Page 22
Bookkeeping Procedure to Convert Cash to Accrual:
NOTE:
If there are any areas that you are not sure about when making the conversion, get advice from the tax agent
to verify your calculations.
Conversion Example
Reports used:
1.
2.
3.
4.
GST Summary September 2013 – Current Quarter ACCRUAL
Sales/Receivables Summary with Tax – June 2013 Quarter (to bring in outstanding sales)
Purchases/Payables Summary with Tax – June 2013 Quarter (to bring in outstanding purchases)
NOTE: You need to now determine if the amounts outstanding are fully inclusive of GST, or if there
are some FRE, N-T or other taxes as part of the figure. Firstly determine what portion is GST
inclusive.
GST Summary for
September 2013
ACCRUAL
FRE – GST Free
Sale
Value
Purchase Value
$300.00
$993.75
GST – Goods and Services $15,156
Tax
.64
$31,239.40
N-T – Not Reportable
$1,106.
80
$10,936.84
Totals
$16,563
.44
$43,169.99
Tax
Collected
Tax Paid
$1,377.88
$2,839.94
$1,377.88
$2,839.94
.
Page 23
Sales Summary with Tax @ 30 June 2013
Customer
Amount Outstanding
Tax Outstanding
A-Z Stationery Supplies
$1,736.23
$156.00
James Cameron
$2,067.60
$187.96
Cash Sales
($269.50)
($24.50)
Chelsea Mosset
($162.50)
($14.77)
Chris Davis
$240.00
$21.82
Footloose Dance Studio
$577.97
$52.54
$3,351.83
$562.23
Leisure Landscape Nursery
$699.00
$63.54
My Town Reality
$262.10
$23.83
The Motor Company
$825.51
$75.05
$9,328.24
$1,103.70
Island Way Motel
Total:
Sales/Receivables Difference Calculation



Tax outstanding: $1,103.70 * 11 = $12,140.7 which is different to the report total of $9,328.24. (This
being a higher amount would indicate that there are possibly non-standard GST taxes in this table).
Check that the GST listed against each customer is 1/11th of the total. Note any differences:
o Island Way Hotel has $1260 that includes $372.06 in WET thus reducing the total GST sales to
$8,068.24 and Tax Outstanding (For GST) to $731.64.
o A-Z stationary supplies have a GST FRE Portion of $20.23.
o The following calculation was used to determine GST:
Tax Outstanding - $1,103.70 - $372.06 (WET) = 731.64 *11 = $8,048.04
Total Sales Outstanding - $9,328.24 - $1,260.00 (WET Sale) - $20.23 = $8,048.01 (Difference
of .03 to rounding account)
.
Difference to include on BAS:
o GST Sales $8,048.04
o FRE Sales $20.23
o WET Sales $1,260.00
Purchases Summary with Tax 30 June 2013
Supplier
Amount Outstanding
Tax Outstanding
Clear & Bright Filters
$531.51
$48.32
Curbys Super Stands
$825.00
$75.00
Huston & Huston Packaging
$335.20
$16.45
$8,526.33
$768.10
Underwater Springs Pty Ltd
$20,131.41
$1,808.14
Total:
$30,349.45
$2,716.01
Mountain Spring
Page 24
Purchases/Payables Difference Calculation


Tax outstanding: $2,716.02 * 11 = $29,876.11. Difference = $473.34.
Check that the GST listed against each supplier is 1/11th of the total.Total purchases outstanding:
$30,349.45 - $473.34 = $29,876.11
o H&H Packaging GST free transaction of $154.25
o Mountain Springs GST FRE transaction of $77.23
o Underwater Springs GST FRE transaction of $241.87
o Total = $473.34 difference
.


Total purchases outstanding: $30,349.45 - $473.34 = $29,876.11
Difference to include on BAS:
o GST Purchases $29,876.11
o FRE Purchases $473.34
New BAS Report including the June Quarter Accrual Figures not previously claimed
Refer to above examples
Adjusted BAS
Sales Reporting
Adjusted BAS
Purchases Reporting
GST Free
Accrual Report
GST Free Sales
Plus Outstanding
Total FRE Sales
Accrual Report
$300.00 GST Free
Purchases
$20.23 Plus Outstanding
$320.23
Total FRE
Purchases
$993.75
$473.34
$1,467.09
GST Inclusive
Accrual Report
GST Sales
Plus Outstanding
Total GST Sales
$15,156.64
Accrual Report
GST Purchases
$8,048.01 Plus Outstanding
$23,204.65
Total GST
Purchases
$31,239.40
$29,876.11
$61,115.51
GST/Other
Accrual Report
GST Collected
$1,377.88
Accrual Report
GST Paid
Plus Outstanding
$1,103.70 Plus Outstanding
$2,716.01
Total GST
$2,481.58 Total GST
$5,555.95
$2,839.94
Other
Accrual Report
WET/WEG
Plus Outstanding
Total
$0.00
Accrual Report
WET/WEG
$372.06 Plus Outstanding
$0.00 Total
$0.00
$0.00
$0.00
For more information:
ATO - Cash and non cash accounting
We will cover how to convert from Accrual back to Cash basis in the next newsletter.
Return to top
Page 25
Concessional GST on Commercial Accommodation
.
What is the GST Concession?
A concessional rate of GST can apply where commercial accommodation is provided to an
individual for a period of 28 days or more and the business providing the accommodation falls
under certain categories—see below.
If a business qualifies as able to provide the concession then either
1. they charge GST on only 50% of the supply of the accommodation, (the supply is inclusive of GST)
or
2. you can treat the supply as being input-taxed.
When you choose one of these methods all supplies must be treated the same way for 12 months before it
can then be changed.
This only applies to sales. There is no change to the GST rate of purchases.
What is Commercial Accommodation?
Commercial accommodation is considered the right to occupy the whole or any part of commercial
residential premises, and includes (if provided as part of the right to occupy) the supply of cleaning and
maintenance, electricity, gas, air-conditioning or heating, telephone, television, radio or similar things.
For example: An Aged Retirement Village where residents pay a bond for their unit and occupy the facilities
of the Village being common room, activities etc. but have their own separate unit.
Any service that is provided separately to that which is supplied as part of the tariff is unlikely to be within the
meaning of commercial accommodation and therefore the GST concession will not apply. For example,
separately metered electricity, mini bar items, personal laundry or dry cleaning charges, meals and phone
calls are separate supplies. These items will attract the full GST rate.
Types of Accommodation
Residential premises and commercial residential premises
Includes:

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Hotels, motels
Provision of school accommodation, (not for education institutions that aren’t schools)
Ships mainly let out for hire in ordinary course of a business of letting ships out to hire
Ships mainly used for entertainment in ordinary course of a business providing ships for entertainment
or transport
Marinas where one or more berths are occupied by boats being used as residences
Caravan parks or camping grounds
Aged Retirement Villages
Similar type residences to those above
These businesses are entitled to the full concession of 50%.
“Predominantly” long term accommodation
To be classified as predominantly long term, at least 70% of the business guests must stay 28 days or more;
they are provided with commercial accommodation in the premises and are provided with 'long-term
accommodation'. These businesses are entitled to the full concession of 50%.
Page 26
Premises not “predominantly” long term
If less than 70%, of the individuals provided with accommodation, stay 28 days or more, the business can
only reduce the GST to the concessional 50% from day 28 onwards.
Calculating the GST
Businesses have 2 options for calculating the GST portion:
1. Include no GST in their long term accommodation prices (the supply will be input taxed) and no GST
will be paid to the ATO. This will mean that you will be unable to claim input tax credits for GST
included in the price of goods and services acquired to provide the accommodation. (This option is
irrelevant of number of days stayed).
.
2. Charge a concessional rate of GST of 50%. This is only available for stays that are for 28 days or
more. This concession depends on whether the commercial residence is for “predominantly long term”
or not. The supplier will be able to claim input tax credits for all GST included in the good and services
they acquire. That is, while they charge GST at half rate, they can claim all GST back on purchases.



If you fall under “not predominantly” long term you can only claim the concessional rate from day 28
onwards. The first 27 days you are required to charge full GST.
.
For short stay accommodation less than 28 days there is no concession at all and full GST is charged
on the accommodation.
.
Whichever method is chosen, the business may not change their method for 12 months.
Bookkeeping Processes
Scenario 1: Predominantly Long Term: Concession Applies to Whole Stay

When claiming the concession you need to halve the accommodation cost including GST and then
charge the GST on that price.
E.g.: Accommodation is normally $66 per night including GST. The GST is worked out on half that
amount of inclusive price i.e. $33. The GST is calculated at 10% on $33 = $3.30. Therefore the
accommodation costs for the week is $60 (GST exclusive price) + $3.30 = $63.30.
Description
Account#
Total
Tax
Accommodation 5 nights @ $66 per night – 50%
of cost
Income
$165.00
GST Incl
50% of cost no GST due to Div 87 ruling
Income
$165.00
No Tax
TOTAL
$330.00
Total GST Value $15

If using the input tax method (see 1 above), then no GST will be charged on the usual
accommodation fee..
Description
Accommodation 5 nights @ $60 per night –
Account#
Total
Tax
Income
$300.00
No Tax
TOTAL
$300.00
Total GST Value $0
Page 27
Scenario 2: Not Predominantly Long Term: Concession Applies From Day 28


No concession is claimed on the first 27 days so this is entered as full price with GST as first line item.
Then calculate the concessional rate as above for predominantly long term from day 28 onwards and
enter as second line item.
E.g.: For a stay of 32 nights, accommodation is normally $66 per night including GST so for the first 27
nights the cost would be $1782, shown on the first line. Day 28-32 onwards is $63.30 (concessional GST
rate) per night, worked out in second and third lines.
Description
Account#
Total
Tax
Accommodation 27 nights @ $66 per night
Income
$1,782.00
GST Incl
From Day 28 onwards:
Accommodation 5 nights @ $66 per night – 50%
of cost
Income
$165.00
GST Incl
5 nights--50% of cost no GST due to Div 87
ruling
Income
$165.00
No Tax
Electricity supplied to caravan site
Income
$50.00
GST Incl
TOTAL
$2,162.00
Total GST Value $181.55
Useful Links:
http://www.ato.gov.au/Issue-20---Commercial-accommodation/
http://myobaustralia.custhelp.com/app/answers/detail/a_id/9276/~/gst-and-long-term-accommodation
Return to top
Deferred GST Scheme for Importers
.
This allows importers to defer payments of GST on all taxable importations into Australia. This does not
affect any Customs Duty or other fees due at the time of importing goods; these must still be paid at the time
of importation.
Importers must have been granted approval from the ATO to defer payments on imported goods.
Eligibility
To be eligible for the scheme you must:






Have an ABN
Be registered for GST
Lodge activity statements online
Lodge activity statements monthly
Make activity statement payments electronically
Business owner has their own Auskey and Business Portal
Eligibility may be affected by:
 Outstanding tax related returns or payments
 Convictions or court penalties in the last 3 years relating to taxation requirements, customs
requirements, mis-description of goods, trade practices, fair trading or defrauding the Australian
Government
 These points relate to public officers, directors, office bearers, partners and trustees of the applicant
Page 28
Moving to Deferred GST Scheme
If you are on quarterly Cash BAS and want to register for the Deferred GST Scheme, you will need to
consider other implications and effects on the business.
First you will need to swap the BAS from Cash to Accrual and from quarterly to monthly. You will need to pay
out any GST obligations from the Cash calculation. For some businesses this could be substantial and you
may need to consider a payment plan with the ATO. You should also consider the implications this may have
on cashflow for the business. Check your software set up for BAS calculations to make sure that 7A appears
on your calculation sheet.
How does it Work?
Once approved, the importer communicates electronically with Customs. The importer must quote their ABN,
Customs electronically checks that approval has been granted for that ABN entity to defer GST, and the
goods will be released after any other fees and duties are paid. GST is automatically deferred for all
imported purchases—the importer cannot elect to defer the GST on some imports and not others.
Customs records the GST liability and reports to the ATO electronically.
The ATO then includes the amount of GST that was deferred from the previous month on to the importer’s
next monthly BAS. The ATO issues the BAS electronically; the total deferred GST liability will appear at field
7A on the BAS.
Monthly BAS lodgers are due to lodge and pay by the 21st of the following month.
Bookkeeping Process
1. Record the details of the supplier’s overseas purchase, entering the details using N-T tax code
2. Record the Customs fees payable. Enter a tax-exclusive purchase from the Customs agent’s invoice
(or Customs if dealing directly with them), noting that some fees and duties are GST free. These
expenses are payable directly to Customs or the agent on receipt of imported goods and are not part
of the deferral scheme. See Appendix 1.
3. The GST liability is listed on the next BAS at 7A.
4. Set up a liability account for Deferred GST Liability.
5. Record by General Journal the deferred GST liability against the liability account created above. Enter
the amount of the purchase (against the relevant cost of sales account), with GST. On the next line,
enter the amount of the purchase with N-T code.
a. NOTE: Customs calculates the GST based on purchases and additional costs that will make it
difficult to reconcile with GST calculated on the initial purchase of the goods. The exchange
rate also has an impact on calculations. See Appendix 2.
.
Page 29
General Journal Description
Bringing in Deferred Liability on
BAS
Account#
DR
Overseas Purchase – ($1009.61 x
11)
COGS
$11,105
Less Overseas Purchase already
entered
COGS
$10,096
No Tax
Deferred GST Liability
Liability
$1,009
No Tax
CR
Tax
GST Incl
6. Pay the deferred GST liability as part of the BAS. When entering the BAS payment, enter the relevant
amounts at GST collected, GST paid, PAYG etc, and then enter a line against the liability account for
the amount of deferred GST as per the BAS.
NOTE: The GST listed in 7A is ALSO captured in 1B. In a normal purchase, the business would pay
the bill including the GST and claim it back on the next BAS. With deferred GST the business pays
and claims back the GST on the same BAS. You will still be able to reconcile your GST accounts.
ATO BAS Payment
Account#
DR
CR
Tax
$2,452
No Tax
GST Paid
Liability
GST Collected
Liability
$7,926
No Tax
PAYGW
Liability
$2,837
No Tax
Deferred GST
Liability
$1,009
No Tax
ATO RBA Control Liability
Asset
$9,320
No Tax
For more detail:
http://www.customs.gov.au/site/page5349.asp
Easy steps to the deferred GST scheme
Converting from Cash to Accrual Accounting
http://www.icb.org.au/Resources/Cash-to-Accrual
Page 30
Appendix 1
Appendix 2
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Page 31
Fuel Tax Credits
.
What are Fuel Tax Credits?
Fuel Tax Credits (FTC) provide you with a credit for the fuel tax (excise or customs duty) included
in the price of fuel you use when using machinery, plant, equipment and heavy vehicles as part of
your business activities.
Who Can Claim Fuel Tax Credits?
Many businesses are eligible to claim the fuel tax credits.
Eligibility depends on your business activities and the kind of fuel used. Some businesses that are likely to
be eligible are:









Road transport
Construction
Manufacturing
Agriculture
Fishing
Forestry
Electricity generation
Landscaping
Check the ATO links below for more detail on eligible businesses, this is not a complete list
Eligible fuels:
 Petrol
 Diesel
 Kerosene
 LPG
Businesses must be registered for both GST and Fuel Tax Credit prior to making a claim.
Register for FTC via phone, business or BAS portal prior to the BAS period in which you want to start
claiming FTC. The claim is then submitted on your monthly or quarterly BAS.
Once you have registered the FTC BAS fields of 7C and 7D become available. You will need to update your
software settings.
What is Claimable?
 Vehicles with a gross vehicle mass (GVM) greater than 4.5 tonne travelling on a public road (vehicles
you acquired before 1 July 2006 can equal 4.5 tonne GVM).
 Specified activities eligible since 1 July 2006 in agriculture, forestry, fishing, mining, marine and rail
transport, nursing and medical services, electricity generation, and non-fuel uses.
 All other activities, machinery, plant or equipment eligible from1 July 2008 that were not previously
eligible (such as a wide range of construction, manufacturing, wholesale/retail, property management
and landscaping activities).
What is Not Claimable?
Some activities and fuel are not claimable, including:




Fuels you use in light vehicles with a GVM of 4.5 tonne or less, travelling on a public road (for
example, a car or small van) or diesel vehicles you purchased prior to 1 July 2006 that equal 4.5
tonne GVM and are considered heavy vehicles
Fuel you acquired but have not used because it has been lost, stolen or otherwise disposed of
Aviation fuels
Alternative fuels, such as: liquefied petroleum gas; compressed natural gas; liquefied natural gas;
ethanol; and biodiesel.
Page 32
What Rate Can You Claim?
From July 2013 there have been changes made to the rates that can be claimed. Rates vary depending on
the fuel you use and what activity you perform.
From July 2012 when you calculate your rate you need to use the rate that applied at the time of purchase.
The exception to this is where the fuel is used with a heavy vehicle travelling on public roads; in this case
you need to apply the rate in effect at the beginning of the tax period covered by your BAS.
To help determine your rate the ATO have a calculation worksheet or a fuel tax calculator that you can use
as well as a tool that helps determine if you are eligible to claim.
Fuel Tax Credit calculator:
http://ato.gov.au/Calculators-and-tools/Fuel-tax-credit-calculator/
Rates:
Calculating and record keeping - Fuel tax credit rates and eligible fuels
Bookkeeping Processes
As a bookkeeper you need to calculate the Fuel Tax Credit and ensure it is claimed on the BAS for the
period it relates to. You can do this using either the worksheet linked above or the online calculator.
Once you have determined what your claim is you need to add the amount to your BAS. There are two areas
on the BAS that you can use.
7D –claim fuel tax credits as well as any adjustments or mistakes you may have that increases your fuel tax
credit entitlements.
7C –add any adjustments that you have that decrease your fuel tax credit. For example you may realise you
have made an over claim in previous periods.
Journal entry to recognise income
This allows you to recognise the income and post to correct accounts when you complete the BAS payment.
Accounts
Debit
Fuel Tax Income
FTC Liability Account
Credit
Tax Code
$68.00
N-T
$68.00
N-T
BAS payment including Fuel Tax Credit claim
Allocation
GST Collected
Debit
$12,000
GST Paid
PAYG Withholding
FTC (liability account)
TOTAL PAYMENT FROM BANK
Credit
$5,000
$2,355
$68
$9,287
Page 33
Example from the ATO Calculator
Adjustments and Errors
An adjustment is necessary if you have already claimed FTC in a previous BAS but the fuel is subsequently
used in a different way therefore giving you a different FTC amount.
An error is when you have reported the FTC incorrectly because of using the incorrect rate or calculation or
claiming for an ineligible fuel.
If you have NOT claimed FTC in a previous period that you were entitled to, you do not have to revise the
earlier BAS, you can claim the FTC in the current BAS. If this is the case, you need to use the rate in effect
at the time of purchase. You need to claim FTC within four years from the end of the tax period the fuel was
purchased in.
For more detail about FTC in general and eligibility:
Fuel tax credits for business
For more detail about FTC adjustments and errors:
Fuel tax credits - making adjustments and correcting errors
For more detail on FTC on the BAS:
Fuel tax credits - how to complete your business activity statement
Page 34
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National Disability Insurance Scheme and GST
.
GST implications of the new National Disability Insurance Scheme
From the 1st July 2013 the National Disability Insurance Scheme (NDIS) has become available to
eligible people with a disability in different locations around Australia.
How does that affect the bookkeeper?
If your client is a supplier of disabled supports, (goods, services and other supplies), to a NDIS recipient and
is registered for GST, the tax status may have changed on some supplies. These supplies may now be GST
free under certain situations as follows:
1. You DON’T receive government funding for making the supply
If you don’t receive any government funding for making the supply then you, some of your supplies
may be GST free under section 38-38 of the GST Act 1999.
For the supply to be deemed GST free it must be:
To a participant for whom an NDIS plan is in effect and approved by DisabilityCare Australia
For one or more of the reasonable and necessary supports specified in the NDIS plan for the
participant
o Made under a written agreement that identifies the participant and the nature of the supply
including the reasonable and necessary supports specified in the plan
o Supplies of a kind determined in a legislative instrument:
http://www.comlaw.gov.au/Details/F2013L01325
o
o
If section 38-38 doesn’t apply then some of your supplies to the participant may be GST free under
other sections of the GST Act that apply to “other non-government-funded supplier”, for example,
medical services, health services, medical aids and medical appliances.
2. You DO receive government funding for making the supply
If you receive government funding then you need to check here for information on which supplies are
GST free.
If your supply is not GST-Free under the above conditions then it may be a taxable supply and you will
need to account for the GST payable.
If GST is included in the price of things you purchase to make a taxable or GST free supply then you
are able to claim an Input Tax Credit for the GST component.
You may find that you have a mixture of supply and as such you need to ensure you record
appropriately within your bookkeeping system.
Common GST free supplies:
o
o
o
o
o
Residential care
Community care
Flexible care under the Aged Care Act 1997
Disability services funded under the Disability Services Act 1986 or complementary state law
Other government funded health services under section 38-15 of the GST Act 1999
Page 35
For more detail about the scheme in general see these links:
GST and the National Disability Insurance Scheme
http://www.disabilitycareaustralia.gov.au/
Return to top
Is a Guest Speaker’s Token of Appreciation Considered a Taxable Supply?
.
In most cases where a guest speaker receives a gift as a token of appreciation it is not deemed to be
consideration of supply for giving the presentation. For example: Bottle of wine, flowers, box of chocolates.
However in some circumstances where the gift is of exceptional value then it may be deemed a
consideration of supply.
For example:


the value of the token far exceeds what that speaker may normally receive in fees
the token is in excess of what other speakers are receiving.
Eg: Speaker A receives a bottle of wine and box of chocolates and Speaker B receives a laptop.
Speaker B would be deemed as receiving a consideration of supply.
If accommodation and meals are provided for the period of the event these would not be deemed a taxable
supply but additional days for the speaker and inclusion of the speaker’s family would be deemed a taxable
supply.
For more information:
http://law.ato.gov.au/atolaw/view.htm?locid='GSD/GSTD20025/NAT/ATO'&PiT=99991231235958
Return to top
.
Continued Professional Education
.
This month from the ICB Continued Professional Education webpage
.
Upcoming events
ICB 2014 National Conference - Bookings now open for ICB full Members ONLY
Launceston
4th March, 2014
Melbourne
5th March, 2014
Adelaide
6th March, 2014
Sydney
7th March, 2014
Brisbane
10th March, 2014
Cairns
11th March, 2014
Darwin
12th March, 2014
Canberra
17th March, 2014
Perth
19th March, 2014
ICB Network Meetings
Nationally, Monthly
Quarterly BAS Review - ICB Member ONLY
ICB Webinar
25th October, 2013 (12pm AEDST)
Page 36
Bank Feeds - ICB Member ONLY
ICB Webinar
15th November, 2013 (12pm AEDST)
Consumer and Contracts Training, from the ACCC
Online
Educare - Tips and Tricks in Microsoft Excel 2010 - Part II
Webinar
26th September, 2013 - 1.15pm AEST
Holmesglen TAFE - BAS Agent Skill Set
Classroom training (Victoria SE suburbs - Moorabbin)
FNSBKG404A - 11th October, 15th November, 6th December, 2013
FNSBKG405A - 18th October, 22nd October, 13th December, 2013
Assessment - 25th October, 29th November, 20th December, 2013
MYOB - An update to the latest and greatest features
Webinar
11th October, 2013 (10am AEST) and 4th November, 2013 (1pm AEDST)
Workplace Review 2013 - Australia's Biggest Payroll Conference
The Association of Payroll Specialists (TAPS)
Melbourne - 17th - 18th October, 2013
Sydney - 24th - 25th October, 2013
MYOB - Perfecting Payroll
Webinar
28th October, 2013
Getting a grip of pivot table in Excel
Webinar
30th October, 2013 (1pm AEDST)
Payroll Administration
Perth (Online and DVD also available)
5th November, 2013
Salary Packaging
Perth (Online and DVD also available)
6th November, 2013
Xero Accounting and Payroll
Perth (Online and DVD also available)
13th November, 2013
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Page 37
.
ICB Network Meetings
.
Question for you to discuss this month??
.
This month's question for you all to debate at your network meeting is:
Your client engages a contractor who has a voluntary agreement for withholding PAYG. Should he be
charging the client GST on his invoice?
What do you do?
Let us know your thoughts and solutions by posting comments on the Q & A Space.
Let us know your queries you would like addressed here
Last month we asked you:
You have just taken over a new client and upon checking the file discover that there are several pay
categories that have been set to incorrectly attract super guarantee (ie overtime and some allowance
categories). You alert the client to the overpayment of super, and she wants to short pay the next month’s
super to balance the amount overpaid.
Is this allowed? How should you advise the client in this situation?
ICB's Response:
You cannot short pay this quarter for an overpayment in another quarter. This would be deemed to be not
meeting your superannuation obligations for this quarter. You will still need to pay the obligations in full for
the current period.
You can contact the superannuation funds in writing to request a refund. In this case, you need to detail the
employee name, period of work, amount paid originally, amount that should have been paid, the difference
you want refunded, and the reason for the overpayment. It is then up to each super fund as to whether they
refund the mistaken payment or not. They can choose NOT to refund, on the basis that the super fund is not
currently authorised to repay a mistaken superannuation payments. On the other hand, if they are satisfied it
was truly a mistaken payment, they can issue a refund. It is entirely up to the superfund’s discretion.
Generally speaking, if it is proved that there was a genuine mistaken overpayment, the super funds will issue
refunds, but it may take some time to process.
If a large amount of mistaken payment was involved and the superfund decided not to refund, the business
owner can take the matter to court. Courts ruling on this kind of situation previously have said that the
principal of “unjust enrichment” of the employee applied, and therefore the amount should be refunded.
There have also been rulings related to what is deemed “fair and reasonable” and in this situation, the court
may decide that the super fund refusing a refund for a genuine mistaken overpayment is not being fair and
reasonable.
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Page 38
Upcoming Network Meetings
.
Join a network meeting this month, not just to share, but to also network and keep informed.
All ICB Network Facilitators volunteer their time to assist ICB in keeping you up to date and informed and
without the help of these fantastic people it would not happen.
If you are unable to attend your local meeting due to time restraints or there isn't a meeting in your area, why
not join us via webinar on the 2nd week of each month.
Webinars
Online
11th October, 2013 - 12pm
(AEST)
Online
14th October, 2013 - 5pm
(AEST)
Queensland
Gold Coast (am and pm
sessions)
8th October, 2013
Brisbane North
8th October, 2013
Brisbane South
15th October, 2013
South Sunshine Coast
10th October, 2013
North Sunshine Coast
10th October, 2013
Logan
15th October, 2013
Moreton Bay
14th October, 2013
Bundaberg
5th November, 2013
Hervey Bay
11th November, 2013
Cairns
11th October, 2013
Toowoomba
18th October, 2013
Townsville
11th October, 2013
Sydney - Balmain
21st October, 2013
Sydney - Moorebank
3rd October, 2013
Sydney - Randwick
9th October, 2013
Sydney - Brookvale
14th October, 2013
Sydney - Hornsby
10th October, 2013
Sydney - Newport
TBA
Sydney - Sutherland
16th October, 2013
Bathurst
19th November, 2013
Ballina
18th October, 2013
Bellingen
25th November, 2013
Blue Mountains
14th October, 2013
Central Coast
9th October, 2013
Newcastle
18th October, 2013
Port Macquarie
16th October, 2013
Shoalhaven
25th November, 2013
Dubbo
14th November, 2013
Orange
TBA
New South Wales
ACT
Canberra - Phillip
8th October, 2013
Victoria
Burwood (am session)
2nd October, 2013
Burwood (pm session)
10th October, 2013
Mordialloc
8th October, 2013
Docklands
18th October, 2013
Frankston
10th October, 2013
Cranbourne
9th October, 2013
Lilydale
18th October, 2013
Macedon Ranges
22nd October, 2013
Geelong
8th October, 2013
Page 39
Point Cook
8th October, 2013
Cobram
TBA
Sale
10th October, 2013
Yarra Valley
11th October, 2013
Horsham
TBA
Western Australia
Balcatta
TBA
Bunbury
TBA
Melville
9th October, 2013
Joondalup
21st October, 2013
Midland
9th October, 2013
Cockburn Central
TBA
South Adelaide
3rd October, 2013
Henley Beach
27th September, 2013
Para Hills
16th October, 2013
Unley
29th October, 2013
Mt Barker
18th October, 2013
South Australia
Tasmania
Hobart
TBA
Northern Territory
Launceston
TBA
Darwin
TBA
These meeting are conducted in a relaxed and informal environment to promote discussion amongst
those attending the meetings.
No meeting in your area?
We are always on the lookout for facilitators to run meetings in their local area so if you are interested
please contact Rick Van Dyk at rick@icb.org.au
ICB Network Meetings are proudly supported by MYOB
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.
Other Things Happening in the World
.
Small Business Victoria HR manual and checklist
.
We know bookkeepers are not human resources consultants! But some business owners will still approach
you for all things related to payroll. Here are links to human resource related matters that could be useful for
either your own business or that of your clients.
We have included the business.vic.gov.au checklist as a useful reference. The actual template for the HR
manual is 55 pages, covering a great deal of relevant areas such as intellectual property, grievance
procedures, performance management, flexible work arrangements, induction and much more. You can
customise this template as much or as little as you wish.
HR Manual template
Page 40
Page 41
Page 42
Note that there may be more relevant resources available from your state's business.gov.au website
Return to top
.
From the ICB
.
This month...
.
Supervising BAS Agent Program (SBAP)
.
Are you a bookkeeper seeking support, and the opportunity to grow your business?
On the 1st August 2013 ICB launched the Supervising BAS Agent Program (SBAP). We have received our
first round of applications and prospective Supervising Agents are currently undertaking the assessment and
will shortly complete the induction process.
The Supervising BAS Agent Program (SBAP) provides new Bookkeepers with the opportunity to seek
support, technical advice and develop their skills, confidence and knowledge working with their supervisor.
There are 3 main areas the SBAP is assisting members:
I.
II.
III.
Provides a Bookkeeper new to the industry, who has completed or working to complete the Cert IV
Bookkeeping or Accounting, and is ultimately seeking to register as a BAS Agent, the ability to work
under supervision and accrue their required hours of experience under the Tax Agent Services Act
2009
.
Currently registered BAS Agents who have the skills and experience to enlist with ICB to be a
Supervising BAS Agent for other Bookkeepers
.
Currently working Bookkeepers and BAS Agents the ability to further expand their business and
personal skills under a Mentor program (phase 2).
For Bookkeepers seeking supervision, the program will provide an experienced member of ICB as a
“Supervising BAS Agent” who has been approved by ICB to act as your supervising agent for review and
lodgment of your clients’ BAS. ICB has also prepared a kit of documents that provide a clear understanding
of what a bookkeeper should expect from a Supervising BAS Agent, along with other tools and resources.
For a registered BAS Agent who has met the ICB criteria, and has the capacity to take on other bookkeepers
in order to act as their supervising agent, ICB will provide a complete kit to manage and support the
supervision.
Page 43
The kit includes:





Documents outlining the expectations relevant to each party
Template letters of engagement and agreements relating to all relationships in the tri-party
arrangement; Supervising Agent, Bookkeeper and Client
An instructional kit and resources for the Bookkeeper to provide the lodging agent to review the
information and lodge the BAS
Notification for the Client(s) of the Bookkeeper advising there is an lodging agent acting on behalf of
the Bookkeepers
Complete set of instruction and induction training on how to complete the kit and recommended
processes.
Information on the PI Insurance requirements
ICB has confirmed with Insurance Made Easy that members who have their PI Insurance provided by them
are covered under that policy for the provision of supervision and control.
How to Apply
BAS Agents who would like to apply to be an ICB Supervising BAS Agent click here. Bookkeepers who are
seeking supervision stay tuned to further newsletters for the announcement of our first round of approved
Supervising Agents to be listed on our website.
Further information regarding business structures for BAS Agent is available here - Acceptable business
structures for BAS Agents
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Client Newsletter - eBrief - September 2013
.
The September 2013 Bookkeeping eBRIEF is now available for you to download.


September 2013 Bookkeeping eBRIEF - Generic
.
September 2013 Bookkeeping eBRIEF - fully customisable version
Back copies are available here
"The best bookkeepers using the best resources".
Return to top
What's new this month
.
New Resources



August 2013 Members Newsletter Podcast - Link
ATO Small Business Newsletter, August 2013 - Link
The BAS Agent, Edition 40 - Link
News Items


Footy tipping winnings may need to be declared
The Liberals Workplace Relations Policy
Page 44
ICB Q & A Space News
During September there has been a bit of activity around 'Compliance requirements for
bookkeepers'. Inventory Management is also a bit of a hot topic, what are your thoughts??
Feel free to ask your questions regarding any issue you may be having or if you require clarification, we are
here to help.
The Latest Updates lists all the topics in order of replies
Return to top
.
From the ATO
.
Correct an instalment or business activity statement
.
The ATO has recently updated their information about correcting instalments and Business
Activity Statements - click here for the full details.
The way to correct a mistake made on an activity statement depends on what tax your mistake
relates to.
You can use your current business activity statement (BAS) to correct many GST and fuel tax credit
mistakes. If you can't make the correction on your current BAS, or the mistake relates to another type of tax,
you either have to revise the original BAS or write to us (except for PAYG instalments). You can vary a
PAYG instalment on your current instalment or business activity statement.
Unclaimed refunds and credits
A four-year time limit applies to claiming credits and refunds. The time starts from the end of the tax period
the credit arose or, for excise on imported goods, the date of importation.
Revising an earlier activity statement
Registered users of the Business Portal, Tax Agent Portal, BAS Agent Portal, electronic lodgment service
(ELS) and electronic commerce interface (ECI) can revise an earlier activity statement online.
Goods and services tax (GST)
You can correct GST mistakes on the activity statement that is current when you find the mistake, unless you
are outside the correction limits. If so, you will need to revise the earlier activity statement.
Fuel tax credits
You can correct mistakes and adjust your fuel tax credits on your current activity statement, unless you are
outside the correction limits. If so, you will need to revise the earlier activity statement.
Correction limits for GST and fuel tax credits
There are time and value limits that determine whether or not you can correct a mistake on your current
activity statement. Your annual business turnover determines your value limit. Luxury car and wine
equalisation taxes
To correct a mistake relating to wine equalisation tax (WET) or luxury car tax (LCT), you need to lodge a
revised activity statement. You can make an adjustment to LCT on your current activity statement.
Pay as you go (PAYG) withholding
To correct a mistake in the PAYG withholding amount reported on your activity statement, you revise the
original activity statement. To report an amount not withheld when it should have been, write to us.
Page 45
Pay as you go (PAYG) instalments
How you change the PAYG instalment amount you have reported on your activity statement depends on
whether your income tax return for that year has been assessed.
Return to top
ICB Links
.





Apply for ICB Membership here
Renew your ICB Membership here
ICBenefits - Cashback and Savings for ICB Members
BAS Agent updates and information
Other Newsletters
o The BAS Agent
o ATO Small Business Newsletter
o Workforce Education News
o The Association of Payroll Specialists (TAPS)
o Calxa
Return to top
ICB Membership Statistics
.
3,720
2,361 Members maintain Fellow, Member, Associate, Affiliate and Educator membership, ICB also has 1,318
Student Members and 41 Subscriber Members.
Return to top
ICB Supporters and Sponsors
1
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Please note that, in between newsletter issues, articles may be published straight to the Latest News section
of the website. Please check the headlines which can be found in the top right of the website homepage, to
ensure you stay up-to-date.
The Institute of Certified Bookkeepers complies with the Spam Act 2003 and we have a documented Spam
Policy on our website. You can unsubscribe from ICB newsletters and updates here.
ICB's Newsletter contains news articles, links and regular sections that we feel will be of interest. If there is
anything that you would like to see, whether a regular feature or a one-off, please let us know. Email your
ideas to admin@icb.org.au
Return to top
Page 46
The monthly Newsletter for members of the Institute of Certified Bookkeepers.
A selection of those articles listed are accessible by ICB Members ONLY - ICB Members, you will need to be
logged onto the ICB website to view all the articles in full.
The newsletter of ICB is designed as information and resources for Bookkeepers with clients and also
bookkeepers in employment.
The content of the newsletter maybe relevant in part or in whole to other publications or other purposes.
The ICB withholds all rights of all content that is restricted to member access only and that information
included in the member newsletter. Member only information is not to be reproduced without specific consent
from ICB.
The ICB permits reproduction of ICB articles and material contained in the non-members newsletter and
available publicly on the website on the proviso that acknowledgement of ICB is specifically provided
including links to the ICB website and original article. eg "This information has been obtained from the
Institute of Certified Bookkeepers from www.icb.org.au"
Page 47