k 1 - GST Classifications

All supplies fall into the following categories, regardless whether they are inputs or outputs:

Taxable (10% rate)

GST free (zero rated)

Input taxed (no rate)

Exempt

Required:

Indicate with an 'X' which category the following supplies fall into:

Supply Taxable (10% rate) GST-free

(zero rated) Input taxed (no rate) Exempt

Wages paid X

Fruit sales X

Residential rent income or expenses X

Superannuation X

Water Rates X

Purchase or sale of an asset X

Commercial rental income or expenses X

Education X

Depreciation X

Membership fee X

Task 2 - BAS Case Study

Macro Sales Pty Ltd is registered for GST as a cash payer and has chosen to report and calculate its GST every quarter. As a bookkeeper, part of your job description is to complete the quarterly BAS (under the direction of your client's tax agent).

Required:

The following was extracted from the accounts for the quarter ended 31 December 2018. Complete the followings:

a) GST Classification Worksheet for BAS purposes.

b) GST Calculation Worksheet for BAS purposes.

c) Calculate PAYG Instalment Income for Macro Sales Pty Ltd assuming a PAYG income tax instalment rate of 5.4%.

d) Prepare the Instalment Activity Statement for the quarter using option 2.

Note: All values are GST inclusive (wherever applicable)

SUMMARY $

Sales of goods and services 880,000

Export sales 15,400

Other GST-free sales 13,200

Commercial Rent 198,000

Residential Rent 44,000

Sale of Assets 11,000

General Business Expenses 440,000

Water Rates 4,400

Depreciation 8,800

Commercial Rent Expenses 19,800

Residential Rent Expenses 8,800

Purchase of Fax Machine 4,400

Wages & Salaries 176,000

Superannuation 15,840

PAYG tax withheld 50,000

PAYG Instalment rate 5.4%

a) GST Calculation Worksheet for the quarter ended 31 December 2018:

Inputs:

Account Details Inputs Capital Purchases Non Capital Purchases Taxable Supply Input Taxed GST

Free Excluded

General Business Expenses 440,000 440,000 440,000

Water Rates 4,400 4,400 4,400

Depreciation 8,800 8,800

Commercial Rent Expenses 19,800 19,800 19,800

Residential Rent Expenses 8,800 8,800 8,800

Purchase of Fax Machine 4,400 4,400 4,400

Wages & Salaries 176,000 176,000

Superannuation 15,840 15,840

PAYG tax withheld 50,000 50,000

TOTALS 728,040 4,400 473,000 464,200 8,800 4,400 250,640

GST

Classification Worksheet Reference G10 G11 G17 G13 G14 Excluded

Item Description $ Item Description $

G1 Total Sales (including any GST) 1,161,600 G10 Capital Purchases (including any GST) 4,400

G2 Exports 15,400 G11 Non-Capital Purchases (including any GST) 473,000

G3 Other GST -Free Sales 13,200 G12 G10 + G11 477,400

G4 Input Taxed Sales 55,000 G13 Purchases for making Input Taxed Sales 8,800

G5 G2 + G3 + G4 83,600 G14 Purchases without GST in the price 4,400

G6 Total Sales subject to GST (G1 minus G5) 1,078,000 G15 Estimated Purchases for Private Use or not Income Tax Deductible 0

G7 Adjustments (if applicable) 0 G16 G13 + G14 + G15 13,200

G8 Total Sales subject to GST after Adjustments

(G6 +G7) 1,078,000 G17 Total Purchases subject to GST (G12 minus G16) 464,200

G9 GST on Sales

(G8 divided by eleven) 98,000 G18 Adjustments (if applicable) 0

G19 Total Purchases subject to GST after Adjustments (G17 + G18) 464,200

G20 GST on Purchases

(G19 divided by eleven) 42,200

NET GST PAYABLE

(G9 minus G20) 55800

b) Prepare the Instalment Activity Statement for the quarter using option 2.

Total PAYG Instalment Income:

Account Details Amount including GST PAYG Instalment Income

Sales of goods and services 880,000 800,000

Export sales 15,400 14,000

Other GST-free sales 13,200 12,000

Commercial Rent 198,000 180,000

Residential Rent 44,000 40,000

Sale of Assets 11,000 10,000

Total PAYG Instalment income 1,056,000

PAYG Instalment amount =1,056,000*5.4/100 57,024

c) Prepare the Instalment Activity Statement for the quarter using option2.

Option 2: Calculate PAYG instalment using income X rate

PAYG Instalment income T1 $ 1,056,000

T2 % 5.4%

T1 X T2 T11 $ 57,024

Task 3 - PAYGW

Below is an extract from weekly tax tables.

Weekly earnings With tax-free threshold No tax

free-free threshold

($) ($) ($)

812 117 239

814 118 239

816 119 240

818 119 241

820 120 241

(a) The correct amount of tax to withhold (if any) from a resident employee earning $812 per week, who has not quoted a TFN but has requested the tax-free threshold is

239

(b) The correct amount of tax to withhold (if any) from a contracting supplier earning $814 who has correctly supplied an ABN is:

118

(c) The correct amount of tax to withhold (if any) from a resident employee earning $816 per week, who has quoted a TFN and requested No tax-free threshold:

240

(d) The correct amount of tax to withhold (if any) from a resident employee earning $818 who has quoted a TFN and requested the tax-free threshold:

119

(e) The correct amount of tax to withhold (if any) from a contractor employee earning $820 who hasn't quoted ABN.

241

Task 4 - BAS Case Study (Accounts Method)

Rainy Rinaan Pty Ltd maintains a computerised accounting system for its painting business which accounts for GST on an accrual basis and reports quarterly to the ATO for its Business Activity Statement obligations. Rainy Rinaan's annual GST turnover is less than $10 million and therefore adopted Simpler BAS. Below is the company's quarterly Profit & Loss and the general ledgers were perused for movements in the asset accounts to highlight any capital acquisitions made during the quarter.

Required:

a) Using the reports provided below, complete the quarterly Business Activity Statement (BAS) for the quarter ended 31 December 2018 using the accounts method.

b) Reconcile the Wages, PAYG withholding and GST Control amount from P & L, Balance sheet and Payroll Summary.

Rainy Rinaan Pty Ltd Profit and Loss Statement

October - December 2018 Quarter

Income from Service(s): $ $

Painting Services 185,600.00

Total Income from Services 185,600.00

Other Income:

Interest Income 400.00

Dividend received 1,080.00

Total Income 187,080.00

Expenses:

Advertising 3,384.00

Bank Fees 360.00

Depreciation 8,164.00

Insurance 5,418.00

Motor Vehicle Expenses 3,229.00

Paint Supplies and Materials 51,000.00

Stationery 1,030.00

Superannuation 5,239.00

Telephone 2,900.00

Income from Service(s): $ $

Wages - Casual (Gross) 55,152.00

Total Expenses 135,876.00

Net Profit 51,204.00

Rainy Rinaan Pty Ltd Balance Sheet

As at 31 December 2018

Item $ $

Cash at Bank 20,924.00

Accounts Receivable 8,400.00

Furniture & Fittings 5,000.00

Accumulated Depreciation - Furniture & Fittings 564.00

Motor Vehicle(s) 150,000.00

Accumulated Depreciation - Motor Vehicle 40,204.00

Accounts Payable 13,618.00

GST Control 10,494.00

PAYG Instalment (Instalment Rate @ 6.7%) 12,534.00

PAYG Withholding Amounts 19,797.00

Capital - Rainy Rinaan 106,687.00

Drawings 19,574.00

203,898.00 203,898.00

Motor Vehicles

Rainy Rinaan Pty Ltd General Ledger

As at 31 December 2018

Date Item Debit Credit Balance

01/10/2018 Opening Balance 136,300.00 136,300.00 dr

30/10/2018 Motor vehicle (Ute)

purchase 13,700.00 150,000.00 dr

31/12/2018 Closing Balance 150,000.00 dr

Rainy Rinaan Pty Ltd

Payroll Activity (Summary): 01/10/2018 to 31/12/2018

Item Gross Wages PAYG

Maxwell, Graham 18,384 6,568

Price, Sarah 20,403 7,853

Samuels, Alex 16,365 5,376

b) Reconcile the Wages, PAYG withholding and amount from the Payroll Activity Summary.

Wages

Item $

As per Profit and Loss

As per payroll summary report

Difference

PAYG

Item $

As per Balance sheet

As per payroll summary report

Difference

Reconciling GST Control Account:

GST Collected amount extracted from BAS summary GST collected:

GST Paid amount extracted from BAS summary GST paid:

Net GST Payable

Net GST Payable to ATO:

GST control as per Balance Sheet As per Balance Sheet:

Difference between Net GST Payable to ATO and the GST Control amount as per Balance sheet: