and Services Tax (
and services tax (GST) is an indirect tax introduced in
products or services sold in
businesses are required to register for GST once their turnover exceeds (or is
likely to exceed) $60,000 per annum.
for GST is required if you carry out a taxable activity and if your turnover:
can even choose to register for GST if your annual turnover is less than
$60,000, which is known as voluntary registration.
of GST working in
GST in sales and income and claim it back for purchases and expenses.
During the GST return, calculate the difference to find out or work out
whether to make a GST payment or
have to receive a GST refund. The working consists of the following two
goods and services includes:
goods and services don't include:
organizations only pay GST on the difference between what they sell and what
they buy: income less expenditure. This is accomplished by reconciling GST
received through sales and GST paid (through purchases) at regular periods
typically every 2 months .However some qualifying companies may also opt for 1
month or 6 month periods. The difference is then paid to Inland
Revenue Department (IRD) if the GST collected on sales is higher, or
receiving a refund from IRD if the GST paid on purchases is higher
exporting goods and services from
GST inclusive price is usually irrelevant for business purchasing decisions
because businesses claim back their input GST. They mainly takes into
consideration the cash flow issues.
Consequently, wholesalers often state prices exclusive of GST, but must
collect the full, GST-inclusive price when they make the sale and account to
the IRD for the GST so collected.
headline price must always be GST-inclusive in advertising and stores.
The only exceptions are for businesses which claim a mainly wholesale
client-base. Otherwise, displaying a prominent GST-exclusive price (i.e.
larger and more obvious than the GST-inclusive price), is illegal.
GST increased to 15% in May 2010
budget which is going to be implemented from Oct
1, 2010. As a result,
businesses will need to make many critical decisions about issues such as
pricing points, updating business systems, GST stipulations in long-term
contracts, logistics around repricing consumer goods, and updating promotional
material. This new rate will also create challenge for tourism
operators who have set their prices up to 2012.