Q1: What is a BAS Service Provider? Explain.
Providing BAS Services:
Registered BAS Agents can charge a fee for providing BAS Services to a taxpayer.
A BAS Service is defined as:
Preparing or lodging an approved form about a tax payer’s liabilities, obligations or entitlements under the BAS Provision.
Giving advice about the Tax Payers Obligation under the BAS provision.
Transacting any business with the Commissioner on behalf of a taxpayer in relation to their obligations under the BAS provision.
The following questions are based on the material in Chapter 2: PAYG & IAS
Q2: Match the following terms with their respective definitions:
Possible definitions:
An arrangement where a separate contract is entered into to perform the original contract.
The process by which amounts are deducted from payments made to others and remitted to the ATO. This is done using BAS and IAS.
Payments made using a Business Activity Statement or Instalment Activity Statement (if not registered) including tax on business and investment income.
The PAYG form that states the total of the withholding payments and the amounts withheld.
A written agreement between a business and a worker to bring work payments into the PAYG withholding system.
Amounts that include sales, fees, interest income, rental income and dividends.
The amount will usually be based on previous year’s tax on business and investment income.
A penalty for underpaying instalments.
Terminology Definition
1. General Interest Charge
2. A penalty for underpaying instalments.
3. Instalment Income
4. Amounts that include sales, fees, interest income, rental income and dividends.
5. Notional Tax
6. The amount will usually be based on previous year’s tax on business and investment income.
7. PAYG Instalments
8. The process by which amounts are deducted from payments made to others and remitted to the ATO. This is done using BAS and IAS.
9. PAYG Withholding
10. Payments made using a Business Activity Statement or Instalment Activity Statement (if not registered) including tax on business and investment income.
11. Payment Summary The PAYG form that states the total of the withholding payments and the amounts withheld.
12. Subcontract
13. An arrangement where a separate contract is entered into to perform the original contract.
14. Voluntary Agreement
15. A written agreement between a business and a worker to bring work payments into the PAYG withholding system.
The following questions are based on the material in Chapter 3: The Good & Services Tax
Q3:
Foxwedge Pty Ltd operates a small business. Foxwedge Pty Ltd accounts for and reports GST on an accrual basis quarterly. During the June quarter the following transactions occurred.
Required:
Complete the GST Calculation Worksheet for Foxwedge’s June quarter BAS.
All amounts include GST where applicable.
Receipts ($)
Sale of goods 200,900
Export sales 11,450
GST-free sales 5,000
Commercial rent received 12,900
Sale of printing equipment 19,500
Bank interest received 2,309
Dividends received 236
Bank loan received 300,000
Payments ($)
Salaries and wages 57,600
Superannuation 5,340
Rent of business premises 14,000
General business expenses 32,215
Purchase of fax machine 4,880
Printing supplies 42,420
Interest paid 100
Telephone 5,120
Drawings 150,000
Bank charges 560
Insurance 2,590
GST Calculation Worksheet for Foxwedge Pty Ltd, June quarter BAS:
GST amounts you owe the Tax Office from sales
G1 Total sales (including and GST) G1 $ 516345
G2 Export sales G2 $ 11450
G3 Other GST-free sales G3 $ 5000
G4 Input taxed sales G4 $ 30225
G5 G2 + G3 + G4 G5 $ 318675
G6 Total sales subject to GST G6 $ 197670
(G1 minus G5)
G7 Adjustments (if applicable) G7 $ 0
G8 Total sales subject to GST after adjustments G8 $ 197670
(G6 + G7)
G9 GST on sales (G8 divided by eleven) G9 $ 17970
GST amounts the Tax Office owes you from purchases
G10 Capital purchases G10 $ 42420
(including and GST)
G11 Non-capital purchases G11 $ 0
(including any GST)
G12 G10 + G11 G12 $ 42420
G13 Purchases for making input taxed sales G13 $ 0
G14 Purchases without GST in the price G14 $ 0
G15 Estimated purchases for private use G15 $ 0
or not income tax deductible
G16 G13 + G14 + G15 G16 $ 0
G17 Total purchases subject to GST G17 $ 424220
(G12 minus G16)
G18 Adjustments (if applicable) G18 $ 0
G19 Total purchases subject to GST after G19 $ 424220
adjustments (G17 + G18)
G20 GST on purchases (G19 divided by eleven) G20 $ 38565.45
The following questions are based on the material in Chapter 4: Other Reporting Requirements
Q 4(a):
Carolyn’s Cars wishes to sell a car worth $69,300 including GST, but before Luxury Car Tax (LCT).
Required:
Calculate the amount of LCT using the 2016-17 threshold amount and determine the total amount Carolyn’s should charge for the car (show your workings).
Rate of the Car- $69300
Add GST 18%- $12474
Total amount paid- $81774
Q 4(b):
Solitude Springs is a resort in a remote part of North West Australia and must generate its own electricity using a generator. In December 2016 quarter it purchased and used 5,934 litres of petrol for electricity generation.
Required:
Calculate Solitude Spring’s Fuel Tax Credit entitlement (show your workings).
Rate of Petrol Price in Sydny-$1.02 Per Liter
Total purchased quantity- 5934 litres
Total amount paid for Petrol $6052.68
Add GST(10%) $605.26
Total Amount INCL GST $6657.94
Q 4(c):
Wonderful Wines is a winery in the Clare Valley and operates a cellar door selling wine direct to the public. In the December quarter it made sales of $97,235 including GST and Wine Equalisation Tax (WET). Wonderful Wines uses the half retail price method for calculating its WET liability.
Required:
Calculate the WET payable by Wonderful Wines on the December BAS (show your workings).
The total amount of sale-$97235
Q 4(d):
Cherry Cosmetics is a cosmetic company and has provided the following fringe benefits to its employees during the year ended 31 March 2017:
Entertainment food and drinks $13,200 (including GST)
A statutory interest amount of $10,000 on free loans provided to employees.
Required:
Identify the benefits as Type 1 or Type 2 and
Calculate Cherry’s FBT liability for the 2017 FBT year (show your workings).
The statutory interest amount is in TYPE1 benefit
The entertainment is in Type 2.
The liability of Cherry-$23200
The following questions are based on the material in Chapter 5: completing the BAS
Q 5: Sparky’s Electrical Wholesale is registered for GST and reports on a quarterly basis.
The company elects to use Option 1 for GST, Option 2 for the PAYG tax instalment and also need to pay an FBT instalment amount.
Sparky’s has provided the following information relating to the December quarter BAS.
G9 GST on sales $32,432
G20 GST on purchases $21,188
FBT instalment $10,000
PAYG tax withheld $14,200
PAYG instalment income $427,438
Commissioner’s instalment tax rate 5.90%
Required:
Complete the ‘Summary’ and ‘Payment or Refund’ sections for the December quarter BAS.
Summary
If you are using GST Option 3 leave 1B, 1C, 1D, 1E, 1F blank
Amounts you owe the Tax Office
GST on sales or GST instalment 1A $ 32432
Wine Equalisation Tax 1C $
Luxury Car Tax 1E $
PAYG tax withheld 4 $
PAYG income tax instalment 5A $
FBT instalment 6A $
Deferred company/fund instalment 7 $
1A + 1C + 1E + 4 + 5A + 6A + 7 8A $ 32432
Amounts the Tax Office owes you
GST on purchases 1B $ 21118
WET refundable 1D$
LCT refundable 1F $
Credit from PAYG income tax instalment variation 5B $ 10000
Credit from FBT instalment variation 6B $ 427438
1B + 1D + 1F = 5B + 6B 8B $ 490988
Payment or refund?
Is 8A more than 8B? (indicate with X)
Yes, then write the result of 8A minus 8B at 9. This is the amount payable to the Tax Office.
no No, then write the result of 8B minus 8A at 9. This is the amount refundable to you (or offset against any other tax debt you have).
Your payment or refund amount
9 $ 458556
The following questions are based on the material in Chapter 6: Advanced BAS Topics
Q 6: What are the two methods available for accounting for GST? Explain each method.
Accounting for GST on a cash basis
Businesses with an aggregated turnover of less than $10 million can choose to account for their GST using the cash accounting method.
Accounting on a cash basis means you account for GST on the business activity statement that covers the period in which you receive or make payment for your sales and purchases.
The advantage of the cash accounting method is that the money flowing through your business is better aligned with your activity statement liabilities, so it’s easier to manage your cash flow.
Accounting for GST on a non-cash basis
Most larger businesses must use the non-cash accounting method. Small businesses can choose to use either the cash method or the non-cash method.
Using the non-cash method means you account for GST on the business activity statement that covers the period in which you issued the tax invoice or received any payment (for a sale) or received the invoice from your supplier or made any payment (for a purchase).
