You use an activity Statement to report your business tax entitlements and obligations, including GST, PAYG instalments, PAYG withholding and FBT instalments. You can offset tax payable against tax credits to arrive at a net amount.
Australian Business Number (ABN)
The Australian business number (ABN) is your identifier for certain dealings with us and other government departments and agencies. Also, unless you quote your ABN when dealing with other businesses, they may have to withhold 46.5% of any payments to you.
Suppliers become creditors when they provide your business with goods or services and allow you to pay for them at a later date.
Debtors are customers you have billed for goods and services and who have not yet paid you.
Grossing up ensures that the amount of tax paid on a fringe benefit is the same as the tax paid if an employee receives cash salary taxed at the highest marginal rate plus Medicare levy. The grossing-up formula has been adjusted to take into account any GST credits an employer, or other provider, may be entitled to in providing a fringe benefit.
You are entitled to a GST credit for the GST included in the price of purchases or importations you make for use in your business. However, you are not entitled to a credit to the extent you use the purchase or importation for private purposes or, in many cases to make input taxed sales. You will need to have a tax invoice to claim a GST credit (except for purchases with a GST-inclusive value of $82.50 or less, although you should have some documentary evidence to support these claims).
You don’t include GST in the price of GST-free sales you make, but you are entitled to credits for things you have purchased or imported for use in your business. Examples of GST-free sales include basic food, exports, sewerage and water, the sale of a business as a going concern, non-commercial activities of charities, and most educational and health services.
Input Taxed Sales
You don’t include GST in the price of input taxed sales you make, and you are not entitled to GST credits for things you have purchased or imported that relate to making those input taxed sales. In some cases, you may be entitled to claim reduced GST credits. Examples of input taxed sales include most financial supplies and supplies of residential rent and residential premises.
Payees are those people or businesses who receive payments from payers.
Payers are those people who pay and withhold amounts from payments.
Reportable Fringe Benefits
Employers must keep records of certain fringe benefits provided to each employee. These are known as reportable fringe benefits amounts. Where an employee receives benefits with a total taxable value of more tan $2,000, the employer must record the grossed-up value of those benefits on the employee’s payment summary for the corresponding income tax year.
A tax invoice is a document generally issued by the supplier.
It shows the price of a sale, indicating whether it includes GST, and may show the amount of GST. You must have a tax invoice before you can claim GST credit on your activity statement for purchases of more than $82.50 (including GST).
A tax period is the length of time for accounting for GST on your activity statement. It may be quarterly, monthly or annually. Quarterly tax periods are periods of three months ending on 30 September, 31 December, 31 March and 30 June. Monthly tax periods end on the last day of each calendar month. An annual tax period ends on 30 June. An activity statement must be lodged for each tax period.