1. GST For UNSW Anne Harvey – Group Tax Manager, Corporate Finance Eric McCallum, Lucy Lowe - Tax Team

2. Agenda GST liability How Does GST work GST Codes Valid Tax Invoices Claiming Input Tax Credits Sales - Taxable, GST Free Appropriations GST Process GST - risks and responsibility for Compliance Common Mistakes

3. GST liability – Section 9-5. Taxable Supply Supply is made for consideration, and Supply is made in the course or furtherance of an enterprise that is carried on, and Supply is connected with Australia, and You are registered or required to be registered However the supply is not a taxable supply to extent that it is GST-free or input taxed

4. When does GST apply? When is it applicable? Taxable supply  for consideration  in course of furtherance of carrying on enterprise  connected with Australia  registered or required to be registered  not GST free or input taxed Taxable sales  price includes GST  pay GST on sales  claim GST on purchases  1/11 th of Total invoice/sale price When is it not applicable GST free sales  Basic food - meat, milk, bread, fruit and vegetables  Most education, child care, health  Most exports – goods within 60 days  Can claim a input tax credit on purchases Input Taxed sales  Residential property

5. How Does GST work Issue Tax invoice $1100 Taxable Sale $1000 GST on sale $100 Total Sales on BAS $1100 Sales $1000 Remit GST 1/11 th to ATO $100 Cash Received $1100 Net revenue $1000 GST paid to ATO $100 Receives Tax Invoice $1100 Purchases $1000 GST charged $100 Total Acquisitions on BAS $1100 Acquisition $1000 Claim ITC for GST $100 Cash Payment $1100 Net Expense $1000 GST claimed from ATO $100 Supplie r Raises Tax Invoice Purchase r Receives Tax Invoice Sponso r UNSW Recipient

6. Current State Process Diagram NSS-HR General Ledger Purchasing Transactions GST posted to Account 3505 (GST receivable) Sales Transactions GST posted to Account 8505 (GST payable) BAS Report Extract Transactions extracted based on dates specified Calumo Purchasing or Acquisitions Accounts Payable Vouchers Expense Reimbursement Credit Card transactions Payment Request (PR1) Sales or Cash Receipts Tax Invoices Cash Receipts Journals StarRez Student Accommodation P3 Copying & Printing Miscellaneous Journals Contractors (HR) Salary Packaged Laptops (HR) Car Parking (HR) Gym Memberships (HR) VAT Transaction Loader Transactions loaded into BAS Reporting Tables Manual Adjustments StarRez Student Accommodation interface Adjustment Reverse Automatic Contractors Accrual Data Integrity Adjustments Timing adjustments Inclusions/Exclusions Contractors interface Adjustments Journal Adjustments Salary Sacrificed - Parking, Gym Memberships Deferred GST on Import from ATO Reconciliation Reconcile BAS Report to Account 3505 and 8505 Final BAS Submit BAS Report to ATO Tax Compliance InputSystemProcess ATO Refund or Payment of GST Enquiries/ Questionnaire /Audit Output

7. 1.Taxable – SALE 2.GST Free – FREE 3.Exports – EXPT 4.Input Taxed – ITAX 5.Out of Scope - EXCL 1.Most services 2.Accredited Education courses 3.Overseas customer 4.Some Kensington College rent 5.Gifts, No supply made GST Codes – Sales. Billings/Accounts Receivable

8. 1.Taxable – AC/AO 2.GST Free – FRAC/FRAO 3.Imports – IMAC/IMAO 4.Input Taxed – ACIT/AOIT 5.Non deductible – NIAC/NIAO 6.Out of scope – EXCL 7.Advances - EXAD 1.Most goods and services 2.Basic food; consumed/used overseas i.e. international airfare, accommodation 3.Customs clearance e.g. Equipment; overseas subscriptions 4.Financial supplies, residential accommodation 5.Cannot claim GST, no Tax Invoice, student entertainment 6.Taxes, wages, donations, journals 7.Travel Allowance, Advance GST Codes – Acquisitions. AP/POs/Expenses/Credit Card

9. Less than $1000 Supplier’s Name – Legal or business name ABN of supplier Date of Issue of Tax Invoice Intended to be “Tax Invoice” Invoice Number GST inclusive price Brief description of each item including price Quantity of goods or services Extent to which each sale is taxable sale i.e. includes GST GST payable, either –shown separately –if 1/11 th, “Total Price Includes GST” $1000 and above Supplier’s Name – Legal or business name ABN of supplier Date of Issue of Tax Invoice Intended to be “Tax Invoice” Invoice Number GST inclusive price Brief description of each item including price Quantity of goods or services Extent to which each sale is taxable sale i.e. includes GST GST payable, either –shown separately –if 1/11 th, “Total Price Includes GST” Purchaser’s identity – Name or ABN Valid Tax Invoices

10. Tax Invoice for goods or services – all include GST

11. Tax Invoices for Mixed Supplies- Taxable and GST Free

12. Mixed Supply Calculator MIXED SUPPLY CALCULATOR HOW TO CREATE TWO LINES FROM ONE (where GST is not calculated on the total of the invoice) Entry fields are green, all other fields are derived from the entry fields Total GST is not 10% of the total invoice value Enter the total value of the tax invoice (inc GST) $202.80 Enter the total GST on the suppliers tax invoice $5.80 Value of the tax invoice (excluding GST) $197.00 GST Code Base AmountGSTGross Amount Total to enter as AO including GSTAO$58.00$5.80$63.80 Total to enter as FRAO including GSTFRAO$139.00$0.00$139.00 This should equal the total value of the invoice (inc GST) $197.00$5.80$202.80 Comments: If the non-taxable supplies on the invoice relate to residential rent, financial supplies, or long term student accommodation please use the code AOIT instead of FRAO. If the supply relates to capital above $5000; please use the codes AC or FRAC as appropriate

13. Claiming input Taxed Credits Supplier does not have ABN No GST should be charged No GST to claim GST code FRAO Supplier has ABN but not registered for GST No GST should be charged No GST to claim GST code FRAO Low Value Items $82.50 or Less Tax Invoice not required to claim GST Other supporting documentation required Can still claim GST if GST charged GST code AO Tax Invoice Missing Information Rely on other documentation from supplier – if minor defects Can still claim GST GST code AO

14. Purchases – Special Rules Imports UNSW registered under Deferral scheme Do not pay GST directly to Customs GST accounted for on BAS Advise Customs of ABN/UNSW name No ABN Need to withhold 49% unless exception Statement by Supplier form required – no withholding RCTI * Value determined by recipient rather than supplier Recipient and Supplier Agreement * RCTI – Recipient Created Tax Invoice

15. Changing Default VAT (GST) codes Credit Cards –Select the icon and confirm the VAT code for the transaction matches the GST treatment for the tax invoice or receipt. Expense Claims

16. Taxable Conferences/Seminars Event Management Venue Hire On-charging Salaries/Expenses Sponsorship – Marketing benefit Related entities Subcontracting Research funding (not satisfy appropriations test) Milestone payments (not satisfy appropriations test) Shared funding another University/entity (not satisfy appropriations test) Service agreements Non Taxable GST Free UNSW student education course fees Exports, within 60 days Appropriations - GREs, no profit margin (not consideration) Health and Medical care Some Student Accommodation: charge <75% market rent Not in Australia when work done Input Taxed Financial Supplies Residential Premises Out of Scope (no supply) Gifts and Donations Scholarship Sales/Cash Receipts

17. Previously GST Act paragraph 9-15(3)(c) Payment made by GRE to another GRE is not consideration for GST purpose if payment specifically covered by appropriation under Australian law Following requirements to be met for payment not to be consideration  Be Appropriation under Australian law  Payment made by GRE to GRE ( not where to GRE or non GRE)  Payment made pursuant to appropriation  Specifically covered by appropriation – specify GRE by name or class of GRE  No GST – outside scope of GST New legislation -1/7/2012 Restore Policy intent – non commercial activities of GRE not subject to GST GST Act paragraph 9-17(3) and (4) For appropriation to not be provision of consideration for supply current requirement to be specifically covered by appropriation removed – (no need to specify GRE recipient by name, or generically) New “non-commercial” test satisfied Not consideration (No GST) if  payment from GRE to GRE for making a supply  covered by appropriation under Australian law  satisfies non commercial test (sum of payment received by GRE + anything else from another entity in connection with supply does not exceed anticipated or actual costs of making the supplies). No Profit margin.  If payment to GRE for commercial supply-GST  If margin above cost of supply – GST Appropriations

18. Appropriations: Example Appropriation Funding $5m (terms state purpose funds are appropriated) GRE Department (DoHA) $5m UNSW $5m Covered by Appropriation GRE to GRE Non Commercial test satisfied (Anticipated cost $6m, UNSW funds extra $1m shortfall) GST Free Appropriation Funding $5m (terms state purpose) GRE Department (DoHA) $5m Another GRE Department UNSW $5m Covered by Appropriation GRE to GRE Non Commercial test satisfied (Anticipated cost $6m, UNSW funds extra $1m shortfall) GST Free Supply

19. GST - Risks and responsibility for Compliance Risks If Taxable Supply and GST not charged, UNSW still have to remit 1/11 th of total amount to ATO in subsequent periods without the ability to pass on the cost to the recipient. Loss of revenue received by UNSW – only 10/11ths. Audit risk – inadequate processes, controls, supporting documentation; placed in a higher risk quadrant by the ATO. Penalties and Fines Reputational risk BAS amendments; outside of the time limits could result in penalty interest. Incorrect claiming of Input Tax Credits – No Tax Invoice, No GST charged Responsibility for Compliance AP vouchers/PR1, Expenses, Credit cards - Enterer and Approver in Faculties and Divisions Billings – Requestor/User raising the Bill in Faculties and Divisions BAS Preparation, based on transactions entered - Tax Payment or claiming of GST with ATO - Tax

20. Common GST Mistakes Mixed Supplies – need to enter Taxable items and GST free items on separate lines with separate GST code AP vouchers - Assume GST applies to total, claim ITC for 1/11 th of total – check for GST free items Tax calculated in system not agree to GST on Tax invoice – may need to split lines into GST free (FRAO) and Taxable (AO) Use GST code from PO - check if agrees to Tax Invoice Relying on default GST codes in EMS No Tax Invoice held, but claim GST - receipt only, confirmation of payment, Tax Invoice not attached to Expense claim/ Credit card reconciliation Deposits – claiming GST on deposit and no GST charged. Adjust on final Tax invoice. For example booking a conference room at a hotel; the final settlement invoice should contain the GST on the applied deposit. Credits from prior month. Check GST charged on Invoice. For example Telstra bills might have carry forward credits & international calls. GST not charged on Taxable Supply – GST code should be SALE (taxable) but Bill raised as FREE (non taxable) GST not charged on Sale as other entity not registered for GST

21. Finance website - Taxation Mixed Supply Calculator

22. Further Information and Questions Further Information –Finance website - Taxation Questions