1. ARMSARMS Presented by Peter Gibson 02 9267 9344

2. Quote from Australian Financial Review (dated 4 February 2000 ) “Our GST, for example, is in excess of 360 pages now compared to New Zealand’s 100 or so pages”.

3. Basic Rules Important ConceptsImportant Concepts When is GST TriggeredWhen is GST Triggered Input Tax Credits (I.T.C’s)Input Tax Credits (I.T.C’s) Partial I.T.C’sPartial I.T.C’s Tax InvoicesTax Invoices

4. Specific Issues Pricing Examples Duty Free SalesPricing Examples Duty Free Sales Lay-Bys Refund 30/6Lay-Bys Refund 30/6 Gift Vouchers ACCC IssuesGift Vouchers ACCC Issues Adjustments Two Company StructureAdjustments Two Company Structure Valuations Must Do ListValuations Must Do List Repairs Sales Tax IssuesRepairs Sales Tax Issues 2nd Hand Goods2nd Hand Goods

5. Fact Sheet Overview GST Effects-EVERYONE GST- Triggered by a supply of things for consideration GST Rate-One rate - 10% Value of Goods Or Service-10/11 of the price paid Registration-Turnover 50k p.a. ThresholdNon profit bodies 100k p.a.

6. Fact Sheet Overview Cash Accounting-Up to $1,000,000 Quarterly Reporting- Up to $20m p.a. Electronic Lodgment-Turnover > $20m p.a. Commencement Date-1.7.2000

7. Triggering GST TAXABLE SUPPLY OCCURS AT THE EARLIER OF: Any consideration is received for the supply Any consideration is received for the supplyOR An invoice is issued relating to supply An invoice is issued relating to supply FULL AMOUNT OF GST BECOMES PAYABLE WATCH OUT FOR DEPOSITS, PREPAYMENTS

8. Quarterly P & L Outgoings Income Outgoings Income $ $ $ $ *Purchases 200,000 Sales 350,000 *Accountancy 700 Repairs 75,000 Bank Charges 680 Valuations 11,000 Bank Charges 680 Valuations 11,000 *Cleaning 900 *Insurance 1,600 *Rent 15,000 Wages 120,000 Wages 120,000 *Repairs & Maint 800 *Leases 3,300 ______ 342,980 436,000 342,980 436,000 *222300  11 = 20209.09 1/11th 39636.36 GST PAYABLE $19427.27 GST PAYABLE $19427.27

9. Part Business Use Only Input tax credit available to the extent of business use only Input tax credit available to the extent of business use only An adjustment process will be in place An adjustment process will be in place Adjustment will usually be made once per year Adjustment will usually be made once per year

10. Invoices l Under $50 No Invoice Required. l It is not compulsory to issue a tax invoice however if a customer requires one it must be issued within 28 days.

11. Over $50 and * the words “Tax Invoice” Under $1,000 * the issuer’s ABN must * date of issue of the tax invoice include * the name, or trading name of the supplier * the quantity or volume of what was supplied * the GST inclusive price of the taxable supply Invoices (cont)

12. Over $1000 must * as per previous slide include PLUS * the name of the recipient * the address or ABN of the recipient * a brief description of each thing supplied. Invoices (cont)

13. Pricing Jewellery Before After Before After $ $ $ $ 100 100 100 100 +32% (cost +6%) 33.92 10 133.92 110 133.92 110 (10) (10) +GP (100%) 133.92 100 267.84 +GP 133.92 267.84 +GP 133.92 233.92 233.92 +GST 23.39 +GST 23.39 257.31 257.31 REDUCTION = 3.93% REDUCTION = 3.93%

14. NO Before After Before After $ $ $ $ 100 100 100 100 +32 (cost + 6%) 33.92 10 133.92 110 133.92 110 (10) (10) +GP (100%) 133.92 100 267.84 + 100% 100 267.84 + 100% 100 200 200 + GST 20 + GST 20 220 220

15. Pricing Watches Before 29/7/99 29/7/99 to 30/6/00 1/7/00  $ $ $ 100 100 100 +32% (cost+6%) 33.92 22% 23.32 10 133.92 123.32 110 +GP (85%) 113.83 113.83 (10) 247.75 237.15 100 113.83 213.83 +GST 21.38 235.21

16. Pricing Aged Stock BEFOREAFTER$100 TAX1610 116110 G.P.17.92 (10) 133.92100 + 17.92 117.92 +11.79 129.71

17. Pricing Aged Stock BEFOREAFTER$ OR100100 1610 116110 151.84(10) 267.84100 151.84 251.84 + 25.18 277.02

18. Lay Bys Cash/AccrualCash/Accrual CancellationCancellation NZ TreatmentNZ Treatment

19. Gift Vouchers Before 1 JulyBefore 1 July After1 JulyAfter1 July

20. Adjustment Events Settlement DiscountsSettlement Discounts RefundsRefunds ReturnsReturns Bad DebtsBad Debts

21. Other Issues ValuationsValuations RepairsRepairs Debtors/CreditorsDebtors/Creditors Buying GroupsBuying Groups

22. Second Hand Goods Trading StockTrading Stock Business AssetsBusiness Assets Stock on Hand 30/6Stock on Hand 30/6

23. Tax Free Sales Open BagOpen Bag Closed BagClosed Bag RefundRefund

24. Refund 30/6 Stock For SaleStock For Sale ConsumablesConsumables By 22 Jan 2001By 22 Jan 2001

25. Interposed Wholesale Entity ABN/GST RegABN/GST Reg Retain???Retain??? Sales Tax MattersSales Tax Matters

26. ACCC Guidelines Prices should be reduced immediately to pass on the full effect of the tax reductions Price increases based on the GST should include a full offset for other indirect tax reductions No mark up on GST component Prices should reflect actual tax increase Dollar margins should not be increased

27. Pricing l ACCC requirements - pass on savings created by abolition of sales tax

28. Systems-Capturing The Information Accounting Systems to separate, calculate and record GST paid Accounting Systems to separate, calculate and record GST paid Information systems to ensure you have received a ‘Tax Invoice’ Information systems to ensure you have received a ‘Tax Invoice’ Filing system to maintain your period tax invoices Filing system to maintain your period tax invoices A reconciliation system A reconciliation system

29. Likely Audit Focus Areas Sales incorrectly returned;Sales incorrectly returned; Purchases/expenses claimed in the incorrect period;Purchases/expenses claimed in the incorrect period; Arithmetical errors made on the GST return;Arithmetical errors made on the GST return; Claims for expenses that have no GST charged on their supply;Claims for expenses that have no GST charged on their supply; Claims for private expenses;Claims for private expenses; Input tax credit claims without the required tax invoices being held or produced in the required time-frame;Input tax credit claims without the required tax invoices being held or produced in the required time-frame; Sales and income returned in the wrong GST period; andSales and income returned in the wrong GST period; and Purchases and expenses claimed on GST-free items.Purchases and expenses claimed on GST-free items.

30. Must Do List - Before July 1 Apply for ABNApply for ABN Apply Before 31 May 2000Apply Before 31 May 2000 Review Contracts & AgreementsReview Contracts & Agreements Unbundle Sales Tax (+ other) SavingsUnbundle Sales Tax (+ other) Savings Determine PricesDetermine Prices Record any GST charged by SuppliersRecord any GST charged by Suppliers Prepare StationeryPrepare Stationery Ensure Accounting Systems are AdequateEnsure Accounting Systems are Adequate

31. Must Do List - Before I July Determine whether you will account for GST on a cash or accrual basisDetermine whether you will account for GST on a cash or accrual basis Consider Timing of Capital AcquisitionsConsider Timing of Capital Acquisitions Train StaffTrain Staff Conduct cash flow exercise and prepare (if necessary) for extra working capitalConduct cash flow exercise and prepare (if necessary) for extra working capital Charge GST now if necessaryCharge GST now if necessary Send Questionnaire to SuppliersSend Questionnaire to Suppliers

32. Must Do List (cont) Decide whether you will lodge monthly or quarterlyDecide whether you will lodge monthly or quarterly Ensure suppliers provide “Tax Invoices”Ensure suppliers provide “Tax Invoices”