Question

Advise the following tax payers of the GST consequences arising out of the following information and calculate the GST outputs or inputs, as required:

Angela is a photographer. She recently purchased a new camera from the USA as the camera was not yet available in Australia. The camera cost AUD 1,818, which was shipped directly to her home. • NIC Ltd is a large advisory firm that is registered for GST purposes. It accounts for GST on an accruals basis and submits its Business Activity Statements (BAS) on a monthly basis. NIC Ltd organises and pays for the accommodation of one of its managers, Daniel. This is treated as a fringe benefit for fringe benefits tax purposes. On 10 June 2020, NIC Ltd received a tax invoice from the residential property agent where Daniel lives, Smart Strata Pty Ltd, for the payment of Daniel’s fees of $550 (including GST). NIC Ltd did not pay the membership fee for Daniel until 12 July. Smart Strata Pty Ltd accounts for GST on a cash basis and submits its BAS on a quarterly basis. (Explain the GST consequences for both NIC Ltd and Smart Strata Pty Ltd). • MBR Pty Ltd has a total input tax credit of $1,000,000 comprising $80,000 of financial supplies and the balance is taxable supplies.

Answer 1

1. Angela purchased a camera from other country does not get any input tax benefit from that purchase

2. Fringe benefits are taken for the business purpose and nic ltd is following accrual basis so, input tax benefit is available

Daniel received a tax invoice for his house property , As this has no connection with the business NIC ltd so Input Tax Credit is not available

Nic ltd not paid membership fees to daniel even though it is following the accrual basis of accounting ITC cannot be availed until the actual payment of fess and received the bill

3. Total of input tax $1,000,000 comprising $80,000 of financial supplies and the balance is taxable supplies

Input related to the financial supplies are not considered under the gst