2.7 Calculating GST
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The document discusses the calculation of Goods and Services Tax (GST) in Australia, which is set at a rate of 10% on various business transactions. It provides examples of how to compute GST inclusive and exclusive amounts, illustrating the formula used for the calculation. Additionally, it mentions items that are exempt from GST, such as wages and loan repayments.
2.7 Calculating GST
- 2. Video of this presentation at… YouTube Channel for VCE Accounting
- 3. © Michael Allison. Author’s permission required for external use. In Australia we have a Goods and Services Tax (GST) on many business transactions The Australian government has decided to apply a GST of 10% Other countries apply different amounts 2.7 CALCULATING GST 10% 15% 19.6% 5%
- 4. © Michael Allison. Author’s permission required for external use. However, the GST is not applied on all items… Australian Tax Office guide to GST 2.7 CALCULATING GST
- 5. © Michael Allison. Author’s permission required for external use. Do NOT have GST Payments to creditors Wages Loans Loan repayments Drawings Capital contributions Interest revenue Interest expense Receipts from debtors 2.7 CALCULATING GST
- 6. © Michael Allison. Author’s permission required for external use. Items with GST are made up of three amounts: For example, the a business paid $300 plus GST for advertising… How much did it pay? + = GST Exclusive Amount GST 10% GST Inclusive Amount + = GST Exclusive Amount GST 10% GST Inclusive Amount $300 $30 $330 2.7 CALCULATING GST
- 7. © Michael Allison. Author’s permission required for external use. The GST inclusive amount can be given rather than the GST exclusive amount. How do you find the GST? The formula is: + = GST Exclusive Amount GST 10% GST Inclusive Amount /= 11GST 10% GST Inclusive Amount 2.7 CALCULATING GST
- 8. © Michael Allison. Author’s permission required for external use. For example, a business paid $484 for rent inclusive of GST… So the GST exclusive amount would be the difference between the two figures… /= 11GST 10% GST Inclusive Amount 11$44 $484 = - GST Exclusive Amount GST 10% GST Inclusive Amount $440 $44$484 2.7 CALCULATING GST
- 9. © Michael Allison. Author’s permission required for external use. Some examples… + = GST Exclusive Amount GST 10% GST Inclusive Amount + =$700 $70 $770 + =$1100 $110 $1,210 + =$500 $50 $550 + =$330 $33 $363 2.7 CALCULATING GST
- 10. © Michael Allison. Author’s permission required for external use. TASK In-class Homework SQ4 X