I posted this on another thread but it got me to thinking, daily I read of issues involving tax......... W8ECI forms..... Income tax in Hong Kong.....Minneapolis Sales tax...EIN numbers....tax form 1042-S, the list goes on and on and all these things mean nothing to me so, I though I would post a no nonsense guide as to how the tax business works in Australia.
This was in response to another contributors question...."What is GST"?
The GST is a broad-based tax of 10% on the supply of most goods, services and anything else consumed in Australia. Since Goods and Services Tax was introduced in 2000, many thousands of Australians have to calculate the amount of GST to add to the price of goods or services or calculate how much GST is included in the price to claim tax credits for any GST included in the price of goods, services or anything else acquired for use in carrying on the business....Phew!
If you are transacting business in Australia you are required to add and collect GST to all sales or services that you provide. This GST is forwarded to the ATO (Australian taxation office) via a BAS ( Business Activity Statement) and as part of this you will be required to be the holder an ABN (Australian Business Number)! If you are claiming tax credits, in other words you are passing the goods on for further handling before the final purchaser you need to apply to the ATO for a rebate of GST tax paid.
If the provider does not hold an ABN and does not quote GST then the purchaser must retain tax in what is called an Australian Business Number Withholding Tax Account (ABNWT)....For tax credits one must apply to the ATO and quote their ABN in order to receive a GST Tax Credits PDF!
And if all parties concerned to not adhere to the above they will be subject to the ATO's, KUB scheme.....(Kick up the bum) !!
There you go, clear as mud hey, but you know that is what you get when you deal with governments.....Even saw this one floating around the other day.....
Cheers.....Rob