Deck 13: Goods and Services Tax

Question 1

Lisa Martin has operated a small legal practice on a part-time basis for the last ten years and is registered for the GST. However, in December 2019 she became a mum and as a result expects her business income to decline. Lisa believes that her projected annual turnover will change as a result and impact upon her GST registration. Lisa estimates the following income over the next 12 months:
Client fees (including GST): $44,000
Sale of old computer equipment no longer required (excluding GST): $10,000
Settlement of an insurance claim: $5,000
Lisa's own drawings and dividends paid $1,500.
Based on the above information, Lisa's projected annual turnover is:

A) $56,500
B) $51,500
C) $40,000
D) $50,000

Answer 1

$40,000

Question 2

Peter Nolan runs a small jewellery shop in the outskirts of Melbourne and provides specialised advice on all purchasers. Peter employs two permanent staff and is registered for the GST. For the tax period ending 31 March 2020, Peter reported the following transactions and uses the cash basis of accounting for GST.
Receipts (inclusive of GST where appropriate)
Cash sales: $55,000
Credit sales outstanding: $7,700
Gift vouchers issued: $4,400
Expenses (inclusive of GST where appropriate)
Cash purchases: $22,000
Staff salaries: $45,000
Electricity: $990
Gas heating: $880
Telephone: $440
Assuming that all tax invoices are held where appropriate, the net amount for the tax period ending 31 March 2020 is:

A) $5,690
B) $3,190
C) $2,790
D) $3,000

Answer 2

$2,790

Question 3

Which if the following is not a requirement of a taxable supply?

A) The supply is connected with Australia
B) The supply is for consideration
C) The supply is by an entity not registered for GST nor required to be registered for GST
D) The supply is in the course or furtherance of an enterprise

Answer 3

The supply is by an entity not registered for GST nor required to be registered for GST

Question 4

Which if the following is not a requirement of a taxable importation?

A) Goods
B) Goods imported into Australia for home consumption
C) Goods imported into Australia by an entity registered for GST
D) Goods imported into Australia for private use

Question 5

Which of the following is an example of a GST-free supply (as defined in Division 38 of the GST Act 1999)?

A) Bread and bread rolls
B) Accounting services
C) Legal services
D) A supply of electricity

Question 6

Which of the following is not an example of an input taxed supply (as defined in Division 40 of the GST Act 1999)?

A) A financial supply
B) Health services provided by approved medical practitioners and pathologists
C) A supply of residential rent
D) A supply of residential premises

Question 7

Which of the following is not an example of an out of scope supply?

A) A supply of salary and wages
B) Superannuation contributions
C) Depreciation expenses
D) A sale of a motor vehicle which is recorded as a business asset by an entity registered for GST

Question 8

Which of the following is not an example of a creditable acquisition?

A) A purchase of new clothing from a registered supplier to a clothing store that is also registered for GST
B) An acquisition of accounting services from a registered accounting practice to a business registered for GST
C) A purchase of goods by a business for private purposes
D) A purchase of new farm machinery by a farmer registered for GST

Question 9

Which of the following statements is not true with respect to creditable importations?

A) An importation of goods for private purposes entitles the taxpayer to claim the GST paid on the taxable importation
B) The GST paid on the importation of goods by a registered business can be claimed in the same tax period in which the GST is paid
C) A registered business entity can defer the payment of GST on a taxable importation under the deferred GST scheme
D) An importation of goods for business purposes entitles the registered taxpayer to claim the GST paid on the taxable importation

Question 10

Which one of the following does not entitle the members to form a GST group?

A) Each member of the group must agree in writing to form the GST group
B) Each member of the group must be registered for GST
C) Each member of the group must not belong to another GST group
D) Some members of the group have branches for GST purposes

Question 11

Which one of the following statements is not true about a purchase of second hand goods?

A) If the goods were purchased for $300 or less, the second-hand dealer is deemed to have purchased the goods from an unregistered entity GST-inclusive
B) If the second-hand goods were acquired for more than $300, the second-hand dealer is entitled to a notional input tax credit equivalent to 1/11th of the amount paid to acquire the goods in the tax period in which the dealer subsequently sells the second-hand goods
C) No input tax credit can be claimed on the purchase of second hand goods from someone who is not registered for GST
D) The amount of any notional input tax credit that can be claimed is not able to exceed the amount of GST payable in respect of the subsequent sale of the second-hand goods

Question 12

Which of the following statements is not true with respect to the acquisition of vouchers?

A) GST does not apply when the voucher is sold to the customer
B) The initial sale of the voucher is considered taxable and so attracts GST
C) GST applies when the voucher is redeemed by the holder and the relevant goods or services are sold to the customer
D) The special rules regarding vouchers are set out in Division 100 of the GST Act 1999

Question 13

If a retailer, that is registered for GST, in a tax period has furniture sales totalling $22,000 and in the same tax period had purchases that were all creditable acquisitions of $12,100, what would the net amount of GST be that this retailer owes the ATO?

A) The net amount of GST refundable by the ATO would be $1,100
B) The net amount of GST owing to the ATO would be $2,000
C) The net amount of GST owing to the ATO would be $3,100
D) The net amount of GST owing to the ATO would be $900

Question 14

Which one of the following statements is not true?

A) An enterprise with annual turnover of $75,000 or more must register for GST
B) A not-for-profit organisation with an annual turnover of $150,000 must register for GST
C) A local government body can carry on an enterprise and so is entitled to register for GST
D) An enterprise with an annual turnover of less than $75,000 can choose, if it wishes, to register for GST

Question 15

Which of the following is correct regarding the claiming of input tax credits in respect to the purchase of a car for business use?

A) If a car is purchased for $120,000, the maximum input tax credit that can be claimed is $5,235
B) If a car is purchased for $120,000, the maximum input tax credit that can be claimed is $10,909
C) If a car is purchased for $55,000 and is used 50% for business purposes, the maximum input tax credit that can be claimed is $5,000
D) If a car is purchased for $22,000 for private purposes the maximum input tax credit that can be claimed is $2,000

Question 16

If ABC Wholesalers Pty Ltd sells items for a total of $3,630 (GST-inclusive), what is the value (as per s9-75 of the GST Act 1999) of these supplies?

A) $3,630
B) $3,300
C) $330
D) Some other amount

Question 17

What is the GST on a taxable importation that has a value of $1,100?

A) $111
B) $110
C) $100
D) Some other amount

Question 18

Which is not included in calculating the value of a taxable importation?

A) the customs value of the goods
B) any customs duty payable in respect to the importation of the goods
C) any freight costs in transporting the goods internally within Australia
D) any wine equalisation tax (WET) payable?

Question 19

Which one of the following is not a GST-free supply of education?

A) A secondary school course
B) A tertiary course
C) A Masters or Doctoral course
D) Courses undertaken to maintain an individual's professional or trade qualification

Question 20

Which one of the following supplies of residential premises is input taxed?

A) A sale of established (not new) residential premises
B) A sale of new residential premises
C) A sale of commercial residential premises
D) A sale of non-residential premises such as shops or offices

Question 21

Dennis is a dentist who is registered for GST. During the most recent tax period his total receipts from dental services he supplied equalled $44,000. Dennis paid for the following expenses during this same tax period: Practice rent of $6,600; electricity and gas of $2,200; liability insurance costs of $3,300 and staff salaries of $411,000. What is the likely result of this tax period? Will it result in an amount payable to the ATO or an amount refundable? What is this net amount likely to be?

Question 22

Frank is a painter and registered for GST. During the most recent tax period he paid $24,200 for painting supplies. 30% of these painting supplies were used to paint his own home. What is the amount of GST that Frank can claim in respect to the painting supply purchases made in this recent tax period? Explain.

Question 23

BG Plumbers accounts for GST on a cash basis. What amount of GST can BG Plumbers claim in the most recent tax period if the following information is obtained: Expenses paid of $8,800 to registered suppliers; Expenses of $2,000 paid to unregistered suppliers; Expenses of $4,400 for which invoices have been received but these invoices have not been paid as yet.

Question 24

Abel Lawyers is a partnership that is registered for GST and that accounts for GST on an accruals basis. During the March quarter tax period, Abel Lawyers billed out $66,000 worth of invoices. An amount of $22,000 was not collected against those invoices by the end of the March tax period. The partnership received other receipts of $33,000 in the March tax period for invoices that had been billed out in the December tax period. What is the GST liability if Abel Lawyers in the March tax period?

Question 25

Martin operates a second hand store in Launceston and he wants your help to work out his net GST amount for the September quarter. During the September quarter Martin purchases 20 second hand items for a price of $220 each from various persons (none of whom are registered for GST). He also purchased a second hand item for $440 from a person who also was not registered for GST. During the September quarter martin sold second hand items for a total of $11,000. What is Martin's net GST amount payable to the ATO for the September quarter?