GST on Imports and Deferred GST Scheme

Transcription

1 GST on Imports and Deferred GST Scheme GST on Imports Importers purchasing goods worth more than $1,000 from overseas suppliers require their goods to go through the Australian Customs and Border Protection Service (ACBPS). The ACBPS values the goods and charges GST on the value of the goods, which the importer must pay before the goods are released. The GST value is outlined in the Customs Report provided, see example below. GST-Imports and Deferred GST (October 2015) The Institute of Certified Bookkeepers Page 1

2 Calculating Customs Value From 1 October 2016, GST registered importers or agents must use actual freight and insurance amounts, or specified percent of the customs value on the import declaration when calculating customs value. if using the specified percentage calculation, importers and agents have the option to apportion 10% between freight and insurance fields on the import declaration. Bookkeeping Entry to Bring in GST Customs Invoice to pay Account# DR CR Tax Bringing in GST for the BAS Customs Duty Freight $492 No tax GST on Customs Purchases $6,560 GST GST Paid Liability $656 No Tax Purchase value reversed as already $6,560 No Tax purchased from overseas supplier Other Charges Freight $70 No Tax Customs Payment Bank $1,218 No Tax Deferred GST Scheme for Importers This allows importers to defer payments of GST on all taxable importations into Australia. This does not affect any Customs Duty or other fees due at the time of importing goods; these must still be paid at the time of importation. Importers must have been granted approval from the ATO to defer payments on imported goods. Eligibility To be eligible for the scheme you must: Have an ABN Be registered for GST Lodge activity statements online Lodge activity statements monthly Make activity statement payments electronically Business owner has their own Auskey and Business Portal Eligibility may be affected by: Outstanding tax related returns or payments Convictions or court penalties in the last 3 years relating to taxation requirements, customs requirements, misdescription of goods, trade practices, fair trading or defrauding the Australian Government These points relate to public officers, directors, office bearers, partners and trustees of the applicant GST-Imports and Deferred GST (October 2015) The Institute of Certified Bookkeepers Page 2

3 Moving to Deferred GST Scheme If you are on quarterly Cash BAS and want to register for the Deferred GST Scheme, you will need to consider other potential implications and effects on the business. First you will need to swap the BAS from quarterly to monthly. (At this time, the business may also choose to go from Cash to Accrual reporting. If so, you will need to pay out any GST obligations from the Cash calculation. For some businesses this could be substantial and you may need to consider a payment plan with the ATO). You should consider the effect on cashflow for the business when GST obligations will paid monthly. Check your software set up for BAS calculations to make sure that 7A appears on your calculation sheet. How does it work? Once approved, the importer communicates electronically with Customs. The importer must quote their ABN, Customs electronically checks that approval has been granted for that ABN entity to defer GST, and the goods will be released after any other fees and duties are paid. GST is automatically deferred for all imported purchases the importer cannot elect to defer the GST on some imports and not others. Customs records the GST liability and reports to the ATO electronically. The ATO then includes the amount of GST that was deferred from the previous month on to the importer s next monthly BAS. The ATO issues the BAS electronically; the total deferred GST liability will appear at field 7A on the BAS. Client Register for Deferred GST Scheme Purchase overseas goods Customs Goods arrive in Australia Customs reports deferred GST to ATO Client pays Duty ONLY and receives goods to sell Accounting Electronic BAS shows deferred GST in 7A General journal allocating Deferred GST and GST on Goods Prepare and Pay BAS GST-Imports and Deferred GST (October 2015) The Institute of Certified Bookkeepers Page 3

4 Bookkeeping Process 1. Record the details of the supplier s overseas purchase, entering the details using N-T tax code 2. Record the customs fees payable. Enter a tax-exclusive purchase from the customs agent s invoice (or customs if dealing directly with them), noting that some fees and duties are GST free. These expenses are payable directly to customs or the agent on receipt of imported goods and are not part of the deferral scheme. See Appendix The GST liability is listed on the next BAS at 7A. 4. Set up a liability account for Deferred GST Liability. 5. Record by General Journal the deferred GST liability against the liability account created above. Enter the amount of the purchase (against the relevant cost of sales account), with GST. On the next line, enter the amount of the purchase with N-T code. NOTE: Customs calculates the GST based on purchases and additional costs that will make it difficult to reconcile with GST calculated on the initial purchase of the goods. The exchange rate also has an impact on calculations. See Appendix 2. General Journal Description Bringing in Deferred Liability on BAS Account DR CR Tax Overseas Purchase = ($1, x 11) COGS $11,105 GST Incl Less Overseas Purchase already entered COGS $10,096 No Tax Deferred GST Liability Liability $1,009 No Tax 6. Pay the deferred GST liability as part of the BAS. When entering the BAS payment, enter the relevant amounts at GST collected, GST paid, PAYG etc, and then enter a line against the liability account for the amount of deferred GST as per the BAS. GST-Imports and Deferred GST (October 2015) The Institute of Certified Bookkeepers Page 4

5 NOTE: The GST listed in 7A is ALSO captured in 1B. In a normal purchase, the business would pay the bill including the GST and claim it back on the next BAS. With deferred GST the business pays and claims back the GST on the same BAS. You will still be able to reconcile your GST accounts. ATO BAS Payment Account DR CR Tax GST Paid Liability $2,452 No Tax GST Collected Liability $7,926 No Tax PAYGW Liability $2,837 No Tax Deferred GST Liability $1,009 No Tax ATO RBA Control Liability Asset $9,320 No Tax Related References ICB Converting from Cash to Accrual ICB Inventory Landed Cost Calculation ATO Deferred GST Scheme Australian Department of Immigration and Border Protection Importing and buying from overseas GST-Imports and Deferred GST (October 2015) The Institute of Certified Bookkeepers Page 5