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Case Study
Case Study
XYZ Inc, a US company, trades in car parts. Representatives of
XYZ made a business trip to Melbourne, Australia. Whilst in
Australia, XYZ’s representatives paid for hotels, taxi fares, meals
and miscellaneous other expenses. All of these expenses included
GST. XYZ purchased car parts from an Australian company. The price
that XYZ paid to the Australian company included GST because the car
parts were exported to XYZ more than 60 days after XYZ had been
invoiced for them. XYZ was also required to pay the rail costs to
move the goods from the Australian company to the point of export,
again including GST.
XYZ contacted EasyGSTrefunds. EasyGSTrefunds arranged
for XYZ to be registered for GST and claim back a refund
of the GST it had paid. This provided a boost to XYZ’s cash flow and
profit margin. Easy.
Glossary
ABN – Australian Business Number. An ABN is
allocated as an identification number for businesses and other
entities dealing with the Australian Taxation Office and other
government departments. Businesses that charge GST have an ABN and
this number will be shown on the relevant tax invoice.
Adjustment Note – After a supply or importation
has been made, there may be some subsequent event which alters the
GST consequences for the parties. For example, the price may be
reduced following spoilage of the goods in transit. The supplier
will then issue an adjustment note setting out the change in price.
An adjustment note may increase or decrease an entitlement to a GST
refund.
ANTS – An acronym to describe the package of
legislation which includes the goods and services tax legislation.
For example, two pieces of ANTS legislation are A New Tax System
(Goods and Services Tax) Act 1999 and A New Tax System (Luxury Car
Tax) Act 1999.
Creditable Acquisition – An acquisition that
gives rise to input tax credits (see ITC). Your business makes a
creditable acquisition if it acquires something during the course of
carrying on the business, the acquisition is a taxable supply, your
business is liable to provide consideration for the supply and your
business is registered or required to be registered. However, if the
acquisition is for private or domestic purposes, or relates to your
business making input taxed supplies, the acquisition will not be a
creditable acquisition.
EasyGSTrefunds – The leading niche provider in
its field, arranging for GST refund services to be provided
to businesses in all parts of the globe.
GST-free Supplies – GST-free supplies are not
subject to GST. Therefore, the price paid for these supplies does
not include GST and hence does not give rise to any entitlement to a
refund of GST. In general terms, GST-free supplies include many
goods and services under the headings of healthcare, education,
childcare, religious services and most exports. The makers of
GST-free supplies do not include GST in the price they charge for
their supplies but are entitled to claim back the GST they have paid
on the inputs used to make those GST-free supplies.
ITC – Input tax credit.
Input Tax Credit – Input tax credits are offset
against liability to pay GST, giving either a net liability to pay
GST or an entitlement to a GST refund. Input tax credits arise from
creditable acquisitions.
Input Taxed Supplies – Input taxed supplies are
not subject to GST. Therefore, the price paid for these supplies
does not include GST and hence does not give rise to any entitlement
to a refund of GST. In general terms, input taxed supplies include
residential rent and many financial services, such as loans and
share trades. The makers of input taxed supplies do not include GST
in the price they charge for their supplies but are not entitled to
claim back the GST they have paid on the inputs used to make those
input taxed supplies.
RITC – Reduced input tax credit.
Reduced Input Tax Credit - Banks and other
institutions providing financial supplies may not be entitled to
claim input tax credits, but will be entitled to reduced input tax
credits in respect of certain acquisitions.
Tax Invoice – For an invoice to be recognised as
a tax invoice it must meet certain requirements. In particular, a
tax invoice must show the supplier’s name and ABN, a brief
description of the goods or services provided and whether GST has
been included in the invoice total. The requirements vary depending
upon whether the total amount payable exceeds Aus $1,000.
Taxable Supply – A supply that gives rise to GST
liability for the supplier. For a supply to be a taxable supply, the
supply must be for consideration, made in the course of furtherance
of an enterprise, be connected with Australian and made by an entity
that is registered or required to be registered. | 
