The rate of GST goes up to 15% on 1 October. Are you ready? Here is a quick summary of what you need to know.
The IRD will send you the relevant GST 101 form and calculation sheet for your business. For most businesses, this return is likely to take longer to complete than usual so you should get onto it as early as possible in October. Just give us a call if you have any queries – or if you’d like us to take care of filing your transitional GST return.
Here is a quick questionnaire to find out what you need to do to correctly file your transitional GST return.
For Invoice Basis Filing
1. Is your return Period to 30 September 2010?
No – go to question 2.
Yes – the good news is that you don’t have to do anything – just file your September GST return as usual using the old 12.5% rate, and your future GST returns using the new 15% rate. Easy.
2. Is your return Period to 31 October 2010?
Yes – You will need to complete a transitional GST return which identifies your activity to September at the old GST rate of 12.5% – and all activity from 1 October 2010 at the new GST rate of 15%.
For Payments Basis Filing
1. Is your GST Return period to 30 September 2010?
No – go to question 2
Yes – You will need to prepare a debtors and creditors* list as at 30 September 2010 – and adjust for these amounts in your GST return. This will ensure the transactions that relate to the old GST rate are still taxed at 12.5%. See below for the calculation.
2. Is your GST Return period to 31 October 2010?
Yes – You will need to prepare a debtors and creditors* list as at 30 September 2010 and adjust for these amounts on the transitional GST return which identifies your activity to September at the old GST rate of 12.5% – and all activity from 1 October 2010 at the new GST rate of 15%. See below for the calculation.
*Debtors are all amounts still owing to you by your customers for invoices dated up to and including 30 September 2010.
*Creditors are all amounts still owing by you to your suppliers as at 30 September for goods and services with an invoice date on or before 30 September 2010.
Here is the calculation for Debtors and Creditors that you will need to complete if you are on payments basis. The IRD will send you the calculation sheet, so you just need to work your way through it. There will be no need to file the calculation sheet with your GST return, but you will need to keep it on file in case of audit.
Once you have completed your debtors and creditors as at 30 September 2010, you will need to complete the following calculation – and then to add or subtract the balance from box 9A.
(Total Creditors $xx Minus Total Debtors $xx) divided by 51.75
ie say Total Creditors at 30 September is $15,000 – and Total Debtors are $8,500
so – $15,000 – $8,500 = $6,500
$6,500 / 51.75 = $125.60.
Add (or subtract if the amount is negative) this amount (in this case $125.60) from box 9A.
For some businesses, this will be very easy – and for others it could take some time. If you have any problems just give us a call.