Time for a deep breath! But we plan on making the GST changes as simple as possible for you.
Each business will have their own considerations so we need to talk to you prior to you completing your GST return for the period 30 September 2010.
The Inland Revenue Department requires each business to complete a return to the period end 30 September 2010 in which all GST will be returned at 12.5%. The remainder of the period will be recorded on a separate GST Return to the end of your particular GST Period and all GST will be at 15% for both sales and purchases. Adjustments for your debtors and creditors at 30 September 2010 will be made to counteract the difference. This will all be completed in your next scheduled return. So a list of debtors and creditors needs to be prepared as soon as practical after 30 September 2010, just like you do for the financial year end.
So the 'Time of Supply' of the goods and services is the crucial point that decides what GST rate is charged.
The general rule is that the time of supply is the earlier of the time at which an invoice is issued (being the date of the invoice) or the time that any payment is received by the supplier in respect of the transaction.
If the 'Time of Supply' occurs before 1 October 2010 the old rate of 12.5% will apply to the transaction. If the 'Time of Supply' occurs on or after the 1 October 2010 the new rate of 15% will apply.
Example: Take our own case. We complete work up to 30 September 2010. We charge the amount but complete the bill in early October 2010, we will charge GST at 12.5% as time of supply was September.
- If on Invoice Basis – claim GST at 12.5% as invoice date was 30 September 2010.
- and claim adjustment of GST amount in the 30 Sept 2010
return. Claim the 15% when paid after 1 October 2010 when you complete
your next GST Return.
There are different 'Time of Supply' rules for the following:
Machines, Meters or devices operated by Coin or Tokens
Tokens, Stamps or Gift Vouchers
Hire Purchase Agreements
Agreements to Hire and Periodic Payments (Leases and Rentals)
We will talk to you about these.
Accounting Software/Computer Systems
Changes will be required to accommodate the new GST rates.
Most systems will be offering upgrades to their software.
Please talk to us to consider what needs to be done.
Changing the default GST rate in the system may result in the change being applied retrospectively, causing problems with reconciliations.
One way to prevent this from happening would be to add a new GST Rate to the system.
However some less sophisticated accounting systems may only allow one rate of GST to be used at any one time.
Any changes made to systems should be tested before going 'live'.
Copy the data and use test invoices etc.
Once again TALK TO US to ensure you get on the right path.