GST Implementation

•	GST can be run on either the Accruals or Cash Basis. The selection for each Company is made in Set Up together with the GST percentage. The percentage and GST basis will display in the header of the GST Details screen. Do not switch methods part way through a year.

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Create 3 new General Ledger (GL) accounts: a level 2 heading account, e.g. 2.2000 "GST (Net Value)"; a level 3 postable account for "GST Collected" e.g. in Liabilities 2.2100 "GST Collected", and another level 3 postable account for "GST Paid Tax Credits" e.g. in Liabilities 2.2200 "GST Input Tax Credits".

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Create the GL accounts for the other taxes and expenses (as depicted in the screen below). Fringe Benefits Tax (FBT) and Wages (WAG) will be expenses; Pay As You Go Instalments (ITX) re income will either be an expense or against a provision liability (check with your Accountant); the Pay As You Go Withholding (PYG) for employee tax deductions, and voluntary deductions; Deferred Instalments (DFI) re income; and the PAYG Withholding Tax (WHT) for the non-ABN 48.5% deductions are best created as liability accounts and will operate as clearing accounts.

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A "Job" for general ledger posting purposes (i.e. for posting expenses and Balance Sheet items) should already exist, e.g. with a code of GENLED (note: existing installations would already have such a "Job" for this purpose, other codes may be BALSH, OHEAD, 2000, etc). If not then one must be created. This Job/ledger should of course be linked to the appropriate General Ledger Cost Centre bank.

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A GST Cost Centre must exist in all Cost Centre Banks (these are automatically generated by the system, if they did not previously exist). Note that the GST cost centres do not require linking to specific General Ledger accounts in the Cost Centre screen. There will also be cost centres automatically created for DFI, FBT, ITX, PYG, WAG and WHT (these appear also in the screen below), being other forms of tax or values that will be required on the Business Activity Statement (BAS). Link these new Cost Centres to the new GL accounts created in the earlier step. These are only required in the cost centre bank linked to the Job referred to in the previous step, e.g. GENLED, and can be safely deleted from the Job Cost Centre bank, etc.

•	Load the Suppliers screen and select the Details label. For each GST applicable Supplier check the GST box. To tag all Suppliers perform a Select All and then drag & drop onto the GST box. DO NOT set up GST as a pay deduction or oncost.

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Note that the ABN (Australian Business Number) can be recorded in the Supplier Details area. The ABN is checked by the system for its validity. The ATO requirement is for a Withholding Tax of 48.5% to be applied to Suppliers without a valid ABN. If a Supplier is not required by law to have an ABN then enter EXEMPT in the ACN/ABN field. A list of Suppliers with invalid ABNs can be obtained through the Suppliers Report screen. The WHT deduction is automatically created when GST is activated in the system. You will need to complete the deduction details within the Pay Deductions section for WHT and PYG deductions. The general ledger accounts used against the deductions must be consistent with those nominated in the GL "Taxation Office Details" screen. These two new deductions basically supersede the PPS and PAYE deductions (refer to section on Other Deductions). The Supplier code for the new deductions must be the same as the ATO Supplier code used for GST purposes.

•	Modify the Claim and Variation layouts to facilitate the printing of the GST amount included in the Claimed amount. There are selectable fields available to separately report GST, Net (GST exclusive), and GROSS (GST inclusive) amounts, including other inclusive and exclusive values.

The following is an example of the set-up details required for the other forms of tax. Note that "Pay As You Go" and "Withholding Tax " have been introduced, and "Pay As You Earn" and "Prescribed Payment System" taxes have been dropped as of 1/7/2000.

1. The system automatically generates a number of Cost Centre Codes as described in the first section. These new Cost Centres will require new GL accounts to be linked to them. The GST Cost Centre does not require a GL account to be linked to it in the Cost Centres screen. Also it is wise not to alter or reuse the existing PAYE and PPS Tax GL accounts.

2. "Suppliers" - "Pay Deductions" require creation and adjustment. Note that the system automatically creates a deduction for "Withholding Tax" (WHT).

The following (refer sample screen below) is an example of the new deductions and their associated codes and GL accounts. It is recommended that the existing deductions should not be altered so that prior accounting and reporting integrity is preserved. Each deduction requires a GL account; Supplier code; Job; and Cost Centre.

Note that the saved deduction or oncost relating to a particular Supplier will appear in the lower right field "Pay Deductions" of the "Suppliers" main screen. The applicable deduction/s must appear here to be active and will be displayed in the Payment screen for the Supplier.

Voluntary PAYG Withholding Tax for Suppliers with an ABN and GST applicable – refer How DO I "Payment Deductions – Voluntary".

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The GST method of calculation can be either on the Accruals or Cash basis. Accruals basis reports GST on Claims and Invoices only for the BAS and GST reports. Cash basis reports GST on Payments and Receipts for the BAS and GST reports, however GST is also recorded on Claims and Invoices for accounting purposes. The Databuild accounting method assumes accrual accounting and not cash book.

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When a Supplier Invoice is posted, the system will generate a GST Inclusive Amount (i.e. the total payable invoice value) and a GST amount for the GST Paid Tax Credit. This can be viewed in the Audit Trail screen. The GST amount is automatically posted as a debit against the GL account nominated in the "Taxation Office Details" screen in the General Ledger Chart of Accounts module. The GST exclusive amount is posted against the expense or Job cost relating to the invoice. There are specific BAS amount fields that will not be reported unless the relevant code is entered in the "Comments" field on each Invoice transaction. These are G10 (Capital Acquisitions); G14 (reportable Acquisitions with no GST in the price); and G15 (Private Use and Non-deductible Acquisitions). Invoices with zero GST and no recognisable code in "Comments" will not be reported. Please note that GST on Retention is reported according to the transaction date. Therefore a manual adjustment on the BAS would be required if the Paid Tax Credits are not claimable until the Retention monies are released.

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When a Client Claim is posted, the system will generate a GST Inclusive amount as a debit to Debtors. This amount is of course the amount payable by the Client/Debtor. Also a GST amount will be recorded as a credit against the GST Collected account, and the GST exclusive amount will be recorded as a credit against Sales/Income. If the Claim is a GST Free Sale then G3 must be entered in the "Comments" field. Important note: GST will not be reported and treated as due if the "Authorised" box is not ticked. There is a new menu item in GST Details screen – Reports which will Authorise all existing Claims as a one-time action. Claims with zero GST and no recognisable code in "Comments" will not be reported.

•	If Cash basis is selected then there will be a GST amount field in the Receipt posting screen where GST must be entered manually. A GST amount will be recorded automatically on a Payment by the system based on the GST amounts recorded against the Invoices that are being paid.

Job reporting is essentially GST exclusive. The Job Cost Detailed report, for example, gives a summary of GST exclusive and inclusive amounts. Typically Budgets, Purchase Orders, Cost and Forecast amounts are all GST exclusive, therefore profits and income exclude GST. Purchase Orders can be printed optionally with a total GST amount at the end of the order.

The Job Cost Summary report provides "Variance Type" options to report payments and receipts amounts with choices: Pays ex GST; Pays inc GST; and Receipts (inclusive of GST by nature).

The company's net GST liability (plus any previously generated unpaid ATO invoices) at any time is reflected in the "Taxation Office Details" screen in the General Ledger module as Unprocessed items. The system will display from the earliest unprocessed GST item. Unprocessed GST entries have not had ATO invoices generated for payment (be wary of previously processed GST entries in the date range). Refer to GL accounts 2.21 and 2.22. After ATO invoices have been generated (equivalent to the processed GST entries), the net liability for the reporting period would then be reflected in the Creditors Control account balance. If Cash basis is being used then there may be balances in 2.21 and 2.22 at the end of the reporting period which will relate to GST recorded on Invoices and Claims which have yet to be Paid. Do not generate ATO invoices until the Databuild "Business Activity Statement" and "GST Report" have been verified and reconciled.

The Australian Taxation Office requires a "Business Activity Statement" (BAS) which includes a variety of Taxation liabilities including GST. The "Taxation Office Details" screen in the system displays the GST amounts required to appear on the BAS as well as a hard copy report, which can be run from the reports menu. The Databuild BAS report will assist your Tax Accountant/Agent together with other information from the system to complete the ATO's BAS stationary. Users should not simply transcribe the amounts reported on the BAS report generated by the system. It is recommended that the GST Report is run and printed (also a saved report to disk will prove useful), as this will support the GST amounts reported on the BAS. To run both reports, firstly enter the date range and then click on Range and leave Show Unprocessed Only unticked.

Important note: The GST Report should also be run for Unprocessed GST amounts for prior reporting periods. Once again the report should be saved and ATO invoices should be generated. The unreported prior period amounts should be included in the BAS for the current reporting period as Adjustments in accordance with ATO instructions.

The items on the Databuild BAS report are coded to correspond with the fields on the ATO Business Activity Statement. Most amounts are automatically reported in the BAS based on your settings and the nature of the transaction. However there are specific BAS amount fields that will not be reported unless the relevant code is entered in the "Comments" field on each Invoice transaction. These are G3 (GST Free Sales); G10 (Capital Acquisitions); G14 (reportable Acquisitions with no GST in the price); and G15 (Private Use and Non-deductible Acquisitions). Refer to the ATO publication (provided to all registered ABN entities) "Business Activity Statement Instructions" which contains definitions and guidelines for valid inclusions relating to all BAS fields.

The GST Report provides a detailed listing of the items included in the GST totals at 1A and 1B on the BAS Report. The report also highlights GST amounts that are not 10% (1/11) of the associated claim or invoice. Note GST Paid Tax Credits on G15 Private Use purchases are not included in 1B, 2B, 8B or G20. Also G9 and G20 may not necessarily be 1/11 of G8 and G19 respectively due to the asterisked items. G9 and G20 are the GST amounts recorded by you in the system. The Databuild BAS reports the transactions as recorded and does not force a 1/11 adjustment; this should be a manual reporting adjustment by the user to the relevant Sales or Purchases sections.

The Audit Trail allows you to list transactions based on the contents of the "Comments" field and date range. Therefore values reported on the BAS Report for G10, G14 & G15 can be easily obtained.

The following section outlines the source of data used to produce the BAS report from the system and should assist with its verification.

G10 Sum of all invoices with GL account not in "Excluded list" with G10 in "Comments"

G15 Sum of all invoices with GL account not in "Excluded list" with G15 in "Comments"

Note: only Invoice & Claim transactions in the selected date range are considered

"Excluded list" refers to the list of GL accounts declared in the GST details screen

To pay the net GST balance owing to the ATO, select the "Taxation Office Details" icon in the General Ledger Chart of Accounts routine. The system will display from the earliest unprocessed GST item. Enter the desired date range, and then click the Dates – Range radio button, be sure to make your selections in this order to ensure that only relevant GST entries are selected. Generally leave the Show Unprocessed Only check box unticked, the unprocessed GST entries will be displayed in black and the processed GST entries will be displayed in blue (see note b.). Processed entries are those which have had an ATO invoice generated previously in that date range. The balances for the selected GST entries are displayed at the bottom of the screen. Then press the red up arrow icon which will "Process GST transactions and Create ATO invoices" for unprocessed entries only. Two invoices will be generated for the ATOGST Supplier, one being the total of GST Collected and the other being a negative invoice for GST Paid Tax Credits for GST paid to suppliers.

Note (a): check to see whether there are any prior period unprocessed GST entries and print a GST Report for these, then create ATO invoices as previously described. The value of income and purchases and the associated GST must be added to your ATO BAS as adjustments on the current return.

(b): Accruals basis - processed Supplier Invoices and Debtor Claims will have a tick in the "Reconciled" box in the Audit Trail screen, Cash basis - processed Payments and Receipts will have a number in the "Closing Tran 2" field in the Audit Trail screen

Go to the "Posting" – "Payments" routine and select the ATOGST Supplier; then select and pay the 2 invoices that were generated by the system (also other interim ones if previously generated). The cheque will typically include other tax liabilities (e.g. FBT - Fringe Benefits Tax and ITX - PAYG Instalments which should be posted as INVOICES to the Tax Office Supplier Code) and be included with the "Business Activity Statement" (BAS) (refer to your Accountant or Tax Agent). If the net amount payable to the ATO for all the required taxes is a negative then do not update the payment until the refund is received. The negative payment will be treated as a Deposit for Bank Reconciliation purposes.

Refer to the next section on adjustments prior to drawing a cheque or recording a refund.

There may be instances where there needs to be adjustments which relate to the current or previous net GST amount on the BAS.

Roundings: the BAS amounts are reported in whole dollars. If the net tax payable or refundable in the Payment screen differs (typically cents only) from the reported whole dollars on the manual BAS then post an Invoice dated the Until date of the BAS. Code the invoice to the Supplier ATOGST (or the Taxation Office Supplier code appearing in the GST Details screen) and the Job GENLED (or the Job code in the GST Details screen) with the previously suggested Cost Centre and GL account, e.g. 4.9999 GST Adjustments. Include this invoice in the Payment to the ATO or when recording the refund.

The aim is to have the GST GL accounts balanced to nil at the end of the reporting period. There should be agreement between the ATOGST Creditor and any statements lodged to the ATO. GST amounts appearing on system generated reports (GST Report and BAS) should reflect in the ATOGST Creditor reports subject to any posted rounding adjustments.

GST on Personal Use (G15): The GST on Personal Use acquisitions is not claimable. The ATO Invoice generated for Paid Tax Credits will include the value of GST included in G15. An adjustment invoice will be needed to reduce the value of Paid Tax Credits. Process an invoice to the ATOGST for the GST on Personal Use with the same date as the system generated invoice using the same Job e.g. GENLED but with a new Cost Centre and GL account which will typically be the Loan account of the Director/Proprietor of the business.

Useful ATO publications available through www.taxreform.ato.gov.au and widely available are:

"How to determine the value of construction work-in-progress" GST Bulletin GSTB 1999/2 14/9/99

"Business Activity Statement Instructions" (spiral bound) NAT 3030-05.2000 ISBN 0 642 43330 5

Please note that Databuild clients should seek taxation advice from their Tax Accountant and not Databuild support staff.