Archdiocese of Canberra and Goulburn
Catholic Education Office

Goods & Services Tax

Related Policies:

Financial Accounting Procedures

Purpose:

All schools within the Archdiocese are registered for GST purposes and, as such, are required to conduct their business and maintain accounting records in accordance with the GST legislation. The purpose of this policy is to ensure that the school is meeting its legal requirements in terms of adherence to the GST legislation and is not being disadvantaged financially in the interpretation and implementation of the legislation.

This policy is not designed to cover all aspects of the GST legislation that are likely to affect schools. The references noted below should be referred to for more detailed information on specific issues.

Policy:

Schools will correctly classify all income and expenditure transactions for GST purposes and lodge a Business Activity Statement (BAS) with the Australian Taxation Office (ATO) monthly.

Adequate documentation is to be maintained by the school to support the information shown on the BAS.

Definitions:

Australian Business Number (ABN)
A unique identifying number allocated by the ATO to all entities conducting a business in Australia who have elected to register for an ABN. An entity holding an ABN may or may not be registered for GST.

Business Activity Statement (BAS)
Summary of income and expenditure, and GST received and collected, for the period. BAS periods are either monthly or quarterly. All schools are registered to lodge a BAS monthly. Other organisations within the CEO are registered to lodge quarterly.

Goods & Services Tax (GST)
A tax imposed on the consumption of goods and services within Australia . A GST is applicable unless the goods or services supplied have been specifically granted GST Free status by the ATO. The rate is 10%.

GST Free Supplies
Goods and services on which GST is not applied. Examples include education, basic food, religious services, child care, salaries & wages, and transactions between GST registered Catholic organisations. A full schedule of GST Free supplies is available from the references mentioned below.

GST Registration
An entity that is registered for GST is required to charge GST on goods or services that are a taxable supply, and are entitled to claim Input Tax Credits on taxable supplies it purchases in the course of running its business.

Input Tax Credit (ITC)
The amount of GST included in the purchase of a taxable supply that a school is entitled to claim back from the ATO.

Statement By Supplier
An ATO document that can be completed by a supplier who does not have an ABN and who does not want to have withholding tax deducted from their payment.

Tax Invoice
An invoice for the supply of goods or services which sets out, among other things, the ABN of the supplier and the amount of GST (if any) applicable to the supply of the goods or services. A tax invoice is required to enable the school to claim an Input Tax Credit.

Withholding Tax
Tax that is required to be deducted from the payment made to a supplier who does not quote an ABN or provide an ATO Statement by Supplier form. The rate is 48.5%.

Procedures:

1. ABN and GST Registration

1.1 All schools have an ABN and are registered for GST. All Parents & Friends Associations (P&Fs) have an ABN but may or may not be registered for GST.
1.2 Canteens run by the school or the P&F are not required to be registered for GST.
1.3 Other organisations within the CEO who exceed the annual turnover threshold specified in the legislation are required to be registered for GST. Examples include Outside School Hours Care Centres and Principals' Associations.

2. Purchasing

2.1 A tax invoice stating the ABN of the supplier and the amount of GST (if any) charged must be kept on file for all purchases over $50. A tax invoice is not required for purchases less than $50 but proof of purchase (for example, a receipt) is required in order for the school to claim an ITC.
2.2 Withholding tax at the rate of 48.5% must be deducted from a payment made to a supplier where the amount exceeds $50 and the supplier does not quote an ABN or complete a Statement By Supplier.

•3. Sales / Receipting

3.1 Schools must issue a tax invoice and charge GST on all goods and services supplied by the school that are not GST Free. For example, hire of facilities, commissions.

4. Business Activity Statement (BAS)

4.1The ATO will send a BAS to the school for completion each month. The BAS must be completed and signed by the Principal (or their delegate) and returned to the ATO by the 21 st day of the following month. Late lodgement of the BAS will incur a penalty from the ATO.
4.2 In the majority of cases a net GST refund will be owing to the school from the ATO. This will be automatically credited to the school bank account. In cases where the ATO is owed money from the school, a cheque must be forwarded to the ATO with the BAS.

5. ATO Audit

5.1 The ATO has the authority to conduct a GST audit on any randomly selected GST registered entity at any time. If your school is approached by the ATO contact the CEO Finance Section.

References:

Catholic Schools and the GST (issued by the CEC C&G 30 September 2000)

www.cecv.melb.catholic.edu.au

www.taxreform.ato.gov.au

Forms:

Statement By Supplier (issued by the ATO) – included in Catholic Schools & GST.

Last updated on December 2, 2006