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The Deferred GST scheme is an option available to importers who report GST on a monthly basis and deal electronically with the Australian Taxation Office (ATO) and Customs. This liability amount should match the amount you are reporting as an input tax credit for the GST paid on purchases from overseas supplies.
As a result, the ATO liability will cancel the input tax credit resulting in no payment required to the ATO.
For more information on the Deferred GST scheme visit the ATO website.
This article explains how to record your transactions to reflect this in your company file. This information is for guidance only and relates to Australian businesses, and it might not be suitable for your business requirements. If you need clarification or additional information, check with your accounting advisor, the ATO, or post your question below.
Enter the details of your overseas purchase. Use the N-T (No Tax/Not Reportable) tax code to ensure that GST is not payable to the supplier. This transaction can be entered in foreign-currency for those using the multi-currency function available in some versions.
This task records the inventory but not the GST on landed cost. See our example below.
In the above example, $100 represents a liability to the ATO and a tax credit. The effect of this transaction is to create both a liability and tax credit for the deferred GST amount.
At the end of each month, Customs will advise the ATO of the total deferred GST liability. The Business Activity Statement that the ATO issues to you will include the deferred GST liability at field 7A.
A Customs agent is usually employed to handle the costs associated with the import. Generally, the Customs agent will arrange payment and collection of the goods on arrival into Australia and might pay your customs duty, freight and insurance, so you will need to reimburse the customs agent for these costs. Create a Tax Exclusive purchase and use the GST tax code for each line entered. See our example below.
Note: In the above example the freight, customs duty, and insurance is immediately expensed, but these can be included into inventory value (see below).
The Deferred GST Import Liability is paid when you lodge your Business Activity Statement. Essentially, this liability is paid using your GST tax credit using a spend money transaction. When you pay the ATO for your GST, PAYG, and other liabilities, the transaction is entered similar to that shown in the example below.
In the previous example, individual expense items were used to record the freight, insurance and customs duty along with the GST component. The following method can be used where you require these costs to be included into the inventory value for the imported items:
By entering the item amount without a Received quantity, the value of inventory increases without increasing the quantity on hand. This is similar to an inventory adjustment. See our example below.
Then follow the rest of the above steps.
If you import multiple items, these values can be apportioned according to the respective values, and entered using the same method.
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