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Business Tax Tips – What are Input-Taxed sales and supplies or purchases?

Business Tax Tips – What are Input-Taxed sales and supplies or purchases?

Business Tax Tips – What are Input-Taxed sales and supplies or purchases?

A lady rang – and said she heard some comments and wondered what are Input-Taxed Sales and Supplies/Purchases were.

Answer – Input-Taxed refers to when a supplier CANNOT charge GST and also cannot claim GST on the sale.

On the ATO web site it tells us

Input-taxed sales are sales of goods and services that don’t include GST in the price, You can’t claim GST credits for the GST included in the price of your ‘inputs’.

The most common input-taxed sales are financial supplies (such as lending money or the provision of credit for a fee) and selling or renting out residential premises.

Follow the links below for more information about:

Financial supplies

Financial supplies are input-taxed sales and do not have GST in their price.

You generally make a financial supply when you do any of the following:

    • Lend or borrow money;
    • Grant credit to a customer;
    • Buy or sell shares or other securities;
    • Create, transfer, assign or receive an interest in, or a right under, a superannuation fund;
    • Provide or receive credit under a hire purchase agreement entered into before 1 July 2012, if the credit is provided for a separate charge that is disclosed to the purchaser. (For hire purchase agreements entered into after 30 June 2012, the provision of credit is taxable.)

In special cases, you may be entitled to claim a GST credit for a purchase that you use to make a financial supply if any of the following applies:

    • You do not exceed the ‘financial acquisitions threshold’;
    • Your purchase relates to an amount you borrowed and used to make a non-input-taxed supply;
    • Your purchase qualifies as a ‘reduced credit acquisition’ – you will be entitled to a reduced input tax credit.

Residential premises

Generally, selling or renting existing residential premises are input-taxed sales and do not include GST. However, if the residential premise is considered ‘new’, it is a taxable sale and GST is applicable.

If you buy property – old or new – with the intention of selling it at a profit or developing it to sell, you may be considered to be carrying on a business and may be required to register for GST.

Generally, you are not considered to be carrying on a business if your property transactions are for private purposes such as when you are constructing or selling your family home.

There is further information at these links:

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Business Finance 101 – Simple Financial Reporting Template Online

Business Finance 101 – Simple Financial Reporting Template Online

Business Finance 101 – Simple Financial Reporting Template Online

Looking for a simple tool for Financial Reporting as a template online?

Here is a nice one from Butler Consultants – and you can even buy the excel version for $15 USD.

Free Financial Statement Template

The financial statement template is a free web-based tool. This tool can be downloaded into Excel for a very small fee. The content plugged into this table will be lost every time the page is reloaded. These statements are designed to be used for internal use only, and are not up to bank or investor standards. Please see our ‘Financial Statements’ section for more information about bank and investor ready financial projections. The free financial statements template includes an income statement, statements of cash flow and a loan amortization schedule. See our Level 1 for a balance sheet and more.
There are 8 main areas the user can change to create their financial statements: Revenue, Expenses, Tax Rate, Depreciation, Loan, Investment, Assets Purchased, and Assets Sold. You can enter estimated revenue, and how much it will grow for second and third year, as well as expenses in 6 main area/groups and how much you expect them to rise each year

Here is their example and what it gives –

Key data at the top –

Free Fin Stmt Temp data

There is the Profit & Loss / Income Statement –

Free Fin Stmt Temp p&l

Cash Flow Statement –

Free Fin Stmt Temp cflow

And Loan Amortization (payment schedule) on the right –

Free Fin Stmt Temp amortis

Need help? Not sure? Call for FREE 30min advice / strategy session today!

0407 361 596 Aust

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You also get FREE 30 min to assist in setting up your company in the software, and FREE ongoing email or phone support – no-one offers as much! Call and you also get FREE “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right!

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Cashflow Tips – What the Cashflow Statement shows

Cashflow Tips – The Importance and Productive Boost of Team-Building

The Cashflow Statement is also called the Statement of Cashflows, and here we will begin to look at what the statement shows us. It is one of the 3 main financial statements that businesses report on – the other 2 are Profit & Loss, and The Balance Sheet.

The cash flow statement reports the actual cash generated and used during the time interval stated in its heading. The period of time that the statement covers is chosen by the company, for example, “For the Three Months Ended 31 December, 2015” or “The Fiscal Year Ended September 30, 2016”. Most common is annual.

The cash flow statement actually uses data and the CHANGES between periods from the Profit & Loss and Balance Sheet, and organises and reports the cash generated and used in the following categories:

Operating, Investing and Financial activities

Cash Flow Stmt SummaryWhat the Cashflow Statement shows

The profit & loss or Income Statement is prepared under the accrual basis of accounting, meaning the sales/revenues reported may not have been collected yet. Similarly, the expenses reported on the income statement might not have been paid. You could review the balance sheet changes to determine the facts, but the cash flow statement already has integrated all that information. As a result, savvy business people and investors utilize this important financial statement.

Here are a few ways the statement of cash flows is used.

  1. The cash from operating activities is compared to the company’s net income (profit/loss). If the cash from operating activities is consistently greater than the net income, the company’s net income or earnings are said to be of a “high quality“. If the cash from operating activities is less than net income, a red flag is raised as to why the reported net income is not turning into cash.
  2. Some investors believe that “cash is king”. The cash flow statement identifies the cash that is flowing in and out of the company. If a company is consistently generating more cash than it is using, the company will be able to increase its dividend, buy back some of its stock, reduce debt, or acquire another company. All of these are seen to be good for shareholder value.
  3. There are also some financial models that use the cash flow.

The statement of cash flows has four distinct sections:

  1. Cash generated from operating activities
  2. Cash generated from investing activities
  3. Cash generated from financing activities
  4. Supplemental information.

The differences in a company’s balance sheet accounts from one period to the next, will provide much of the needed information. The changes—or differences—in the account balances will likely be entered in one of the sections of the statement of cash flows.

Of the four sections of the statement of cash flows, those balance sheet accounts which affect that section include –

1. Operating Activities

This section reports the net income and then converts it from the accrual basis to the cash basis by using the changes in the balances of current asset and current liability accounts, such as:

  • Accounts Receivable
  • Inventory
  • Prepaid Insurance
  • Other Current Assets
  • Notes Payable
  • Accounts Payable
  • Wages Payable
  • Payroll Liabilities
  • Interest Payable
  • Income Taxes Payable
  • Unearned Revenues
  • Other Current Liabilities

Noteas well as using the changes in current assets and current liabilities, the operating activities section may list adjustments for depreciation expense and for the gains and losses on the sale of long-term assets/investments.

2. Investing Activities

This section reports changes in the balances of long-term asset accounts, such as:

  • Long-term Investments
  • Land
  • Buildings
  • Equipment
  • Furniture & Fixtures
  • Vehicles

Investing activities involve the purchase and/or sale of long-term investments and property, plant, and equipment.

3. Financing Activities

This section reports changes in balances of the long-term liability and stockholders’ equity accounts, such as:

  • Notes Payable (generally due after one year)
  • Bonds Payable
  • Deferred Income Taxes
  • Preferred Stock
  • Paid-in Capital in Excess of Par-Preferred Stock
  • Common Stock
  • Paid-in Capital in Excess of Par-Common Stock
  • Paid-in Capital from Treasury Stock
  • Retained Earnings
  • Treasury Stock

Financing activities involve the issuance and/or the repurchase of a company’s own bonds or shares as well as short-term and long-term borrowings and repayments.

4. Supplemental Information

This section of the cash flow statement reports the amount of interest and income taxes paid as well as significant exchanges not involving cash. For example, the exchange of company shares for company bonds would be reported here.

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Bookkeeping – 7 tips to keep your accounting organised

Bookkeeping - 7 tips to keep your accounting organised

Bookkeeping – 7 tips to keep your accounting organised

When it comes to running your own business, keeping your accounting in-order must be an achievable goal. That said, there are times where a little lack of discipline can cause some headaches down the track.  Rather than getting yourself in a bind later, let’s have a look at some simple steps you can take to help keep your accounting organised.

1. Structure your bank accounts

Mixing up business and private transactions in your bank accounts is a recipe for disaster. Always use separate business bank accounts for your business transactions; your private bank accounts should be kept wholly for private transactions. The cost of business bank accounts these days is very low, and there is no excuse for not having a business bank account or accounts. Get in the habit of making regular transfers of drawings from your business to your private bank account.

2. Avoid cash, where possible

It’s best not to use cash for your business transactions, but if you use it in an emergency, then reimburse yourself using a suitable expense claim (which analyses the expenses between expense categories) so that again, all business transactions are recorded and the GST is safely captured.

3. Stay on top of your credit card bills

If you use a credit card for your business that is absolutely fine, but you should always pay your business credit card bills from your business bank account — that way no business transactions are omitted and all GST is captured. Similarly, if you use the wrong Eftpos card by mistake (such as the one for your private bank account), reimburse yourself using a suitable expense claim.

4. Managing Bartercard transactions

If you must use Bartercard, then it’s so much easier if you use live bank feeds to record all the transactions on the Bartercard statements because there are a lot of them (especially the fees and charges). Otherwise, it’s a total pain from the bookkeeping point of view.

5. Implement process for accounts receivable

Always ensure you have a system for recording whether your customers, clients or patients have paid your accounts receivable. Of equal importance, it’s important to track how old the debts are if unpaid so you can chase them up promptly. Your system should also record any special arrangements to pay over time or the excuses given for non-payment. It doesn’t have to be sophisticated, and if you are not using your accounting software to issue invoices, just write on the face of the invoice whether or not they been paid, filing separately those paid from those awaiting payment. It’s surprising how many business people do not know who owes them money, which is just plain crazy considering how hard it is to earn the money in the first place!

6. And don’t forget about accounts payable… 

Similarly, always have a system for your accounts payable. I’ve had two clients pay me twice this month for the same invoices, which is not only a hassle for me because I have to repay the money, but it is risky for them as not all suppliers are as honest as I am! It’s best to be totally organised with your accounts payable and pay them on the 20th of the month so that your suppliers know when they’re going to be paid and you know when you’re going to pay them. Research shows that the most successful businesses pay their bills on time!

7. Organise your paperwork and digitise where possible

Keep all your business paperwork in an orderly fashion. Nowadays you can scan on the paperwork and keep this electronically, either on your accounting software or in a simple electronic filing system using the US date system so that everything is filed in chronological order. Keep a separate e-folder for each month and year. If you’re old-fashioned you can keep the paperwork in physical form, but now so much stuff arrives electronically it’s pretty daft printing it out and wasting all that ink and paper!

Keeping your accounting organised will save you time and money, and also help you make your business more successful. Perhaps even more important, it should result in a whole lot less stress.

From the MYOB software blog at

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