Lesson 9 - Goods and Services Tax (GST)

Question 1

GST Received is…

Answer 1

GST that the business has charged and collected from it’s customers following a sale.

E.g. If the business sold a sofa worth $1000 + $100 GST
GST Received = $100

Question 2

GST Paid is…

Answer 2

The amount of GST that the business has paid to it’s suppliers on its purchases.

E.g. If a business bought a new fridge for $600 + $60 GST
GST Paid = $60

Question 3

GST Settlement is…

Answer 3

An amount paid to the ATO to settle a GST Payable (i.e. the business paying the GST it owes to the ATO)

Question 4

GST Refund is…

Answer 4

An amount received by the business from the ATO when it’s GST Paid is greater than its GST Received.

It is not that common for a business to have a GST Received but can happen from time to time, particularly with small or start-up businesses.

Question 5

GST Payable is…

Answer 5

GST Payable is an amount that is owed by the business to the ATO and will be settled (with a GST settlement) in the future.

Question 6

GST stands for…

Answer 6

Goods and services tax.

Question 7

GST is levied by…

Answer 7

The Australian Tax Office

Question 8

GST is charged to consumers on the sale of Goods and Services at a rate of…

Answer 8

10%

Question 9

T/f - Only the end consumer is required to pay GST, therefore businesses are not required to pay it.

Answer 9

True - any GST that the business pays will be claimed back as a GST refund or deducted from their GST Payable when they make a GST Settlement.

Question 10

The formula for GST balance is…

Answer 10

Opening balance of GST
+ GST Received
- GST Paid
+ GST Refund
- GST Settlement

Question 11

GST balance will be either…

Answer 11

Receivable = Business owed a refund from ATO
or
Payable = Business owes ATO

Question 12

When calculating the GST Balance, the opening balance can be determined from…

Answer 12

1. The question or additional information.
2. The closing GST Balance from the previous period.