Accounting for Taxation

Question 1

What elements are required on a tax invoice for GST purposes? (10)

Answer 1

Every Tax Invoice:

• the words “tax invoice”
• supplier name and address
• supplier GST number
• date of issue
• supplies description

Under $1000:

• total amount payable
• “Includes GST”

Over $1000:

• recipient name and address
• supplies quantity
• the GST-exclusive amount, the GST amount and the GST-inclusive amount OR the GST-inclusive amount and a statement that GST is included if GST is charged at the standard rate for all the goods or services listed.

Question 2

What is the calculation for adding GST?

Answer 2

price + (price * 0.15)

Question 3

What is the calculation for subtracting GST?

Answer 3

(price * 3) / 23

Question 4

When is the GST payment due for a taxable period?

Answer 4

28th of the following month. If the due date falls on a weekend or public holiday, the due date is the following workday.
Two exceptions:
- Period ending 30th November = 15th January
- Period ending 31st March = 7th May

Question 5

What are the available “taxable periods” (Filing frequency)? and what are the criteria.

Answer 5

Monthly - anyone can apply for a monthly taxable period. Businesses that turnover greater than $24 million must use the monthly taxable period.
Bi-monthly (default)- anyone earning less than $24 million can apply for a two-monthly taxable period.
Six-monthly - businesses that made or will make less than $500k can apply for a six-monthly taxable period.

Question 6

What are the available “accounting basis’s” and what are the criteria?

Answer 6

Payment - businesses that made or will make less than $2 million can use the payment accounting basis.
Invoice (default) - anyone can use the invoice accounting basis.
Hybrid (uncommon) - any business can use the hybrid accounting basis.

Question 7

What are the three accounting basis’s?

Answer 7

• payment
• invoice
• hybrid (income - invoice, expenses - payment)

Question 8

What are examples of “exempt supplies”? (4)

Answer 8

• financial services
• donated products and services which are sold by not for profits
• rent on private home
• penalty interest

Question 9

What are some examples of “zero rated supplies”? (3)

Answer 9

• exported goods
• sales of going concerns
• sales of land

Question 10

What is a taxable activity?

Answer 10

A taxable activity is any activity carried out continuously or regularly by a business, trade, manufacturer, professional person or club. It includes any activity that supplies or intends to supply goods or services to someone else for a consideration but not necessarily for profit.

Question 11

What do you need/need to do for GST registration? (7)

Answer 11

• Business IRD number (personal IRD number can be used for sole trader)
• BIC (Business Industry Certification) number
• Choose an accounting basis
• Choose a taxable period
• Bank account number
• Turnover for the last 12 months
• Expected turnover for the next 12 months

Question 12

What is an exempt supply?

Answer 12

Goods and services which are not subject to GST and are NOT included in a GST return.

Question 13

What are the six types of exempt supply?

Answer 13

• donated goods and services by non-profit bodies
• penalty interest
• financial services
• renting a residential dwelling
• residential accommodation under a head lease
• supply of fine minerals

Question 14

What are zero rated supplies?

Answer 14

Goods and services that are taxed at a rate of 0% rather than 15% and ARE included in a GST return.

Question 15

What are the four types of FBT?

Answer 15

• Motor Vehicles
• Goods and Services
• Low Interest Loans
• Employer Contributions

Question 16

What are the three FBT rate options available?

Answer 16

• Single Rate: 63.93%
• Short Form Alternate Rate: ??%
• Full Alternate Rate: ??%

Question 17

What are Fringe Benefits?

Answer 17

Non-cash benefits enjoyed or received by employees as a result of employment.

Question 18

What is the filing frequency for FBT?

Answer 18

Quarterly

Question 19

When do you have to register for FBT?

Answer 19

When you supply a fringe benefit as an employer.

Question 20

What is an attributed fringe benefit?

Answer 20

A benefit only one employee uses.

Question 21

How many accounts do I need to record Fringe Benefits.

Answer 21

A separate account will be needed for attributed and non-attributed benefits.

Question 22

What is the current single rate applied to fringe benefits?

Answer 22

63.93%

Question 23

What five elements make up the CAANZ Code of Ethics?

Answer 23

• Confidentiality
• Professional competence and due care
• Professional behaviour
• Objectivity
• Integrity

Question 24

What are the four concepts of Confidentiality in the CAANZ Code of Ethics?

Answer 24

• Maintain confidentiality within the employing organisation.
• Maintain confidentiality of information disclosed by a prospective client.
• Do not disclose confidential information acquired as a result of professional activities and/or relationships, even when those activities and/or relationships have ended.
• Do not use confidential information for personal advantage or for the advantage of a third party.

Question 25

What are the five concepts of Professional Competence and Due Care in the CAANZ Code of Ethics?

Answer 25

• Attain and maintain professional knowledge and skill at the level required to ensure that a client or employer receives professional service.
• Act diligently and in accordance with relevant technical and professional standards; and relevant legislation.
• Maintain competency and currency with relevant technical and professional developments.
• Provide training and supervision where required.

Question 26

What are the five concepts of Professional Behavior in the CAANZ Code of Ethics?

Answer 26

• Comply with relevant laws, regulations and standards.
• Avoid any conduct that may discredit the profession.
• Do not knowingly engage in any activity that may impair the integrity, objectivity, or good reputation of the profession.
• Marketing and/or promotional activities should:
  
  • not bring the profession into disrepute
  • not exaggerate claims for the services offered, or qualifications held, or the level of experience
  • not contain disparaging references or unsubstantiated comparisons to the work of others.
• Act with courtesy and consideration.

Question 27

What are the two concepts of Objectivity in the CAANZ Code of Ethics?

Answer 27

• avoid compromise of professional or business judgement due to bias, conflict of interest or undue influence of others.
• avoid professional activities if circumstances or relationships unduly influences professional judgement regarding the activities.

Question 28

What are the three concepts of Integrity in the CAANZ Code of Ethics?

Answer 28

• to be honest and straightforward in all professional and business relationships.
• fair dealing and truthfulness.
• do not knowingly be associated with reports, returns, communications or other information if there is a belief that the information:
  
  • contains a materially false or misleading statement.
  • contains statements or information provided recklessly.
  • omits or obscures required information where such omission or obscurity would be misleading.