GST accountant questions (was Re: Inventory and GST)

[Bret Busby]

On Mon, 23 Jun 2003, marthter wrote:

> Date: Mon, 23 Jun 2003 01:30:51 -0400
> From: marthter <marthter at yahoo.ca>
> To: gnucash-user at lists.gnucash.org
> Subject: GST accountant questions (was Re: Inventory and GST)
> 
> Err, I think the Mr. Osvald's "overcomplicating" of the question has 
> been trumped by Mr. Busby's! :-)
> 
> 

<snip>

> 
> p.s. An interesting spin on the "what is taxable?" question (hot chicken 
> vs cold chicken, etc).  As I understand it, EVERYTHING in Canada is 
> taxable, it is just that some things (like cold chicken and other 
> groceries) are currently taxed at a 0% rate.  This was glossed over by 
> the people who argue that essentials should not be taxed, yet it allows 
> the government to raise the rate in the future with a mere federal 
> budget announcement, rather than passing a whole new law through 
> Parliament to change the definition of what is taxable.
> 
> 

My point, through all of what I said, is that, as I see it, there is no 
easy solution for using GnuCash for GST accounting, in Australia. Your 
Canadian system is yet another example of why I said that a solution for 
Tax accounting, has to necessarily be country-specific. In Australia, 
from memory, on tax invoices (invoices where GST is involved), the 
amount of the GST must be shown when requested by a customer, if the 
purchase is under 50 AUD, and, for purchases over 50AUD, where GST is 
involved, the amount of the GST must be shown on each invoice. Apart 
from that, in Australia, just to make it all more complicated, where a 
business is satisfied (or can satisfy the federal tax department), that 
the total percentage of sales by the business, that is subject to GST, 
is something like 5% or less, the business can charge GST on everything, 
so that it works out that the total GST charged for a reportable 
period, is that percentage of total turnover, and the business then pays 
the tax department, that percentage of its taxable turnover for the 
period (Note: this is nothing to do with profit, or taxable profit; this 
is only the sales tax payable on the turnover).

So, the dead chook may or may not be subject to GST, depending on 
whether the vendor is subject to GST, the temperature of the dead chook, 
whether the dead chook is cooked, and, whether the vendor wants to fudge 
the figures, by shifting the GST liability to apply to everything. Which 
also means that if you go to a grocer here, you have no idea as to 
whether you are getting charged GST on something, whether you should be 
getting charged GST on the item, or, how much GST is or should be 
getting charged on the item.

In all of these circumstances, a business person has to be very careful, 
when dealing with GST and accounting, and requires intricate checking 
that it is all done right.

GST in Australia, is, to use the phrase of a Federal Court judge, 
"Kafkaesque obscurantism", and when the person originally asked about 
using GnuCash for GST accounting in Australia, he might as well have 
been asking, "what happens if I use this person to see what happens when 
I inject the person with heroin cut with PCP - what will the person 
see, and, how will the person feel?".

That is why, as I said, if GnuCash is to be used for GST accounting in 
Australia, for it to be done properly, so the user doesn't get done by 
the tax department, for botching it up, country-specific, add-on modules 
need to be developed, maintained, and, regularly checked, and, it is as 
complicated as I have indicated.

That's what happens, when you open cans of worms.... :(

-- 
Bret Busby
Armadale
West Australia
..............

"So once you do know what the question actually is,
 you'll know what the answer means."
- Deep Thought,
  Chapter 28 of 
  "The Hitchhiker's Guide to the Galaxy:
  A Trilogy In Four Parts",
  written by Douglas Adams, 
  published by Pan Books, 1992 
....................................................