Inventory and GST

George Osvald mail at okstudio.com.au
Tue Jun 24 01:44:28 CDT 2003


Mate you really love writing long emails don't you. Any way I know you are 
trying to help so thank's.


>It is my understanding of the GST in Australia, that the GST applies to 
>all customers

Not to exports and that is a part of my business.


 >The only differentiation as to whether parties (people, businesses, 
>organisations) are subject to GST, applies to whether they are to charge 
>GST (whether the vendor is to charge GST), and, not whether they are to 
>be charged GST (whether the customer gets charged GST). If the party is 
>registered for GST, then the party is entitled, and, required, to charge 
>GST, otherwise the party is not entitled or required to charge GST.

Again not entirely true. If the receipt/invoice is less then $50 then you can 
take away 1/11 of it and claim that money back from government as GST refund 
even if you do not have a tax invoice and/or the supplier is not registered 
for GST.

>1) include a field for the organization using the application, to flag 
>whether the organization is registered for the GST; if yes, then all 
>services have a GST component, and, the calculations for invoices and 
>reports would then check for 2);

Irrelevant. All of my suppliers are registered for GST.


>2) include a field for the (yet to be created module) inventory 
>component, where each inventory item has a flag field; something like 
>"Subject to GST?"; and

Extremely bad idea. I use cash GST system. GST is only calculated at the time 
of transaction. If I add GST to every item in my inventory, then every item 
would be taxed twice. Also what would happened if you sold the item flagged 
as "Subject to GST?" overseas? GST does not apply for exports.


>3) include a field, dependent on 1), that is the GST rate (depending on 
>the particular state/country, assuming that the GST rate is constant 
>for the country, and not variable, depending on the item).

Irrelevant. GST only applies for Australian businesses. Exports are GST free.


>If the annual turnover of the Distributor's business, is greater than 
>50,000AUD, then 
>the Distributor is required to be registered for GST, from memory. If 
>the Distributor's annual turnover is less than the threshold, then the 
>Distributor may be registered for GST, but is not required to register. 

Like any sane businessman I am registered for GST. Otherwise I would loose a 
lot of money every quarter.


>Apart from that differentiation between the two countries, some product 
>lines in Australia, are subject to GST, and, some are not. So, in 
>Australia, using GnuCash for an Amway Distributorship business, with a 
>GST component in the accounting system, would require two components 
>(apart from the addition of the yet to be created Inventory System); the 
>first being whether the Amway Distributor is registered for the GST, 
>and, the second, being which particular inventory items are subject to 
>the GST. As an example, toilet cleaner is subject to GST, as is laundry 
>detergent and dishwashing detergent and toothpaste, and, pasta sauce, 
>salad dressing, canned tuna (exempt for human food, subject to GST 
>for pet food) are not subject to GST. All lines are subject to GST, in 
>NZ, from my understanding.

In this case (if you are registered for cash system) I would probably create a 
separate inventory for GST and GST free items. Then if selling to a customer 
overseas the item would not be taxed.
All my services are subject to GST.

>And, as far as I am aware, the GST rate is different in NZ, so the field 
>for the GST rate. would be required.

NZ is export for me ---> GST free.

>As all business are required to be registered for the GST in NZ, and, 
>due to the reporting requirements, some small businesses 
>(microbusinesses with small turnovers) closed down, and, that included 
>some Amway Distributorships giving up in NZ.


OK. I get it. You work for Amway ;-)


>That is partly why accounting software in Australia, has become 
>prohibitively expensive for microbusinesses; the software development 
>people have an ongoing job, trying to keep up with the unstable GST 
>requirements, and are required to continuously change the software.

As far as I know GST has not changed (in my industry) for two years. I have 
survived with a bunch of queries (that I wrote myself), SQL database and 
StarOffice. It creates BAS for me automatically without a problem. What I 
need is a double entry + invoice + inventory system (and hopefully POS)


>I think, however, that an integrated Inventory System component (devoid 
>of taxes, at this stage; start simple, get it up and running, THEN 
>elaborate), as recently mentioned, would be a good step on the way to 
>enhancement.

I created a simple test inventory as a basic asset account no problem. I would 
like to break it down to parts and store those individually ( I also 
manufacture) The finished product would be created as an assembly. If I sell 
the assembly I want to see the negative result in my parts inventory.


-- 
Regards,

George Osvald
OK Studio
http://www.okstudio.com.au
Email: mail at okstudio.com.au


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