Home – New Forums Money matters GST Query

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  • #972438
    ad2405
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    Newbie Question

    If I buy stock for $10 + GST, I pay $11.
    So in my inventory it would be listed as cost price $10.
    Then I sell the item for $20 + GST, They pay $22.

    My question is, is the item costing me $11 incl GST but i only have it as $10 in my inventory system, does that mean that when i sell the item for $20 + GST the system will think im making $10 when in fact i’m making $9 because of the $1 GST I payed.

    The GST thing is really confusing. Can someone explain to me how it works from a business owners perspective?

    #1056134
    StellarScott
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    If your registered for GST from a profit perspective easiest thing is to ignore the GST

    So in your example

    Sales 20
    Cost of sales 10
    Profit 10

    For BAS the numbers would include GST

    Sales incl GST 22
    Purchases incl GST 11
    GST Payable 2-1 = 1

    So you make 11 profit including GST pay your 1 profit to ATO which leaves profit of 10.

    The above will not apply if your selling health services some food or other GST free items

    #1056135
    victorng
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    You claim a credit for the $1 GST you paid so you are, in fact, making $10.

    Money out to supplier = $11
    Money in from customer = $22
    Money out to tax man = $1 <== $2 minus $1 Cheers,
    Victor

    EDIT: why did I think I could post quicker than Scott … beaten to it by the expert.

    #1056136
    ad2405
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    Thanks very much guys, It all makes sense now.

    #1056137
    ad2405
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    Just another question regarding GST,

    If I buy something from someone who does not have to pay GST such as a Garage Sale. How does that effect me paying GST, does it just mean that I don’t get a GST credit?

    #1056138
    22523#deleted
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    The person selling to you at the garage sale is not adding GST to the sale, so you cannot claim any GST on this purchase.
    You would enter the purchase into your books with FRE (MYOB) or NCG (QBooks).

    #1056139
    ad2405
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    Debonair, post: 69289 wrote:
    The person selling to you at the garage sale is not adding GST to the sale, so you cannot claim any GST on this purchase.
    You would enter the purchase into your books with FRE (MYOB) or NCG (QBooks).

    OK that makes sense. Thanks

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