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  • #986888
    Kylie Roskell
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    • Total posts: 2
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    Hello

    This is NOT about me :) This is for a friend of mine that has only just registered for the GST Oct 2013.

    While looking at her accounts from the previous year (2012-2013), I noticed that her service income was $136,000. I immediately asked her why she didn’t register for GST during that year?

    Her answer was I didn’t know I had to!……. hrmmm

    Anyway, I suggested to her that as far as the rules go on GST registration, she is obliged to register if her GST Turnover exceeded $75k and she should ring the ATO for clarification on what to do about the previous year 2012-2013.

    I phoned the ATO this morning and made a general enquiry… the GST consultant told me exactly the same thing that was on the ATO website (and what most of know), which is;

    ***If you do not register for GST and you are required to do so, you may have to pay GST on the sales you have made since the date you became required to register – even if you did not include GST in the price of those sales. Not only will you be out of pocket for the amount of GST, but you may have to pay penalties and interest***

    The ATO also said that if she didn’t come forward with this information, they would eventually find out and force her to remit all the GST.

    Here’s the kicker though, her ACCOUNTANT is telling her that because she wasn’t registered in the 2012-2013 period (but clearly should have been!!!), her liability to remit the GST to the ATO is exempt! He also said that the ATO told him that (i really don’t believe this or can’t believe it) if the business goes on for 3 or 4 years without registration and they should be registered, they will then ask them to backdate it.

    To me that sounds like absolute rubbish!

    Her accountant also said, “if the ATO wanted the GST revenue from 2012-2013, they would have made them fill out a BAS”, however, they weren’t registered until OCt 2013!! My logical response to what the accountant is saying, is that the ATO just haven’t realised (yet) that they should of in fact been been registered in 2012-2013. Hence why no outstanding BAS on the portal and hence why no fines or penalties, because they simply haven’t cottoned on yet?

    I’m pretty sure they’ll find out though………… one way or another.

    Thanks Guys, newbie to the forum

    #1160029
    Dave Gillen – Former FS Concierge
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    Hi Kylie,

    Welcome to the forums! Hopefully our friendly tax experts will drop in with their advice.

    In the meantime, best of luck to your ‘friend’. ;)

    It’s great to have you here.

    Dave

    #1160030
    Divert To Mobile
    Member
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    Hi Kylie,

    I’m not positive but I suspect the information you gathered by calling the ATO personally is probably correct.

    However, get the advice from the accountant in writing. Tell your friend to start saving the outstanding GST. If the ATO catch up with your friend before the amount has been saved at least there will be documented evidence of being ill informed by the accountant and may be granted clemency on any fines. If your friend saves the outstanding amount before the ATO catches up then have the friend approach the ATO. Being put under pressure to cough up 13,600 in GST at short notice wont be fun. At least your friend will be entitled to an income tax adjustment on the 13,600 income that gets relabelled GST.

    Steve

    #1160031
    nighttax
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    Hi Kylie

    I am not big on criticizing other accountants but tell your friend to get another accountant. The one she has does not know Australian tax law. The cheapest or closest accountant is not always the best.

    If your friend can identify from bank statements what date she reached 75000 in sales income. She can register for GST from that date onwards and she will only have to pay 1/11th of the 61000 less the GST she paid on purchases from that same date. Do it before they catch her or she will pay penalty fines and interest as well.

    her 2013 tax return will have to be amended and she will pay less tax.

    regards
    Evan

    #1160032
    bb1
    Participant
    • Total posts: 4,485
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    Hi Kylie,

    I know someone who works for the ATO, and what they have told me is that if you go to them and admit your mistakes, they are generally more lenieant, and can work out payment arrangments. Whereas if they catch them hiding the fact they will come down with the penalties, etc.

    Be honest them them the mistake and it will be much better for your friend.

    #1160033
    Simply Money Honey
    Member
    • Total posts: 78
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    Your friend definitely needs a new accountant.

    It is her responsibility to register for GST, submit her Business Activity Statements and pay her GST not the tax office’s responsibility to chase her. Once the tax office realise her GST is outstanding (and they will realise when she lodges her income tax returns and declares income over $75k per year) they will impose penalties and interest on top of the outstanding GST. She will be in a much better position if she approaches the tax office, explains that she made a mistake and voluntarily catches up on the outstanding GST.

    I would advise her to contact the ATO to correct this or to find a new accountant and have them fix it up for her.

    You are a good friend helping her sort this out!

    Cheers

    Gabrielle

    #1160034
    Kylie Roskell
    Member
    • Total posts: 2
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    Hi Guys,

    Couldn’t agree more with you ALL :)

    I think she’ll be in a lot of trouble if she doesn’t come forward to the ATO.

    She hasn’t done her 2012-2013 tax return yet, so I’m sure it won’t take long for them to cotton on! Ive seen her P&L and its way over the threshold and really should have been set up from the start of their business. Surely someone would have told them about this???

    I have told her both, either get a new tax accountant or get a letter from him stating that she will no be liable… BUT most of all I’ve told her firstly to call the ATO.. I think she’s worried but have also explained that the ATO are not monsters and I’m sure will be way more lenient if she steps forward herself.

    The rubbish that is being fed to her is quite amazing…

    This was the same accountant who argued with me until he was blue in the face in regards to the Super threshold. He kept telling me that it was OK for someone to be paid a gross of $450 per month and not be paid super because they would be under the threshold (which is actually $449 for no super liability). Hmmmmm again. This is pretty basic stuff!

    I will be strongly advising her again, thanks!

    Kylie

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