If I am not GST registered…Do I include GST component in my expenses?

[Eastern Connection]

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Pretty much what the title says.

Just finally getting around to doing my books in Xero. I am not GST registered. When I put through expenses, do I include GST where it is applicable? Or do I not include it?

My understanding is that if I am not eligible to charge customers GST, then I can’t claim GST credits from Tax Office.

Do they still need to give me refund for the GST I have incurred so far?

[Brad Turville]

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Hey there,

If you are not registered for GST then you will not include or account for it. Also you will not need to lodge any GST details via an activity statement.

In Xero, if you go Settings > General Settings > Financial Settings
Under Activity Statement Settings your GST Accounting Method should read NONE and your GST Calculation should read NONE.

Also, all of your Chart of Account codes should read: BAS Excluded, so when you reconcile you don’t have to change the Tax Rate.

My understanding is that if I am not eligible to charge customers GST, then I can’t claim GST credits from Tax Office.

Correct, you do not apply GST to your sales and inturn you cannot claim back any GST on purchases.

Do they still need to give me refund for the GST I have incurred so far?

No.

Let me know if that helps

[bb1]

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Actually the answer to the question in the Title is yes. If you are not GST registered, the GST you pay will be an expense to you. As you are the end user in this case, you pay the GST, but are not refunded by the ATO, so in your books it is an expense to you.

So in simplistic terms, say you buy and item for $10.00, it has $1.00 GST added. So your overall expense for that item is $11.00. Whereas for someone who is registered for GST, they claim back the $1.00 GST, so the overall expense is $10.00.

[ShellysBookkeeping]

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Bb1 is correct, the GST component of an expense is treated as part of your expenses. If Xero is setup correctly so that the default tax code is BAS excluded, then you simply record the total bill (incl GST) as your expense.
Shelly

[PlanJapan]

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Thanks all.

I am more confused now. I think need to get an accounting advice!

I am willing to submit my tax return for 2013/14 myself, as I traded very little and at a large loss due to a few sales and a lot of initial setup.

For the current year, however, I will be getting advice….

[PlanJapan]

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PlanJapan, post: 211770 wrote:

Thanks all.

I am more confused now. I think need to get an accounting advice!

I am willing to submit my tax return for 2013/14 myself, as I traded very little and at a large loss due to a few sales and a lot of initial setup.

For the current year, however, I will be getting advice….

EDIT: Wow! I apparently have to logins! I didn’t remember that! I will login as EasternConnection now.

[Eastern Connection]

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OK, I am back as the original poster.

Just one last question. When I enter expenses. Could you please confirm that I put all expenses as “BAS excluded expenses” tax rate?

I have to say that I have put all expenses as expenses with GST or without GST, depending whether it was applicable. Do I need to redo them? Jesus, I would hate to do that! I’ve spent the last week entering receipts for the last year.

Or can I leave them as is?

[ShellysBookkeeping]

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Hi Eastern,

It is better if you redo them however not essential. If you don’t redo them, I suggest you Do a journal entry to clear the GST account. You should also go into your settings and change your tax rate as you are not GST registered. If you change all your defaults in your chart of accounts to BAS excluded, then you don’t have to change them when you enter future expenses.
Xero has plans to bring out a way of bulk recoding expenses, but I’m not sure when this will be released.

Shelly

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