7 March 2000

New GST Accounting Methods for Small Retailers

New, simpler GST accounting methods to make it easier for small food retailers to account for GST will be implemented from July 1.

The simplified accounting methods will be available to small food retailers selling a range of GST-free and taxable goods who do not have adequate point of sale equipment. The simplified methods have been developed by the Australian Taxation Office after consultation with industry representatives.

To make accounting for GST as simple as possible for small food retailers, three simplified accounting methods have been developed:

  1. Business Norms Method –
    2. food retailers choose to use standard percentages of sales and purchases to estimate GST-free sales and purchases. (See below for the percentages).
  2. Snapshot Method
    3. – food retailers choose to take a snapshot of purchases and sales to estimate GST-free purchases and sales.
  3. Stock Purchases Method
    4. – food retailers choose to take a snapshot of purchases only to estimate the percentage of GST-free purchases and sales.

These methods relate to trading stock only. They allow retailers with an annual turnover of less than $1 million to estimate their total GST-free sales at the end of each tax period, rather than having to record each GST-free product when it is sold.

Retailers will still need to separately consider other sales (for example non-stock or capital items) and purchases such as rent, telephone and any capital items when filling in their Business Activity Statement (BAS).

To further assist small business with the transition to GST, the Tax Office has introduced a transitional rule which will raise the turnover threshold for the Snapshot Method and the Stock Purchases Method to $2 million for the 2000-01 financial year.

The simplified accounting methods will substantially reduce the administrative workload for retailers by helping them obtain the information they need to correctly complete the GST section of their BAS.

The Tax Office developed these methods in consultation with industry representatives and the business community. If food retailers use these methods, the ATO will accept that their GST liability is calculated correctly.

The simplified accounting methods are provided to help retailers work out, at the end of their tax period, the amount of GST they have to pay or the amount they can claim as a refund.

The simplified accounting methods will not affect retailers’ approach to pricing. Setting prices for individual products must still be done in accordance with the Australian Competition and Consumer Commission’s (ACCC) guidelines.

The Tax Office has developed a booklet for retailers which details the three new accounting methods and features practical case studies for the food industry. Beginning this Friday (10 March), retailers can obtain a free copy of this booklet titled Simplified GST Accounting Methods for Food Retailers by calling 13 24 78. The booklet is available also on the internet at www.taxreform.ato.gov.au

Along with the booklet, the Tax Office is also today releasing three Taxfacts fact sheets which list the percentages which apply for retailers who choose to use the Business Norms methods. These fact sheets have been developed for three specialist food retailers – hot bread shops, convenience stores which prepare take-aways and convenience stores which don’t prepare take-aways.

Business norms will be progressively developed for other types of food retailers.

Business norms method percentages (available to food retailers with an annual turnover of less than $1 million):

  • Hot bread shops:
    Sales:Purchases:

GST-free GST-free

50% 75%

  • Convenience stores which prepare take-aways:
    Sales:Purchases:

GST-free GST-free

22.5% 30%

  • Convenience stores which don’t prepare take-aways:
    Sales:Purchases:

GST-free GST-free

30% 30%

CANBERRA
7 March 2000