Question

henry seeks your advice on GST matters relating to his legal business and provides the information below concerning how he expects his business to operate: in regards to australian laws

(a) He will work as a sole trader and expects his fees from advice to clients to be at least $200,000 for the first year.

(b) He will operate his business from rented commercial premises and expects the rent to be about $800 per week. The landlord is registered for GST.

(c) He will purchase various items for use in his business, such as computers,

computer software and desks and expects this initially to cost about $10,000.

(d) He will have ongoing expenses, such as telephone, internet access, electricity, personal liability insurance and income protection insurance. He can’t say what the exact amount of these expenses will be.

(e) He will need to attend a legal conference each year in Australia and undertake continuing professional education courses to keep his skills up to date.

f) He expects to spend about$ 400 a week taking clients to lunch tp promotr his business

g) His spouse will be employed to carry out the administrative tasks for the business and will be paid $ 800 a week

Answer 1

Dear Friend,

I would advice Henry on GST Matters relating to his legal business Under GST Laws of Australia as follows:

a. Since your commencing the business as a sole trader and expects fees from advice to clients to be at least $200,000 for the first year, which is exceeding the exemption limit of $ 75,000, you are required to get GST Registration.

b. Since you are operating your business from rented commercial premises and expects the rent to be about $800 per week and the landlord is registered for GST.You will be eligible to avail the credit of GST Paid on Rent to your landlord provided you are also a registetered dealer.

c. As you are purchasing the various items for use in his business, such as computers,computer software and desks and expects this initially to cost about $10,000, You will be eligible to claim the credit of GST Paid on the same, since you are using it for business purpose provided you have registered under GST.

d. If you are a registered dealer, you can claim GST Paid on running expenses exlusively used for Business Purposes like elephone, internet access, electricity and income protection insurance.

However, personal liability insurance like if it is like Life Insurance of the person, you wont be eligible to claim ITC even though you are a registered dealer.

e. GST Paid on continuing professional education courses to keep his skills up to date is not eligible to claim Credit, However if such course has been undertaken to Commence the Business is alone eligible to claim Credit that is GST Free Education course.

f. You expects to spend about$ 400 a week taking clients to lunch tp promot his business and if that Food is Exempted from GST, you cannot claim any Credit since you are not paying any GST there on.

g. Your spouse will be employed to carry out the administrative tasks for the business and will be paid $ 800 a week, this is not eligible mode to Claim Credit on the amount paid, However, if you pay any reimbursement or allowances to her, you will be eligible to claim ITC on those expenditures.