Question

You must be able to describe (in Australian accounting context/environment), to a manager or to a client, the ATO requirements and relevant accounting terminology that applies to the preparation and submission of BAS and IAS.

Some of the terminology includes the listed items.

Briefly explain what each of the following is:

RCTI

FBT

WET

GST

BAS

IAS

TASA

withholding tax

GST inclusive

ABN

the business’s document ID

ATO

TPB

entity

reconcile

salaries and wages

Code of Professional Conduct

Answer 1

RCTI - Recipient created tax invoice. Normally invoices are created by the supplier of goods or services. In certain cases the recipient of the goods or services can create an invoice. This is called RCTI.

FBT - Fringe Benefit tax - It is a tax payable by the employers on certain benefits provided to an emplyoee, or the employee's family or associate. It is separate from income tax and is calculated on the taxable value of the benefits provided,

WET - Wine equalization tax - It is a tax levied on the wholesale value of wine .The rate is 29%. This tax is different from the tax levied on other alcoholic beverages which are based on the alcohol content. The WET is designed to be paid at the the last wholesale point of sale which is from the last wholesaler to the retailer.

GST - Goods and services tax - It is a broad based tax levied at the rate of 10% on most goods and services that are consumed within Australia. It is a value added tax.

BAS - Business activity statement - It is a form which is submitted to the Australian taxation office by all businesses registered for gST to report their tax obligations.

IAS - Instalment activity statement - It is a pre-printed form issued by the Australian Taxation office and to be used by taxpayers who are not registered for GST. It is used by businesses or individuals that deal with Pay as you GO (PAYG) instalment, PAYG witholdings and ABN witholdings.

TASA - Tax agents services act - It is an act passed by parliament to regulate the role and responsibilities of tax and financial advisers.All tax and financial advisers have to be registered under TASA .

Witholding tax - It is a tax which is required to be witheld by an Australian resident on certain payments to non residents like interest, royalties, dividends , construction related work etc.

GST inclusive - This means the price is inclusive of the GST. From the inclusive price the GST amount and ex-GST price can be calculated. Since GST rate is 10% , if the GST inclusive price is divided by 110 and multiplied by 100, one can calculate the ex-GST price.

ABN - Australian business number . It is a unique 11 digit number that identifies one's business to the Australian government and community.

the business's document iD - It is a certificate of registration or incorporation issued by the australian authorties. for businesses.ABN is the business's document ID

ATO - Australian Taxation Office - It is the principal revenue collection agency of the Australian government.Responsible for the administration of tax,excise and superannation systems that fund the various services provided by the government.

TPB - Tax Practioners board - It is an independent statutory body responsible for the registration and regulation of tax practioners in Australia. It was created under the Taxation and services act (TASA).

entity - Different forms of business structures like a sole propreitorship, partnership, association of persons and companies is called an entity.

Reconcile - These are adjustments done to tally the business operating profit or loss with the taxable business income. This process is called reconciliation

Salaries and wages - payments made to employees and workers by the employer for the services rendered by the employees and workers.

Code of professional conduct - It provides the professional and ethical standards that are required from registered tax agents. It has five core principles like Integrity and honesty, independence, confidentiality, competence and other responsibilities.