Question

No.1 Supermarkets Pty Ltd operates a corner store and provides you with the following detail to prepare their December 2020 Business Activity Statement. No.1 Supermarkets is registered for GST on a quarterly accrual basis. All amounts below are stated as GST inclusive where GST is applicable and No.1 Supermarkets Pty Ltd holds tax invoices where applicable. All invoices are dated during the period 1 October 2020 to 31 December 2020.

Receipts

               $

          440,000        Receipts from general grocery sales

          300,000        Receipts from sales of fruit and vegetables

25,000          Receipt from rental of the residential apartment above the shop

          5,000            Interest on Bank Deposits

          110,000        Receipts from Sale of alcohol

          6,000            Credit card fees for customers who used credit card

Payments

               $

          180,000        Purchase general groceries

          5,500            Maintenance cost for the residential apartments

          50,000          Salary paid to employees

          66,000          Purchase of fridges

          3,500            Rates on the shop building paid to the Council

1,400            Water expenses paid to Landlord as part of Rent

          22,000          Rent paid on the shop

          175,500        Purchase of fruit and vegetables from the growers

         

Discuss the GST implications of each of the above transactions. Advise No1. Supermarkets Pty Ltd of the Net GST payable/refundable for the December 2020 Business Activity Statement. Provide justification for your calculations using legislation, case law and rulings.`

Answer 1

Assumption common GST Rates @ 5%

1. Receipts from common grocery sales - A normal gst rates is applicable on sales ( given the fact that grocery sold is packed) - 440,000 x 5%= 22000

2. Reciepts from sales of fruits & vegetables - these are exempted from taxes ( given the fact they are sold fresh or packed and according to government norms)

3. Rent from residental apartment - No gst is applicable from residental apartment nor do one can claim it while filling out for gst

4. Intrest from bank - No GST is applicable from intrest from bank

5. Alcholic Beverages are required to undergo GST ( but it may vary as per country law) taking assumption of 5% of 110000 = 5500

6. Whether a person pays through cash or credit GST rates are applicable for that taking GST Rates at 5% of 6000 = 300

7. Purchase of groceries = One will have to pay GST for the same but it will be deductable when paying for GST for the sales made out of it ( 180000 x 5% = 9000), as it ia liablity of the seller

8. Salaries to employees & Maintaince of residental apartment does not go through GST.

9.Purchases of Fridge is required to go through GST ( 66000 x 5% =3300) , one will deduct it as it is a liabilty of seller

10. Rent and rates are required to undergo GST under commercial property so 22000 x 5% = 1100. ( No GST for Taxes and water expenses paid) but one can deduct it as it is a liability of the owner

11. Fruits and vegetables does not undergo any gst.

Net GST Payable is 14400 ( 22000+5500+300 -9000-3300-1100)