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Bought an item from China today and was charged for the item, then a second charge for the GST. This is the first time this has happened. Has something changed? Will I be charged GST on all future purchases?
Yes! Actually Ebay is the one charging (though PayPal is deducting it from our card/bank because it's the payment method). So I believe Ebay should provide Tax Invoice. But alas, when I asked them, they said they don't. OMG.
I understand the GST being charged and don't have a problem with that.
But why can't we just see the total fee we are paying, and have that invoice emailed to us?
I enter the price paid into my Accounting software, then when my credit card statement is received I need to go back into Paypal and search what the GST applies to every time, which is pretty frustrating.
Can this be fixed up somehow??
With the new rules on importing and GST this will continue to be a complex area for any small business.
While not directly answering the question at hand it is important to note here that if you have been charged GST on a purchase and you are a business that is registered for GST then the GST charge is 100% claimable. How you treat this in your accounting software depends on the software.
for example; if you have been charged $20 gst then $20 is the claimable amount.
Do not make the error or entering this transaction as inclusive of GST you will then only be claiming 1/11 of the $20
If you are using Xero for example enter as follows
Account Code is GST Tax Code will be GST on Imports. This tells the system that the $20 is all gst
If myob then the transaction will be coded as follows
Use a clearing account and enter a positive and negative entry. Depending on wether you enter as tax inclusive or exclusive will change the entry.
But for this example ensure the tick box is tax inclusive
Enter a positive entry to the clearing account for the amount of $220.00 Tax Code is GST
Enter a negatvie entry to the clearing account for the amount of $200.00 Tax Code will be Free
This will leave you with a $20.00 Bill or spend money transaction.
You can also use N-T tax code on the second line. there is a deep dive into which code and why to use depending on the originating transaction tax treatment but it would diverge from the GST topic
The main thing to take away from this though is if you are a business that is registered for GST you can claim 100% of the gst, providing it is a legit business expenses.
This is not tax advice.