Answer to Question #80998 in Finance for Hugh Heron

Question

Question:
A business purchases 10 digital televisions for use in its offices. When the televisions arrive at the workplace the owner of the business decides that one will be taken home. The total cost of the acquisition was $16,500 (GST inclusive).

Describe how you would process this to comply with taxation reporting requirements. How much input tax credit could be claimed and why?

Answer:
The Australian tax office requires you to submit the BAS monthly, quarterly or annually and the BAS is used to report the GST and PAYG instalments, PAYG withholding tax and other tax obligations.
In the case of the ten televisions they should all be under taxation, and this is because they were bought to be used in the business.


Feedback:
Only 9 televisions can be claimed for business purposes, have not clearly explained how much input tax credit can be claimed in the BAS, what fields are used and how is deprecation considered and processed.

Answer 1

GST Credits can only be claimed for purchases that are used for business. Accordingly, purchases for personal use do not apply for GST Credits.
Respectively:
16 500/10 = 1 650,00 cost of each TV
1,650 x 9 = 14,850.00 is taken into account for GTS Credits
1,650 х 1 = 1,650 loans do not pretend
14 850 / 1.1 = 13 500
Claims GST Credits are 1,350.00