Institute of Certified Bookkeepers
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March 2015 Question of the Month

  • 127 posts
  • # 106011

This month's question for you all to debate at your network meeting is:

You have received an invoice from a supplier that provides an ABN and includes GST in the price. This supplier has also issued you with a schedule of prices that include GST. He has instructed you to pay the GST on his behalf directly to the ATO.

What should you do?

  • 1 post
  • # 107209

As it is the supplier's obligation to account to the ATO for GST charged to customers, I would advise this to the supplier and request that they deal direct with the ATO.

This is notwithstanding any theoretical method by which I might be able to liaise with the ATO on the supplier's behalf.

I would seek to recover the GST we have paid to the supplier in the normal way from the ATO.

 

Cheers

 

Rod Moss 

  • 172 posts
  • # 107210

admin@ICB said:

This month's question for you all to debate at your network meeting is:

You have received an invoice from a supplier that provides an ABN and includes GST in the price. This supplier has also issued you with a schedule of prices that include GST. He has instructed you to pay the GST on his behalf directly to the ATO.

What should you do?


I see a few problems with this.

1. Has the supplier effectively asked that you make a representation to the ATO on their behalf? - when you are not engaged by them to do so.

2. The supplier is free to forward amounts toward their Integrated Client Account at anytime and can do that themselves. Otherwise, how will the supplier know WHO paid into their ATO account?

3. The supplier could argue that THEY have not received payment in full - and they are correct - therefore the account is delinquesnt. The recipient would likely (IANAL) fare badly if the remaining 'debt' went to court.

I would be most suspicious of the reasons for such a request. Perhaps to avoid a record of income/receipts? - esp. if supplier accounts on a cash basis.

Such a request in not standard busines practice and I can see no plausible benefit to the recipient in accomodating this request - only hazards.



Edited at 10 Apr 2015 11:07 AM GMT

  • 127 posts
  • # 107367

First check the ABN and business name registration on ABN Lookup.  More than likely the supplier is not registered for GST or has given you an unrelated ABN, and is trying to pocket the GST amount through rather disingenuous means!

If it turns out that the supplier IS in fact registered for GST, then you could pay the ATO directly—but only if you see ATO paperwork that includes convincing evidence that indicates you are actually paying into the Integrated Client Account, for that entity’s ABN. 

But you have to ask…why would a business agree to do this for a supplier? Perhaps the supplier is an important and trusted one and is struggling with cashflow and asks you to do this as a favour—okay—assuming you see the above mentioned paperwork. 

The responsibility for lodging a BAS and paying the ATO rests squarely with each entity. You would want to be convinced that the supplier is actually doing the right thing with their BAS. You would not be agreeing to pay GST to the ATO on behalf of an unknown supplier, nor would you agree to this even for a known supplier if there was not convincing evidence and good reason.  This will increase your administration costs—are you willing to incur this expense for another entity’s legal obligation? 

Regardless of evidence or reasons provided, the business owner is under no obligation whatsoever to pay the ATO on behalf of another entity.  Be suspicious!

ICB - Checking Tax Invoices and Suppliers



Edited at 20 Apr 2015 02:35 AM GMT

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