Institute of Certified Bookkeepers
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October 2016 Question of the Month - Claiming GST

  • 127 posts
  • # 113987

My client recently registered for GST, effective 1 July. He had issued invoices prior to July and is now being paid for them. Does he have to pay GST? (He is on cash basis). Or because they were issued as GNR, does he get to keep all the money?

He also purchased business items in June but didn’t pay for them until July. Should he claim the GST credits for the June invoices?

  • 127 posts
  • # 114150

If your client registered by choice without reaching the compulsory registration threshold of $75,000 then the answer is no.  He gets to keep the money.  He is only required to report the GST on the invoices issued after 1 July.

However, if your client reached the threshold and was required to register then he must forfeit 10% as GST payable to the ATO.  He could reissue the invoices adding the 10% GST onto the original cost, but the customer is obliged to pay only on the original invoice issued—so good luck getting the extra money from the customer!

Because he is on cash reporting, for the purchases, he should claim the GST credits as he has paid for the goods in July.

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Edited at 19 Jan 2017 06:38 AM GMT

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