The goods and services tax (GST) is a broad-based tax of10% on the supply of most goods and services consumedin Australia. It is designed to be collected by enterprisesbut eventually paid by consumers. Goods with a sales value of $1,000 would be sold at a price of $1,100. $100 of the price collected by the enterprise Passed on to the government GST is 1/10th the value OR 1/11th of the price Value of a good/service is said to be GST-exclusive Price of a good/service is said to be GST-inclusive
GST is paid at each stage of the production process ie each time a product changes hands – from manufacturer to wholesaler to retailer to consumer – GST is paid on that product by both the enterprise and the consumerHowever, because enterprises do not represent theultimate consumers of the product, the ATO permitenterprises to claim back the GST they pay (Input TaxCredit)It is the consumer who finally pays the tax.
GST forwardedSupply Chain GST Calculation to ATO Manufacturer sells GST on sales $10 furniture for Less: Input Tax $10 GST to ATO $100 + $10 GST Credit 0 Price = $110 GST to pay $10 Wholesaler sells GST on sales $25 furniture for Less: Input Tax $15 GST to ATO $250 + $25 GST Credit $10 Price = $275 GST to pay $15 Retailer sells GST on sales $45 furniture for Less: Input Tax $20 GST to ATO $450 + $45 GST Credit $25 Price = $495 GST to pay $20 Consumer pays $45 ATO receives $45 in GST to retailer total GST