A
Your client is Shannon Johnstone. After two years of testing the heating and cooling mats he developed for dogs, Shannon registered the business name ‘Warm or Frosty Pet Mats’ on 1 July 2020. Shannon projects his sales for the year ended 30 June 2021, excluding GST, to be the following:
· Sales to pet stores and vet clinics in Australia, $70,000;
· Export sales to pet stores and vet clinics in New Zealand, $12,000.
REQUIRED:
i) Based on the projected sales, advise Shannon Johnstone whether he was required to register for GST on 1 July 2020.
ii) Explain why a business would voluntarily elect to register for GST where the projected turnover is less than the registration threshold.
B
Shannon imports one of the components for the pet mats he manufactures and sells in his Warm and Frosty Pet Mats business. On 1 March 2021 Shannon imported components costing $20,000. Freight and insurance to ship the goods to Australia cost an additional $1,500. No customs duty was payable on the imported goods.
Assume Shannon, trading as Warm and Frosty Pet Mats, is registered for GST on the cash basis and reports quarterly, and all amounts include GST where applicable.
REQUIRED:
Advise Shannon of the GST consequences, if any, of importing the components for the pet mats.
C
Shannon purchased a utility vehicle for use in his business, Warm and Frosty Pet Mats, on 1 May 2021. The purchase price of the vehicle was $33,000, and Shannon paid this amount and received a tax invoice from the car dealer on 1 May 2021. Shannon estimates he will use the vehicle 80% for business purposes, and 20% for private purposes. The effective life of the vehicle for tax depreciation purposes is 8 years.
Assume Shannon, trading as Warm and Frosty Pet Mats, is registered for GST on the cash basis and reports quarterly, and all amounts include GST where applicable.
REQUIRED:
Advise Shannon whether he is entitled to claim any input tax credits on the purchase of the vehicle. Calculate the amount of the input tax credits, if applicable, for the June 2021 quarter.
D
Shannon owns a commercial property at 180 Frankston Dandenong Road, Dandenong South Vic. The property consists of 5 offices which are all rented to tenants. During the quarter ended 30 December 2020 Shannon received rent from the commercial property totaling $22,000. On 5 December 2020, the plumbing pipes in the commercial property burst due to a blockage in one of the pipes. Shannon paid $3,300 to a plumber to repair and replace the damaged pipes.
Shannon also receives rent from a 3-bedroom townhouse he owns, totaling $1,980 for the quarter. He paid $188 commission to the real estate agent for managing the townhouse.
Assume Shannon is registered for GST on the cash basis and reports quarterly, and all amounts include GST where applicable.
REQUIRED:
i) Advise Shannon whether GST is payable on the rent from either of the properties? Calculate the amount of any GST payable.
ii) Advise Shannon whether he is entitled to claim any input tax credits on the expenses paid during the quarter. Calculate the amount of any input tax credits Shannon can claim.
