2. The goods and services tax (GST) is a broad-based tax of
10% on the supply of most goods and services consumed
in Australia. It is designed to be collected by enterprises
but 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
3. 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 consumer
However, because enterprises do not represent the
ultimate consumers of the product, the ATO permit
enterprises to claim back the GST they pay (Input Tax
Credit)
It is the consumer who finally pays the tax.
4. GST forwarded
Supply 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
