Pocketing GST for profit??

[Macca]

Unlikely he'd get caught - he's too small to worry about.

From experience Govt departments tend to chase the smaller ones, they are much easier to catch than those who can afford the smart legal advice.

 

[Sunfish]

Unless you are registered for GST you cannot cannot issue tax invoices. So you should not be using the words "Tax Invoice" on your invoices, only "Invoice".

This is true. You must not issue a tax invoice if you are not registered for GST. As I said before, if you are doing "strictly cash" work you can charge as you like. Even for private work I now insist on a tax invoice, it filters out shonks.

First thing you must do is to sack your account and advise your friend to do the same. I think you are getting terrible and dangerous advice.

 

[Mry]

Unless you are registered for GST you cannot cannot issue tax invoices. So you should not be using the words "Tax Invoice" on your invoices, only "Invoice".

Incorrect, you can issue tax invoices, just not with GST attached. Here are the requirements for a tax invoice, and you can note that GST is only required to be included if it is being charged.

http://www.ato.gov.au/businesses/content.aspx?menuid=0&doc=/content/50913.htm&page=4#P37_2228

Your friend is defrauding the government and I would be surprised if he was telling the truth about his accountant friend. Most accountants I know would boot him out the door.

 

[Rob G.]

Unless he is audited by the ATO, which is always possible, then it is unlikely he will get caught but if he has a disgruntled customer who decides to take some sort of action he may be in for a nasty shock.

On the contrary ... he is quite likely to get audited via his client's paper trail.

If clients are led to believe that they are entitled to claim ITCs then they may get audited and this trail will lead to the 'friend'.

GST is 10% on the gross which is fully remitted to the ATO.

Bumping up your invoice by 10% and 'pocketing it' means income tax at the marginal rate, say 30%. Therefore the revenue is defrauded.

Maybe the 'friend' has been misquoted. If he is not registered for GST then he could increase his invoices by 10% and still be competitive with registered businesses. If he does not have any outgoings other than personal exertion then he is a winner.

We don't have the full facts on this one.

Cheers,

Rob

 

[vaughan]

Incorrect, you can issue tax invoices, just not with GST attached. Here are the requirements for a tax invoice, and you can note that GST is only required to be included if it is being charged.

http://www.ato.gov.au/businesses/content.aspx?menuid=0&doc=/content/50913.htm&page=4#P37_2228

Wrong. That is the requirement for a tax invoice, but you have missed the point that you must be registered for GST to issue a tax invoice.

http://www.ato.gov.au/businesses/content.aspx?doc=/content/00221985.htm&page=13&H13

"If a customer or client asks you for a tax invoice, you must provide one within 28 days of them asking for it. You must be registered for GST to issue a tax invoice."

 

[Mry]

Yep, you are correct. My apologies. Further to that -

http://www.ato.gov.au/businesses/content.aspx?menuid=0&doc=/content/76494.htm&page=25&H25

"If your business is not required to be registered for GST and you have chosen not to register, you:

- don't collect GST on your sales or claim GST credits on your purchases. Your business issues normal invoices - it must not issue tax invoices. Normal invoices don't include the words 'tax invoice' or indicate that the invoiced amount includes GST."

 

[Sunfish]

Yep, you are correct. My apologies.

You surprised me Mry. but over the years you have been on the button. My live-in accountant strikes again.

 

[coastymike]

Mry get back to work