Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Certainty for business in GST calculations and rounding.



Download PDFDownload PDF

Search & contents

Glossary

Forms

ATO contacts

Legal database

Tax Reform web

site

Printer-friendly version of this document

Media Release - Nat 2000/36

Certainty for business in GST calculations and rounding Tax Commissioner Michael Carmody today announced details of GST calculation and rounding options to provide business and GST accounting software developers with both certainty and flexibility. These options will satisfy ATO tax invoice and liability calculation requirements for the GST.

"Business can now choose the total invoice approach or the line item approach for their GST calculations," Mr Carmody said.

"The two approaches fit with the flexible new option for GST reporting I announced on 30 March. They also mirror overseas approaches," he said.

Total Invoice Approach

A business can total the prices of all taxable items, where the GST is 1/11 of the price, on an invoice and then make a single 'divide by 11' calculation of the gross taxable amount to arrive at the total GST. This total will then be rounded to the nearest whole cent. The rounding rule will be: round down to the nearest whole cent below half a cent; round up to the nearest whole cent from half a cent.

"Many, if not most, businesses will find this the simplest and most certain option," Mr Carmody said.

Line Item Approach

A business may also calculate the GST on each taxable item or invoice line and add up these amounts to arrive at the total GST for an invoice or for the total GST liability.

In taking the line item approach a business must record the GST on each taxable item or line of items to as many decimal points as their system allows. The total GST for the invoice will then be the sum of the individual line item amounts of GST. Where necessary to get to whole cents, this total will then be rounded: round down to the nearest whole cent below half a cent; round up to the nearest whole cent from half a cent.

If the accounting system can only record dollars and whole cents then the amount of GST for each taxable item or line of items is to be recorded using the rule: round down to the nearest whole cent below half a cent; round up to the nearest whole cent from half a cent.

"These acceptable approaches may result in differences in liability amounts but the benefits of flexibility far outweigh any marginal differences," Mr Carmody said.

GST Regulation 29-70 (7) states that "if the total amount of GST payable for the taxable supply or supplies to which the tax invoice relates is an amount that includes a fraction of a cent, the amount is to be rounded down to the nearest whole cent".

This regulation is to be changed from the rounding down rule to rounding down to the nearest whole cent below half a cent and rounding up to the nearest whole cent from half a cent and above.

This regulation currently only covers the effect on a tax invoice. The approaches described will now also be applicable to the calculation of GST for tax liability and reporting purposes.

"I invite anyone who would like further, personalised information on the BAS and its calculations to call the Business Infoline on 132 478. You can also make an appointment for an advisory visit to their business premises," Mr Carmody said.

CANBERRA

19 April 2000

For further inquiries from members of the media:

ATO Corporate Affairs 02 6216 1901 (bh)

0401 147 127

For other important information, go to:

ATO main page ●

Tax Reform web site (including GST) ●

Feedback about this site ●