BAS Agent’s Blog

Casual Employment Rules have Changed!

BAS Agent's Blog, Payroll & Superannuation / By / / , , , , / 3 minutes of reading

On Monday 26th August 2024, changes to casual employment laws came into effect.

The changes include a new definition of a casual employee and a new pathway for employees to convert from casual to permanent employment.

Please note employees who are casual before the 26th of August, will remain casual under the current definition unless they choose to transition to full-time or part-time (permanent) employment.

New Casual Definition

A person will be a casual employee if:

  • there isn’t a firm promise of ongoing work and
  • he/she is entitled to a casual loading or casual pay rate under an award, registered agreement or employment contract.

Employees who begin as casuals will remain as casuals until their employment status changes either through a conversion process or by accepting alternative employment under a different status.

Casual Conversion – Employee Choice Pathway

There will be a new pathway for eligible employees to change to full or part-time employment. This will replace the current rules for changing to permanent employment and will be known as the  “Employee Choice Pathway”.

Under the new rules, eligible casual employees can notify their employers in writing of their intention to change to permanent employment. Employers can only refuse the notice for certain reasons (see below).

Casual employees can apply to move to permanent employment if:

  • they have been employed for at least 6 months (12 months if a small business) and
  • they believe they are no longer casual employees.

Employers must discuss this potential change to employment with the casual employee before committing to any change. The details of the changes must be worked through via this discussion. Then, employers must respond in writing within 21 days either accepting the change or not accepting it.

There are only a few reasons why a request to move to permanent employment can be rejected. These include:

  • the employee still meets the definition of a casual employee
  • there are fair and reasonable operational grounds that would negatively impact the business. Read more here about this here.
  • the employer is bound by a recruitment or selection process required by law and accepting the request would mean he/she is no longer compliant.

The current casual conversion rules will continue to apply to employers and casuals employed before 26th August 2024 for a transitional period. See those details here.

Reminder! Casual Employment Information Statement

There is a new statement to hand to all casual employees when they begin work. It must also be provided after 12 months of employment (small business employers) and for other employers, after 6 and 12 months, and then after every 12 months of employment. Download the statement here.

For further details about the changes to casual employment rules, go to the Fair Work website.

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Free Courses for Small Business from the ATO

BAS Agent's Blog, Business Topics / By / / , , , / 2 minutes of reading

The ATO has set up a website to help small business owners learn about running their businesses. It’s called Essentials to Strengthen your Small Business. The site covers the 5 stages of business life (from idea to exit) and offers 21 short courses across each stage. In this blog, I’ll walk you through this website so you can see if it’s right for you!

On the website, you’ll find courses linked to one of the 5 stages of your business: Idea, Start-up, Day to Day, Change, and Exit.

Idea: when you’re thinking about starting a business.

Start-up: when you’ve just begun and need guidance on what to do next.

Day to Day: when your business is running, and you want help with everyday management.

Change: when you plan to reshape or update your business.

Exit: when you’re retiring, selling, or closing down your business.

21 Courses

The 21 courses match the stage your business is in. They cover topics from starting a business to keeping records, closing down—and everything in between. For instance, clicking “Start-up” shows you 11 courses on GST, cash flow, record keeping, home-based business deductions, and more. You can filter by business structure and industry to find the most relevant courses.

Course Breakdown

Each course has an overview, a video, and modules you can do in any order. If some modules don’t apply to you, skip them. Every course has “fast facts” – key points from the lessons. There are also “quick links” for more info. After each course, take a knowledge check to see what you need to review. Plus, there’s an “action plan” –  a checklist to guide your next steps based on your learning. You can download the fast facts and action plan as PDFs or Word Docs to share or keep.

Course Account

Create an account on the website to track your courses. With an account, you can create a learning path that fits you and your business. Add or remove courses anytime from the course list. You can also save notes and favourite pages to visit later from your dashboard.

Here’s the video from the website that shows you how everything works, for those who like watching instead of reading!

This learning hub is perfect for small business owners looking for guidance without spending much time or money. It’s one of the best ATO initiatives I’ve seen recently.

For those who use the Cash Flow Coaching Kit, please note that it will be moved to this new Essentials website on June 30 2024.

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Client Agent Linking not working for you? Check your ABN details on the ABR now!

BAS Agent's Blog, Client Agent Linking / By / / , , / 2 minutes of reading

The Client Agent Linking (CAL) process is undoubtedly fairly cumbersome! There are several steps involved in nominating a new tax or BAS agent. The second step requires linking your MyGovID to your ABN. While that process should not be difficult, it is tripping up some because their ABN details have not been updated for quite some time.

The linking between a MyGovID and an ABN is done via the Relationship Authorisation Manager (RAM). This part of the process will not work if the ABN details differ from those currently recorded in the Australian Business Register (ABR). So, to avoid this barrier when trying to link to your new agent, make sure your ABN details are up to date. This is done in the following way:

  1. Log into the ABR (link above) and go to the “update your ABN details” page.
  2. Log into RAM (link above) using your MyGovID credential. Select “Update ABN Record”.
  3. Make any changes required in RAM. Note, that the only change you cannot make in RAM relates to business and legal names. This needs to be done through the ATO and ASIC.

If you cannot log into RAM and the ABR, you can do the following:

  1. Contact the ABR directly, here.
  2. Complete a mail-in form and send it to the ABR.
  3. Ask your tax professional to update the details for you.

If your entity is a Not-for-Profit organisation that needs to update your details before you can access ABR online services, follow these steps for assistance.

If you’re like most business owners, you set up your ABN years ago with a “set and forget” attitude. While many have gotten away with this (myself included!), not having up-to-date details for your ABN will be a major roadblock in the CAL process. It is worth mentioning that regardless of CAL, business owners should be updating ABN details within 28 days of any changes – see here! So, put this on your to-do list today – log into the ABR and check that your ABN details are current. Doing this will ensure that your CAL process goes smoothly.

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Why has my PAYG Withholding Cycle Changed?

BAS Agent's Blog, Payroll & Superannuation / By / / , / 2 minutes of reading

If you’re an employer, your PAYG withholding (PAYGWH) cycle might change depending on how much you withheld in the prior financial year. The ATO will advise you about this change in April each year via a written letter. The cycle change will occur on 1 July of the next financial year.

As a small withholder (small employer) you pay PAYGWH with GST and other taxes in your quarterly BAS. But, the ATO can switch your PAYGWH to monthly if, in the last financial year,

you withheld $25,001 to $1,000,000 from employee wages

These employers are called “medium withholders”.

If that’s you, you must lodge and pay a monthly Instalment Activity Statement (IAS) by the 21st of each month. For example, PAYGWH for July is due by August 21st.

If you withheld over $1 million last financial year, you’re a “large withholder”. 

Large employers have specific dates to pay PAYGWH and get special payment reference numbers (PRN). The ATO will provide you with these details. Remember, large withholders don’t report PAYGWH on their activity statement, but they should still match up their reported STP and paid amounts.

If the ATO changes your PAYGWH cycle, update your payroll software to meet the new deadlines.

If you think your PAYGWH for the next financial year will be below the thresholds mentioned above, you can ask to stay on your current PAYGWH cycle. You must do this within 14 days after getting the ATO’s letter about the cycle change. Complete this form and send it to the ATO (or your tax agent can help).

For more info, check out the ATO Annual Review of PAYG Withholding Cycles on the ATO website.

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Client Agent Linking – Useful Links, Videos & Phone Numbers

BAS Agent's Blog, Client Agent Linking, How To / By / / , , / 2 minutes of reading

In a previous blog, I discussed the challenges agents and clients face because of Client Agent Linking (CAL). Many of the issues encountered are related to setting up various digital identity software and/or not understanding the CAL process. In this blog, I will share useful links, videos and phone numbers to help those stumbling through this difficult task! 

As mentioned, the CAL process is complicated. It involves setting up a myGovID, linking the ABN to the myGovID in Relationship Authorisation Manager (RAM), logging into Online Services for Business (OSB), nominating a new agent and finally advising the agent that the nomination has occurred. The links to assist with setting up myGovID, RAM and OSB are below, along with a step-by-step guide to CAL both in written and video format. Some phone numbers are listed for those who prefer to call a human being! I hope this helps those who are struggling with CAL.

  1. How to nominate an agent in online services for business (download)
  2. The agent nomination process explained
  3. Troubleshooting guide for agents
  4. How to set up myGovID
  5. Online services for businesses
  6. Relationship Authorisation Manager (RAM)
  7. Link your myGovID to your ABN
  8. For agents – think before you link!

CAL – Useful Phone Numbers

  1. ATO – help with nominating an agent or with online services for business – 132866
  2. ATO – help with late lodgements and payments due to not being able to link to an agent – 1300 660 048
  3. ATO – agent can’t link a new client in online services due to a system error – 137286 (only call if the client has completed the nomination process)
  4. RAM – 1300 287 539 (select option 3 for RAM enquiries)
  5. myGovID – 1300 287 539 (select option 2, then option 1 for myGovID enquiries).

CAL – Useful Videos

ATO Client-To-Agent Linking Steps: How to nominate an agent in Online Services for Business

Client / Agent Linking – An ATO How-To Tutorial

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Wage Theft Legislation is Coming! Review your Payroll Now!

BAS Agent's Blog, Payroll & Superannuation / By / / , , / 2 minutes of reading

On 1 January 2025, Wage Theft Legislation will be enacted. This legislation is part of the Federal Government’s “Closing Loopholes” laws which effectively change the Fair Work Act.

Wage Theft Legislation will make it a criminal offence to underpay wages deliberately. Penalties could be $7.825 million or more for a company and $1.565 million or more for an individual and/or 10 years in prison. The Fair Work Ombudsman will be responsible for investigating possible wage theft cases.

These are very hefty penalties indeed. No one wants to be at the pointy end of these new laws therefore, in my opinion, reviewing your payroll set-up now and ensuring it is completely compliant, would be a good idea. To that end, conducting a payroll audit is necessary.

How to Audit Your Payroll Set-up

A payroll audit includes a review of payroll practices, systems and outcomes, all underpinned by complex regulations that vary at the federal, state and territory levels. It looks at employee classifications, pay rates, entitlements, and record-keeping.

The Fair Work Ombudsman has provided a step-by-step guide to auditing your payroll. You can download it here. The guide assists in reviewing payroll records, assessing the findings and finally, providing solutions for any issues raised.

Further to the above guide, the Australian Payroll Association recommends taking these 5 steps to assist with the audit process:

  1. Engage a Specialist – a payroll specialist can review your current set-up and identify any gaps or areas of risk that require addressing.
  2. Educate your Team – make sure your team is across the new Wage Theft Legislation. Provide training and education in any areas of payroll legislation in which your team are lacking.
  3. Leverage Technology – Modern payroll systems help avoid non-compliance issues. If your payroll technology is outdated or not up to par with Australian requirements, consider upgrading to a system that automates calculations and processes for better compliance.
  4. Document Everything – Ensure all payroll processes are well-documented and records are meticulously kept to prove compliance, aid transparency, and defend your organisation in disputes.
  5. Regular Reviews – Once your payroll is fully compliant, ensure regular payroll audits are conducted to catch and correct any discrepancies before they create significant issues.

With the introduction of Wage Theft Legislation, employers are encouraged to be proactive and conduct a thorough payroll audit to ensure compliance. Doing this now, and making it a regular process going forward, will ensure that employers are well-placed to avoid becoming embroiled in criminal proceedings and potential sanctions.

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    Client Agent Linking – Issues & Challenges

    BAS Agent's Blog, Client Agent Linking / By / / / 6 minutes of reading

    Client Agent Linking (CAL) has been in action since 13 November 2023. CAL was created to reduce identity-related fraud attempts, including criminals taking over agents’ identities. CAL ensures that a client has authorised an agent to access his/her tax records. Before CAL, all an agent had to do was enter a client’s ABN into their Online Services for Agents portal to connect himself to the client. This connection method has become very unsafe since ABN data is easily attainable on the ABN Lookup site. This has meant that criminals could easily create a scenario where clients’ data is compromised and misused.

    No one disputes that creating a process whereby clients’ data is kept secure and criminal activity is kept to a minimum, is warranted. As cybercrime increases, the more we can use technology to help us fight the war, the better! CAL is part of this technology arsenal, however, since its live delivery, both agents and clients alike are finding that from a practical perspective, CAL is less than perfect! Many issues and challenges have arisen as a result of CAL. Some of these are described below.

    Issues and Challenges for Clients

    • CAL requires the set up of myGovID and Relationship Authorisation Manager (RAM). Some clients find setting this up difficult and even harder to access help from the ATO.
    • The process is quite complicated. It involves setting up a myGovID, linking the ABN to the myGovID in RAM, logging into Online Services for Business (OSB), nominating a new agent and finally advising the agent that the nomination has occurred.
    • The above process is made more difficult if a financial structure is complicated e.g. involves trusts, self-managed super funds etc
    • CAL requires some level of technological expertise and experience which is not available to all clients.
    • Setting up a myGovID requires strong identification proof which includes a passport. Not everyone has a passport and applying for one is difficult, time-consuming and expensive. Currently, there isn’t any process available to clients who do not have a passport.
    • For CAL to work, a client’s Australian Business Register (ABR) must be current and up to date. A client must access his/her ABR and update the details before beginning the CAL process. This means more time and more frustration.
    • Setting up CAL must be done by the client only. Agents cannot assist the client for security reasons. If a client is not tech-savvy or doesn’t understand the steps required, not being able to ask their agent for help is an issue!
    • Clients can ring the ATO for assistance in setting up CAL, however, this can be very time-consuming.
    • If a client cannot complete the CAL, he/she won’t be able to use an agent for tax lodgements. If this occurs, lodgements will be late and tax payments will be on hold. As a result, such clients may face penalties from the ATO (even though this situation isn’t their fault!). Clients will be forced to process their lodgements via OSB themselves. Of course, some clients are capable of self-lodgement, however, the more complex their tax situation, the less likely they will want to attempt lodgements without some advice and assistance for fear of making errors etc. These are the clients who will fall through the cracks!
    • If a client wants to change from one agent to another but cannot action CAL successfully, the client will be forced to remain with the original agent. This isn’t ideal if the client/agent relationship has broken down.

    Issues and Challenges for Agents

    • A major issue for BAS agents is losing access to current clients in Online Services for Agents (OSFA). This occurs when a tax agent uses the wrong identifier when setting up a new client for income tax lodgements. The correct identifier is the tax file number but many tax agents enter the client’s ABN instead. When an ABN is chosen, this instantly removes the BAS agent’s access to the client. This is frustrating for both the BAS agent and the client because to link to the client again, the client has to go through the CAL process even if the BAS agent and the client may have been engaged for many years! I have been told anecdotally that this is also happening between BAS agents. For example, if one BAS agent is responsible for payroll and another for BAS lodgement, each time payroll is lodged via STP or a BAS is lodged, each agent removes the other from OSFA – crazy stuff! As you can imagine, this is very frustrating for clients but can also create friction between agents. The whole tax landscape is on a slippery slope due to CAL!
    • Following the above issue, if a tax agent uses the ABN as the identifier in OSFA for a new client, s/he will not see the option to add the income tax account for that client. In this case, the tax agent must ask the new client to perform the CAL process again. As you can imagine, this will be very frustrating for the new client – not a great way to begin the client-agent relationship! Tax agents need to understand that using the TFN identifier provides them access to all client accounts i.e. income tax, FBT and ICA (BAS).
    • BAS agents are losing clients to tax agents as a result of CAL. The complexity of CAL for some clients is forcing them to remain with a tax agent to lodge all tax liabilities even if they would like to engage a BAS agent to assist them with BAS, bookkeeping and payroll. Clients can’t be bothered to go through the CAL process for every agent so they are taking the easy way out and asking their tax agents to do the lot!
    • Some agents find that CAL is taking too much of their time (for which most are not charging). Even though agents cannot assist clients with CAL, clients are asking for help nonetheless. Until the CAL process is improved, many agents have decided against engaging new clients.
    • All agents, BAS or tax are losing work because potential and current clients find CAL too complex and time-consuming. Some clients are avoiding navigating the CAL process and are instead choosing to go it alone. This is not ideal for agents wishing to build their client base or for clients who need tax assistance and advice (which is most of them!).
    • When a client successfully links to a new agent, the client must contact the agent to advise him/her. From there, the agent can accept the new client in OSFA. If, however, the client does not advise the agent or the agent doesn’t receive/read the message in the current time frame (currently 28 days), then the CAL is reset and the whole process will have to begin again. A better notification system is required here.

    As you can see, many issues and challenges are being met by agents and clients due to CAL. This situation has occurred because CAL was not fully tested at the time of its release. I believe more testing, research and education should have been carried out before going live. While it works on the whole, for those clients with complex tax needs or who are technology-challenged, CAL is too hard! Until these issues are resolved, I believe CAL should be removed. If this does not happen, agents will lose work, clients’ lodgements and payments will stop and the tax industry as a whole may implode! Hopefully, the ATO will review their decision to continue to implement CAL without first resolving these issues.

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    Client Agent Linking in Online Services

    BAS Agent's Blog, Client Agent Linking / By / / / 3 minutes of reading

    What is Client Agent Linking?

    Client Agent Linking is an ATO initiative intended to improve security over client identity and limit OSFA (Online Services for Agents) fraud by agents, their employees, and other authorised persons. From November 13, 2023, if you want to engage a new BAS or Tax agent to act on your behalf, you will need to nominate them in your Online Services for Business. This is known as “Client-Agent Linking”.

    Why is Secure Client Agent Linking Important?

    The intended outcome of this new process is to reduce fraud and identity theft and improve data security. By strengthening the security of this process, all parties involved – including you, your agent, and the ATO, can have confidence that you, the client, and not a fraudulent person, have authorised an agent to act on your behalf. 

    Rollout of Client Agent Linking Process

    The ATO has implemented a phased rollout of the client-to-agent linking process. The following businesses and organisations are currently included in the rollout or will be soon:

    1. Public and multinational businesses who are part of the Top 100 and Top 1,000 – effective from 19 June 2022.
    2. Most public and multinational businesses – effective from 13 December 2022.
    3. Businesses in the Top 500 privately-owned wealthy groups, where that group has a significant level of ownership of the business – effective from 13 December 2022.
    4. Government entities – effective from 24 February 2023.
    5. All types of entities with an Australian Business Number (ABN) excluding sole traders – effective from 13 November 2023.

    Please note that the client-to-agent linking process does not currently apply to individual taxpayers. However, from 13 November 2023, it will apply to all types of entities with an ABN, excluding sole traders.

    Nominating a New Agent

    When you intend to do either of the following, you need to nominate or link the agent. 

    1. Engage a new tax or BAS agent, or payroll service provider to represent you.
    2. Provide extra authorisation to your existing authorised agent, such as representing you for a new obligation like activity statements or a new entity in your group.

    You can do this by using the new agent nomination feature in Online Services for Business (see the steps below).

    Once you complete the agent nomination, you must let your agent know that you have nominated them as he/she will not receive any notification from the ATO. The agent will have 28 calendar days to add you to his/her client list in Online Services for Agents or Practice Software.

    Steps to Nominate a New Agent

    1. From the Online Services for Business home page:
    2. Select Profile, then Agent details at the Agent nominations feature, and select Add
    3. On the Nominate agent screen, go to Search for an agent
    4. Type your agent’s (or payroll service provider’s) registered agent number (RAN) or practice name and select Search
    5. Select the agent you want to nominate (if multiple results are returned, select the correct agent)
    6. Check that the agent’s details are correct
    7. Complete the declaration by selecting Submit. You’ll now see your agent’s details listed under Agent Nominations.
    8. Let your agent know that you have nominated them!
    1. How to nominate an agent in online services for business (download)
    2. The agent nomination process explained
    3. Troubleshooting guide for agents
    4. How to set up myGovID
    5. Online services for businesses
    6. Relationship Authorisation Manager (RAM)
    7. Link your myGovID to your ABN
    8. For agents – think before you link!

    Conclusion

    The Client-to-Agent linking process strengthens security measures for you and your business, agents, and the ATO. It not only protects your business but also safeguards your sensitive information from fraudulent attempts and uses in identity theft. By following the steps to link to a new agent, you can embrace a more secure digital landscape for your business and your agent/s.

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    Which of the Three Fair Work Information Statements do you need to give to your employees? One or all three?

    BAS Agent's Blog, Payroll & Superannuation / By / / , , , / 3 minutes of reading

    Once upon a time, there was only one Fair Work Information Statement (FWIS). But now there are three of them! As an employer, you need to know which one to give to your employees. This could be only one depending on your employment situation, or all three. But before we look at the three statements, let’s quickly revisit the background of the FWIS for those who may not be across it.

    The FWIS provides information to new employees about the conditions of their employment, including details about the National Employment Standards. The FWIS must be given to new employees before or as soon as they begin working for you.

    3 Fair Work Statements

    As mentioned above, there are now three statements. Let’s look at each one separately.

    1. The Fair Work Information Statement. This is the most well-known statement as it has been around for some time now. The FWIS has information on:

    • the National Employment Standards
    • right to request flexible working arrangements
    • modern awards
    • making agreements under the Fair Work Act 2009
    • individual flexibility arrangements
    • freedom of association and workplace rights (general protections)
    • termination of employment
    • right of entry
    • the role of the Fair Work Ombudsman and the Fair Work Commission.

    2. The Casual Employment Information Statement. The CEIS has information about:

    • the definition of a casual employee
    • when an employer has to offer casual conversion
    • when an employer doesn’t have to offer casual conversion
    • when a casual employee can request casual conversion
    • casual conversion entitlements of casual employees employed by small business employers
    • the role of the Fair Work Commission is to deal with disputes about casual conversion.

    Employers aren’t required to give casual employees the CEIS more than once in any given 12-month period (for example, if an employer employs a casual employee temporarily at different stages in one 12-month period, they only need to give them the CEIS once. However, it should be noted that large employers (15 or more employees) must give the CEIS to employees every 6 months. Still, small employers (15 or fewer employees) must provide the CEIS every 12 months on the anniversary of each employee’s start date.

    3. The Fixed Term Contract Information Statement. The FTCIS has information about:

    • what a fixed-term contract is
    • limitations on the use of fixed-term contracts
    • exceptions to the limitations
    • how to resolve disputes about fixed-term contract limitations and exceptions.

    How to Give these Statements to your Employees

    Fair Work states that you may provide these statements in a variety of ways:

    • in person
    • by mail
    • by email
    • by emailing a link to this page of their website
    • by emailing a link to a copy of the FWIS available on the employer’s intranet

    Depending on the employment status of your employees, you may need to provide the FWIS only. However, if you employ a mix of employees i.e. full-time, part-time, casual, and/or fixed-term contract, it may be necessary to provide all three statements as described above. Remember, providing the FWISs is not optional – it is compulsory. Failure to do so may incur penalties – see here.

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    How to Series No 4 – How to Account for Hire Purchases

    BAS Agent's Blog, How To / By / / , , / 3 minutes of reading

    This is the fourth part in a series I’m calling “How-To”. The first part was about insurance bills, the second part was about VicRoads registration bills and the third part was about chattel mortgages. I will be using Xero for the example, but don’t worry if you use another software, the basic rules will still apply. 

    The fourth how-to is about how to account for hire purchases in your accounting software. A hire purchase arrangement is an agreement to purchase goods in instalments.

    Step 1

    Let’s pretend that your business has purchased a new printer with all the bells and whistles for $15K via a hire purchase agreement, plus $5,000 interest.  For this example, the hire purchase is for 30 months without a residual (balloon) payment at the end of the period. Note, that most hire purchase agreements will include a balloon component (check your documentation). The first thing to do is collect all of the documentation. You will need the hire purchase agreement, the invoice, and the interest amortisation schedule. The hire purchase company will provide all of this to you at the point of purchase. To begin the process, create some accounts in your accounting software:

    • Office Equipment (Asset GST Inc)
    • Hire Purchase Unexpired Interest (Liability GST Inc)
    • Hire Purchase Liability (Liability BAS Excluded)
    • Interest Expense – Hire Purchase (Expense BAS Excluded)

    Note, For any Hire Purchase Agreement made after 1/7/2012, both the purchase price of the asset and all interest charges and fees are subject to GST. (see notes at the end of the blog)

    Step 2

    Now you can enter this journal which adds the purchase of the printer into the accounts:

    Check your balance sheet. It should look like this:

    Step 3

    When it comes time to record the first repayment to the finance company, your entry will look like this (assuming each repayment is $500 (30 x $500 = $15K)). Note, that the tax code for the interest expense account is BAS Excluded. This is because the GST on the interest component of the hire purchase was claimed when the purchase was entered initially (see journal). Therefore the monthly repayments of interest are not reportable on the BAS.

    Step 4

    Check that the balances in the balance sheet are reduced by the first repayment – see below. Note that I have evenly split the interest repayments into amounts of $151.51 for this example ($4,545.45 divided by 30 payments). However, you will need to enter the interest amounts as per your amortisation schedule and these won’t be exactly the figures divisible by the number of repayments. Something to keep in mind!

    GST rules for hire purchases

    For hire purchase agreements entered into on or after 1 July 2012, all components of the transaction are subject to GST including:
    • The upfront purchase price of the asset financed under the agreement
    • Interest charges, and
    • Any other associated fees.

    This is the case regardless of whether you account on a cash or accrual basis.

    This means that taxpayers on a cash accounting basis can claim the full amount of any available GST credit at the time the first payment is invoiced or paid under the hire purchase.

    This was the last part of our How-To series (for now). I hope you found this series useful. For further details about hire purchase agreements and GST, go to this ATO webpage.

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