GST changes coming soon!
The days of being told off by your accountant for losing GST receipts are coming to an end, with new record keeping laws soon in place.
From 1 April 2023, GST rules are being ‘modernised’, with the purpose of making life easier for small businesses. Below are two of the main changes that are likely to affect plumbers and trade businesses.
Changes to expense claims
Currently, there is a need to hold tax invoices for any purchases that cost more than $50. A tax invoice is a particular type of document, which needs to have the words ‘tax invoice’ written on it in a prominent place.
Strictly speaking, if a business does not hold the tax invoice, it is unable to claim the GST on the expense. This is frustrating, especially for trade business owners who are always on the road and moving from place to place. Over the years plenty of tax invoices have been lost down the back of the dashboard or in a forgotten nook of the work van.
The new rules are more flexible. Rather than needing to hold a tax invoice, the new requirement is to hold ‘taxable supply information’. This new term includes tax invoices, as well as other forms of information such as supplier agreements, contracts or bank statements showing the transaction occurred.
While it is still a good practice to keep hold of tax invoices, spending time hunting around for those lost fuel receipts will become less important.
Issuing invoices; What they need to show
The new rules from 1 April 2023 also affect the information required to be shown on ‘taxable supply information’. The sale amount will determine what is required, as show below.
For businesses using cloud accounting products such as XERO and MYOB which populate invoices with default information, it is likely to be easier to simply include all the above information for all invoices issued. Doing so will save switching invoice formats depending on the sale amount.
To ensure your business is ready for these changes, it is timely to check your invoice templates contain all this information. If you are still unsure, consider bringing up the topic of GST modernisation next time you talk with your accountant to get their view on how the changes might affect your business specifically.