The countdown is on for the GST increase and the PAYE decrease for 1 October 2010, and we hope you have given some thought as to how these GST changes will impact upon you and your business.  At Walsh & Associates, it is our intention to keep you informed on a weekly basis on a range of transactions and how they will effect you between now and 1 October 2010 .

... Vaughan

• if you invoice $1,000 goods out at the net value plus GST, on the 1 October , the price will increase to your client from $1,125.00 to $1,150.00
• if you receive an invoice for $1,150.00 inclusive of GST, and you want to find the GST content of that invoice, simply divide the $1,150 by 7.666, or for the mathematicians among us, take the $1,150 multiply by 3 and divide by 23.

The general rule is that a supply is considered to take place at the earlier of the time an invoice is issued or the time any payment is received by the supplier. 

Invoice Basis
For those clients who are on an invoice basis, they would claim GST when they receive an invoice (pre 1 October at 12.5%) and account for GST when they issue an invoice or receive payment in respect of that supply, whichever comes first. 

Payments Basis
For those clients on a payments basis, account for GST or claim GST on any payments received or made during a taxable period, so for payments / receipts made pre 30 September they will be at 12.5%, from 1 October 15.0%. 

So what happens when we raise an invoice in September but it is not paid for till October? 
At the 30 September 2010, the IRD will provide a special GST transitional adjustment form, which effectively will allow you to deduct your creditors from your debtors and multiply the difference by 0.019324 (difference between old and new rate). 

Have you updated your existing accounting package? Was there a cost?  Xero has already commenced the process of the GST updates and the cost to you if you were a client is NIL.  If you haven’t updated your software and you are still thinking about it, we would strongly recommend that you consider Xero.   Contact Sarah today 833 6295.