GST Tutorial: Comprehensive Analysis of Sally's GST for May 2019

This homework assignment is a GST (Goods and Services Tax) tutorial centered around the business transactions of Sally, a real estate agent registered for GST on a non-cash (accruals) basis. The assignment presents Sally's income and expenses for May 2019, including commissions, rental income, property management fees, fuel, a new navigation system, repairs to a rental property, and a fax machine. Students are tasked with answering five multiple-choice questions that assess their understanding of GST principles, including taxable supplies, GST-free supplies, input taxed supplies, and input tax credits. The questions require students to calculate Sally's GST liability, determine the correct GST treatment for specific transactions like residential rental income, and calculate the GST input tax credit available for various purchases, considering factors like payment timing and business use percentage. The assignment tests the student's ability to apply GST rules to practical scenarios and calculate GST amounts accurately.

GST Tutorial
Sally operates a business as a real estate agent and is registered for GST on non-cash basis
(accruals basis) and reports for GST on a monthly basis. She has provided you with the
following information in relation to her transactions for the month of May 2019:
Income
 Sally issued a tax invoice on 20 May 2019 to clients in relation to her agents’
commissions for the month. The total amount was $8800 and she received payment
of $4400 on 29 May 2019.
 Sally received $2200 in rental income from her residential rental property on 4th
May 2019. This income related to rent for the months of April and May. Sally had
issued an invoice on 25 April for this amount.
 Sally received $3300 in relation to property management fees. These relate to
residential rental properties that she manages on behalf of her clients. She issued a
tax invoice on 15 May 2019 and received total payment on 29 May 2019.
Expenses
 Sally’s total fuel account for the month of May was $990 (including GST) for which
she has received a tax invoice. Her local services station allows her to maintain a
credit account. She made payments on this account on 02 May 2019 and 28 May
2019 of $110 each time.
 Sally purchased a new navigation system for her business vehicle on 15 May 2019.
The system cost $5500 (including GST) and she received a tax invoice on the date of
purchase. She paid a deposit of $2200 at this time, and intends on paying the
balance of the amount on 30 June 2019.
 Sally paid $990 (including GST) in having repairs made to one of her rental
properties. This property is owned by Sally in her own name and is rented out to
residential tenants. Sally paid the whole amount in cash on 20 May 2019 and
received a tax invoice on this date.
 Sally purchased a new fax machine on 29 May 2019. Sally paid cash of $880 for this
machine (including GST) on 29 May 2019, however did not realise the receipt was
not a tax invoice and therefore did not receive the tax invoice until 01 July 2019. She
will use the fax machine 60% for business purposes. She lodged her Business Activity
Statement on 20 June 2019.
Question 1
Which of the following amounts represents Sally’s total GST liability for the month of May in
relation to her Taxable Supplies?
a) $12,100
b) $13, 200
c) $1,100
d) Nil
e) $1,300

Question 2
In relation to the residential rental income of $2 200, which of the following statements is
most correct?
a) The supply of the residential rental property is a taxable supply under s9-5 as Sally has
made a supply and she is registered for GST.
b) The supply of the residential rental property is a GST Free supply.
c) The supply of the residential rental property is an Input Taxed Supply under s40-65 of the
GST Act 1999.
d) The supply of the residential rental property is an Input Taxed Supply under s40-35 of the
GST Act 1999.
e) None of the above statements are correct.
Question 3
In relation to the purchase of the new navigation system, which of the following amounts
represents the total GST Input Tax Credit available in the month of May 2019?
a) $5,000
b) $200
c) $500
d) Nil
e) $125
Question 4
In relation to the repairs to the rental property, which of the following statements is most
correct?
a) Sally will be entitled to a GST Input Tax credit of $90 for the month of May.
b) Sally will be entitled to a GST Input Tax credit of $900 for the month of May.
c) The repairs to the rental property are not a creditable acquisition because they relate to
the making of a GST Free supply.
d) The repairs to the rental property are not a creditable acquisition because they relate to
the making of an Input Taxed Supply.
e) None of the above statements are correct.
Question 5

In relation to the purchase of the fax machine, which of the following amounts statements is
most correct?
a) Sally will be entitled to a GST Input Tax credit of $48 for the month of May.
b) Sally will be entitled to a GST Input Tax credit of $80 for the month of May.
c) Sally will not be entitled to a GST Input Tax Credit for the month of May.
d) Sally will be entitled to a GST Input Tax credit of $80 for the month of June.
e) None of the above statements are correct.