Definitions

Listed below are all of the common terms used in this handbook.

Accruals 
ACNC
ACNC – Registered – religious-institution
Adjustment Notes
Attribution
Australian Business Number
Branches
Business Activity Statement 
Cash Basis
Commercial Residential Premises 
Consideration
Creditable Purpose 
Endorsed Charity
Group
GST credit
GST-exclusive Value
GST-inclusive Value
GST-Return
Input Tax Credit
Input Taxed
Margin Scheme
Net GST
Non-profit Sub-entity
Registration Threshold
Religious Practitioner
Taxable Supply
Tax Invoice
Tax Period
Turnover

Accruals

Accruals means purchases and sales are accounted for at the time they are made and an invoice is issued, not at the time of payment. This contrasts with the cash accounting method where purchases and sales are only accounted for when payment is made.

ACNC

Australian Charities and Not-for-Profits Commission (ACNC) is the national regulator of charities. Churches must be registered with the ACNC to access various tax concessions.

ACNC – Registered – religious – institution

This is a charity that is registered with the ACNC under the sub-type of advancing religion.

Adjustment Notes

Adjustment notes are issued when there is a change to the amount of GST included in the price for a good or service. The common events which give rise to adjustment notes are return of goods, prompt payment discounts and price adjustments.

Attribution

Attribution is the way in which GST is allocated to GST periods. The allocation depends on whether the cash or accruals accounting method is used.

Australian Business Number

An Australian Business Number (ABN) is a unique 11 digit number that identifies the organisation to the government and the community.

Branches

Branches are separate sections of an organisation. In some circumstances, a church may be a branch of the denomination. In other instances, a church can have its own branches, such as a Sunday school or youth department. A church can also choose to treat a branch as a “non-profit sub-entity”.

Business Activity Statement

This is a single statement that a church uses to report all its taxation transactions to the Taxation Office. The church uses the same form to report fringe benefits tax, PAYG withholding, GST, etc. This has the same meaning as “GST return” used throughout this Guide.

Cash Basis

This means that sales and purchases are accounted for using the cash accounting method. Sales and purchasers are accounted for only when they are paid. This contrasts with the accruals accounting method which accounts for sales and purchases when they are made or invoiced.

Commercial Residential Premises

These include hotels, caravan parks and hostels. Unlike general residential premises, commercial residential premises are subject to GST.

Consideration

This means the amount paid or payable for a good or service. It is usually money, but can include other goods and services or an act of forbearance. No GST is payable on the supply of a good or service if no consideration is made. Donations are not subject to GST.

Creditable Purpose

Input tax credits can only be claimed on things acquired for a creditable purpose. An entity acquires something for a creditable purpose to the extent that it acquires it in carrying on its enterprise. However, it does not acquire something for a creditable purpose to the extent that the acquisition relation to supplies that are input taxed or the acquisition is of a private or domestic nature.

Endorsed Charity

This is an entity that has been endorsed as a charity by the Taxation Office. To be endorsed, the entity must have an ABN and be registered as a charity with the ACNC.

Group

Closely related entities can be treated as a group for GST purposes. Not-for-profit organisations can group if they are part of the same association or denominational group. Transactions between members of the group are not subject to GST.

GST credit

This has the same meaning as ‘Input Tax Credit’

GST-exclusive Value

This is the value of a good or service before any applicable GST is added.

GST-inclusive Value

This is the value of a good or service after the applicable GST is added. Prices must be shown as GST-inclusive prices.

GST-Return

See Business Activity Statement.

Input Tax Credit

This is the amount of GST that can be claimed back on the purchase of a good or service. Input tax credits can be claimed where the purchaser is registered and the supply is not an input taxed supply. If the GST exclusive purchase price is more than $75, a tax invoice must be held.

Input Taxed

A supply of a good or service is input taxed if there is no GST payable on the supply, but the supplier cannot claim back GST on expenses related to the supply. The most common input taxed supplies are financial services and residential rents.

Margin Scheme

This is a special way of calculating the GST payable on certain real estate. GST is calculated as 1/11th of the difference between the sale price and the original purchase price (or value on 1 July 2000). Special rules apply.

Net GST

Net GST is calculated as the difference between the GST collected, or which should have been collected, and GST credits which can be claimed. If net GST is positive, the amount must be paid to the Taxation Office. If net GST is negative, a refund can be claimed from the taxation office.

Non-profit Sub-entity

A church can choose to treat independent branches of the church as non-profit sub-entities. Sub-entities are treated separately from the church for GST purposes. Provided the turnover of the non-profit sub-entity is less than $150,000, it does not need to register for GST and does not need to apply for an ABN.

Registration Threshold

This is the turnover threshold for determining whether a business or organisation must register. Generally, the registration threshold is $75,000 for businesses, but not-for-profit organisations, including churches, use a threshold of $150,000.

Religious Practitioner

A religious practitioner means:
• A minister of religion;
• A student at an institution who is undertaking a course of instruction in the duties of a minister of religion;
• A full-time member of a religious order; or
• A student at a college conducted solely for training persons to become members of religious orders.

Taxable Supply

This is the supply of a good or service subject to GST. A supply is not a taxable supply if the supplier is not registered, the supply is not connected to Australia, no consideration is paid for the supply or the supply is GST free or input taxed.

Tax Invoice

This is an invoice in a specific format. Various information must be shown on the tax invoice. A GST credit cannot be claimed if GST exclusive price of the supply was for more than $50 and no tax invoice is held.

Tax Period

This is the GST tax return period. It is either monthly or quarterly.

Turnover

Turnover includes all revenue received except revenue from input taxed transactions. Turnover does not include donations, tithes and offerings.