Administration, Regulation, SMSF

SMSFs can report GST annually

ATO GST SMSF Reporting

SMSFs can save time and administrative costs by electing to report their GST obligations annually provided they meet a certain set of conditions.

SMSFs that have voluntarily registered for the goods and services tax (GST) may elect to report and pay the tax on an annual basis, which could lead to reduced administrative costs.

Heffron head of education and content Lyn Formica noted while SMSFs are not required to be registered for GST under certain circumstances, doing so could potentially mean a 75 per cent GST refund of any reduced input tax credits for trustees, including some administration fees, adviser fees and share brokerage costs.

For funds that qualify, electing to report GST annually may be a more practical approach to reduce administrative responsibilities.

“Most SMSFs who are registered for GST because they’re required to be are reporting GST quarterly. They’ve got GST turnover of less than $20 million and the ATO hasn’t told them that they would need to report monthly,” Formica told attendees of a recent Heffron webinar.

“But don’t forget about the annual concept. If we’ve got a fund that is registered for GST but their annual turnover was less than $75,000, [which means] they weren’t required to be registered for GST [and] they’ve chosen to do that on a voluntary basis, they could also elect to report and pay on an annual basis.

“What that means is that they’re not filling out quarterly business activity statements, they’re doing an annual GST return, and the lodgement date for that is at the same time as the SMSF annual return is due.”

She pointed out as the GST return can be completed in the same reporting period as the annual return, SMSFs could possibly save time and administrative costs in contrast to those funds that need to report quarterly or even monthly.

“It means that we can streamline the process because we could work out the GST at the same time as doing the annual financial statements and tax return,” she said.

“In addition to lodging the tax return, you’ll be lodging a GST return and, typically speaking, claiming back some credits from the ATO.

“You do need to do that by a particular time in the quarter to then be eligible to report annually for the rest of the year. Otherwise you’ll have to wait until the following year.”

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