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Richard Smales (TFN 999 999 582) (DOB 11/11/1983) commenced a new cabinetmaking business as a sole trader at 269 Main Street, Croydon, Victoria, 3136 on February 1, 2014. He has registered his business using the trading name Chips and Chops and estimates that his turnover will be a little over $50,000 (excluding GST). It is his first time running a business and he needs to apply for an ABN and register for GST. He intends to lodge his Business Activity Statements quarterly and will use the cash accounting method.

Complete his ABN application form. Additional details are as follows:

Home address: 111 Maroondah Highway, Croydon, Vic. 3136 Postal address: PO Box 256, Croydon, Vic. 3136 Phone number: 0494 987 543 Email address: chipchopwood@bigpond.com

Bank account: Name: Richard Smales BSB 024 369 Account number 78469870 Taxpayers who need to apply for an Australian Business Number, should contact the A.T.O. directly or alternatively, apply on line at https://abr.gov.au/

Using the form on the student disk, prepare the ABN application for this client. See PDF of completed form on Student Disk

2015 RECKON ELITE PRACTICAL CHAPTER 12

IN CLASS EXERCISE Applying for an AUSTRALIAN BUSINESS NUMBER (ABN) (Page 490)

** Students please note: This facility to apply for an Australian Business Number, is no longer available within ELITE.

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CREATE A NEW CLIENT IN THE DATABASE

ENTER AT THE BUSINESS/TAX DETAILS TAB TFN: 999 999 582 ABN: 37 111 155 556

SELECT: TAX RESIDENT

GST REGISTERED YES

BSB 024 369 ACCOUNT NUMBER 78469870 ACCOUNT NAME RICHARD SMALES

IN CLASS EXERCISE 12.3 BUSINESS ACTIVITY STATEMENT (Page 524)

***Students should combine the client details previously provided in the In Class Exercise to complete this exercise.

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IN CLASS EXERCISE SOFTWARE COMPATIBLE

Richard Smales (see details from Part 1 in-class exercise in this chapter) asks you to complete his Business Activity Statement (BAS) for the quarter ending June 2014. His Mobile number is 0498 682 255 He provides you with a copy of the BAS form he has received from the ATO that shows his Australian Business Number (ABN) is 37 111 155 556 and the June 2013 quarterly statement Document ID Number is 00 104 999 744. It also shows the due date for lodgement and payment is 28 July 2014. Richard advises that he uses the cash accounting method. The business Income and expenses for the June 2014 quarter are as follows: Sales: $15,950 Expenses: Rent $3,905 Rates $ 900 (GST Free) Insurance $ 264 Electricity $ 539 Materials $3,036 Advertising $ 495 Telephone $ 561 Wood turner $3,188 (Capital Purchase) On this quarterly BAS, Richard has elected to pay the ATO Instalment amount of $640.

Select: CREATE CLIENT JOB (Using the arrows, select using the drop screens the following functions):

Select: Tax Year 2014 Select: Job Type BAS form (GA) Select: Period Type Quarterly Select: Period April to June 2014 Select: OK

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RICHARD provides you with a copy of the BAS form he has received from the ATO.

Enter all the relevant information from the BAS document that RICHARD has received from the ATO NOTE: The ABN for this exercise use 37 111 155 556 and Document Id Number 00 104 999 744

Use the dropdown arrow to select the REPORTING PERIODS OPTION and the ACTUAL PERIOD of this BAS. In this exercise you are completing the BAS for the April to June quarter. NOTE: This election must be the same as the option selected when he applied for his ABN

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RICHARD advises that the business Income and Expenses for the June 2014 quarter are as follows:

Sales: $15,950 Expenses: Rent $3,905 Rates $ 900 (GST Free) Insurance $ 264 Electricity $ 539 Materials $3,036 Advertising $ 495 Telephone $ 561 Wood turner $3,188 (Capital Purchase) CLICK on the GST calculation workheet to enter sales and purchases amounts:

For the June quarter, RICHARDs business records show that his income and expense details are as follows: Sales (including GST) $15,950 Business Related Expenses: CAPITAL COSTS (inc GST) $ 3,188 NON-CAPITAL expenses (inc GST) $ 8,800 NON-CAPITAL expenses (GST Free) $ 900

From the information above, ENTER onto the GST calculation worksheet as follows:

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The totals transfer to the Calculation Screen:

NOTE: At G11 enter TOTAL

Non-Capital Purchases ie. $9,700 At G14, identify

the GST free purchases that have been INCLUDED at

G11 ie. $900

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AT T7, enter the ATO Instalment Amount - $640

As RICHARD does not have any staff or associates that he is withholding tax for, the PAYG TAX WITHHELD work sheet is NOT applicable.

SELECT: NEXT to proceed to

next work sheet.

On the BAS form sent to RICHARD the ATO has indicated that he can either pay a quarterly PAYG Instalment amount of $640 or he can pay

PAYG Instalments based on the actual income for the quarter. RICHARD has elected to pay the SET INSTALMENT AMOUNT as estimated by the

ATO.

Complete only when Varying the Instalment amount

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As RICHARD is not providing FRINGE BENEFITS for employees, this work sheet is not relevant.

The WINE EQUALISATION TAX work sheet is not relevant in this exercise.

LUXURY CAR TAX work sheet is not relevant in this exercise.

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The DEFERRED INSTALMENT & FUEL TAX CREDIT work sheet is not relevant in this exercise.

On the Summary Screen, the totals have transferred.

The LEFT SIDE of the SCREEN, are the totals that the client owes the ATO

The RIGHT SIDE of the screen, are the totals the ATO owes the client

From NAVIGATOR, SELECT printing option. A PDF of the completed BAS is on the student disk.

ELITE will calculate the PAYMENT or

REFUND amount

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Continue to use RICHARD SMALES as the client in RECKON ELITE. On the June quarter BAS, RICHARD elected to pay the ATO Instalment amount of $640. (See T7 on the BAS).

Assuming this was the only quarter that had a PAYG Instalment Amount, when he prepares him 2014 Tax Return, this payment should be entered into ELITE as follows:

From NAVIGATOR, SELECT: Tax Estimate Screen:

To Enter PAYG Instalments paid, SELECT: CREDIT FOR PAYG already paid

by clicking on the GREEN line

ENTER the details of each PAYG Instalment that have been paid that are relevant to the tax year. NOTE: PAYG Instalments are entered based on the QUARTER, NOT on the actual date paid.

ENTERING PAYG INSTALMENTS PAID

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The total PAYG Instalments paid are reflected in the Tax Estimate