emPOWER Newsletter 21 May 2010

Friday, 21 May 2010

GST to Increase

The budget yesterday confirmed what had already been widely signalled – GST is going to increase from 12.5% to 15% on 1 October this year. This gives you a little over 4 months to prepare for it! Not a long time, but long enough when you are using emPOWER accounting software.

We are in the process of working through the ramifications of the budget announcement and we will be providing you with the necessary tools to make the change as smooth as possible. However, there are few things you can start thinking about to prepare for the change:

  • Pricing Policy: If you price items inclusive of GST are you going to adjust those prices after the GST increase? If an item sells for $9.99 will you be increasing it to $10.21?
  • Laybuys: Do your laybuy contracts allow for an increase in GST at the time of sale? If a client puts an item on Laybuy at 12.5% GST do you have the ability to adjust the price if the sale is completed after GST increases?
  • Forward contracts: If you have ongoing or annual contracts are these priced inclusive or exclusive of GST? If they are inclusive, can the GST rate be adjusted?
  • Quotes: Have you provided any quotes that may be accepted after the GST increase?
  • Work in progress: Will you have any Work-in-progress ("WIP") that is priced inclusive of GST? Is this WIP contracted to be delivered after the GST increase and can you adjust for the increase in the GST rate? Will your customers want any progress payments billed before the GST rate increases?
  • Recurring batches: If you have any recurring batches in emPOWER, i.e. Rent payments, are they priced inclusive or exclusive of GST? If they are inclusive, are you going to adjust the pricing on them after the GST rate increase?
  • Open Invoices: Do you have any open invoices in emPOWER that are priced inclusive of GST? Do these need to be reviewed prior to the GST increase coming into effect?

Closer to the date of increase we will be providing a guide to changing GST within emPOWER and this will help you work through making the necessary changes. In the interim, it is worthwhile thinking about the above points and any wider effects the increase in GST will have on your business.