You should have a copy of the GST Legislation Information leaflet No. 64. This is available from the Methodist Church website. To get a copy click on this link and it will take you there – GST Information Leaflet.
This Help section will explain each of the boxes and information required to be supplied when you are entering information.
To move from field to field on the screen, use the TAB key.
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Box No. |
Item on Return |
Box Number (IRD101) |
Comments |
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1. |
Parish or Organisation Name |
This will be automatically completed when you first log into the GST system. |
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Reference Number |
This will default to the Parish/Division number that has been assigned to you. |
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2. |
Return Number (not to be used at present and as discussed at the meeting on 17/3/2008) |
If your next sequence number is known enter it here or we will enter it for you when it is received by the Connexional Office. |
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Covering Period From |
2 |
Enter the first day for the period that this return starts from. In the main this date will be the first day of the month you are returning. For example, if you are making a March return, then enter 1 March 2008. If the defaults shown on the screen are correct, you do not have to change them. Simply use the TAB key to move to the next field. |
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Covering Period To |
2 |
Enter the last day for the period that this return is to. In the main this date will be the last day of the month you are returning. For example, if you are making a March return, then enter 31 March 2008. If the defaults shown the screen are correct, you do not have to change them. Simply use the TAB key to move to the next field. |
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Date you are submitting this return |
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Accept the default date unless otherwise instructed to change it. |
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3. |
TOTAL SALES AND INCOME for the period |
5 |
See 2.2 (discussed below) for a discussion on this. This must include GST and any zero rated supplies. |
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4. |
LESS zero rated supplies (if any) |
6 |
See 2.3 (see below) for discussion on this. This is not used very often and therefore you can leave blank. |
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5. |
Total of 3 less 4 |
7 |
The system will automatically calculate the difference between the value of Box 4 from the value of Box 3 and place it on in the form. It will also show the amount of GST on this value in Box 5 as “GST Payable on that Amount. |
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6. |
Plus Tax Adjustments which add to GST |
9 |
This is not used often, please contact the Connexional Office if you believe that you are required to fill this in. |
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A. |
TOTAL GST Collected on sales and Income |
10 |
The system will calculate this total for you. Check it with your own calculations. This is the amount of GST collected that we are required to return to the IRD. |
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7. |
Total Purchases and Expenses Paid |
11 |
See 2.4 (see below) for a discussion on this. This must include GST and you must hold a tax invoice as proof of the claim. Enter in the total amount of Purchases into the box. |
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GST payable on that amount |
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This will be automatically calculated from the data you entered in Box 7. It can not be adjusted. |
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8. |
Total Tax Adjustments as Deductions for GST |
13 |
Not used often, please contact the Connexional Office if you believe that you are required to fill this in. |
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B. |
Total GST Credit for Purchases and Expenses |
14 |
The system will calculate this total for you. Check it with your own calculations. This is the amount of GST we have paid on our purchases. |
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10 |
Total A less Total B |
15 |
The system will calculate this total for you. Check it with your own calculations. This will give you either the amount of GST to pay or the amount of the refund that will have to pay paid to you. If a payment is required to be made to the IRD, the word PAYMENT will be shown. If a refund to you is required the word REFUND will be shown. |
If you are happy with the results and want to send them to the Connexional Office then, click on Submit and this will send the information to the Connexional Office, ready for filing.
Total Sales and Income for the Period
GST Taxable Income – Box 5 of the GST return “Total sales and income for the Period”:
Income liable for GST is income received for/from the providing of a taxable activity/service.
Whether income is liable for GST purposes is determined by what it is for, where it came from, and in the case of a sale of asset, how the asset originated.
There are three types of Taxable Supplies relating to Income
- Income Liable for GST
- Income Not Liable for GST
- Exempt Supplies
Only Income Liable for GST should be included in your GST return. Do NOT include the other two types.
A. Examples of Income liable for GST from a church perspective include:
- Government and Local Authority Grants
- Fees received for Special Services i.e. Weddings & Funerals
- Sale of Purchased Goods and in some cases the sale of property which should be discussed with the Financial Services Manager.
- Charges for hire of buildings and facilities
- Sale of Assets (refer Properties section)
- Trading income
- Advertising
- Community Grants (always check the invoice received with the Grant, it will usually state whether GST is included or whether it is a donation and therefore not liable for GST)
B. Income Not Liable for GST – there are certain situations where income received by a church is not liable for GST due to the nature of the income being unconditional and therefore not directly related to a taxable activity.
Examples of Income not liable for GST from a church perspective include:
- Payments of Gifts
- Koha
- Donations
- Offerings
C. Exempt Supplies – are supplies of income that are expressly excluded from GST Income:
Examples of Exempt Supplies for GST from a church perspective include:
- Supplies of financial services i.e. interest, dividends
- Supplies of residential accommodation i.e. this relates to both rental received on parsonage/houses, and the sale of a parsonage/house
- Supplies made by a non-profit body of donated goods and services – i.e. any income earned on the sale of items donated,
- for example - a piece of land was donated to the Methodist church in 1949, they sold this piece of land in 2006, normally this land would incur a GST component being the sale of an asset, however due to the asset originally being donated, no GST is payable.
Zero Rated Supplies
The following supplies of goods and services are zero rated:
- Exported goods;
- Goods sold by duty-free shops
- Goods due to be exported;
- Sealed bag goods;
- Certain sales of boats or aircraft;
- Goods situated overseas
- Goods applied in respect of temporary imports
- Goods for consumption on aircraft, yachts or ships outside New Zealand;
- Certain taxable activities disposed of as going concerns; and
- Newly refined precious metal
Goods and Services Paid by Us
GST Taxable Purchases – Box 11 of the GST return “Total Purchases and expenses for the Period”:
GST can only be claimed back on expenses that are incurred due to providing a taxable activity/service. It can not be claimed on expenses relating to “Income not liable for GST” or Exempt Supplies.
For example: you cannot claim expenses relating to a residential rental property, or the legal fees relating to the sale of a parsonage.
The major activity of the church is the provision of religious services for which the greater part of the income received is not liable for GST. Therefore care must be taken when undertaking major renovations on church property. A proportion of the costs incurred on major renovations may need to be adjusted, based on the percentage of use of the building.
For example, for a Church Hall – the hall is used 3 days a week for the local toy library, which pays a taxable rental for its use. The rest of the time the Hall is used for Sunday school and youth group activities, both of which are not taxable. The parish needs to spend $100,000 on repairs to the hall, really only $42,857 of the expenditure should be claimed for GST purposes.
Reimbursing Expenses – if expenses are incurred by members/staff of the church that need to be reimbursed, as long as the expenses relate to a taxable activity, GST can be claimed on the payment of the reimbursement. Things to note are:
The reimbursement claim must include a copy of a taxable invoice (an eftpos receipt is not sufficient) if the total of the invoice exceeds $50. For items under $50.00 an eftpos receipt is fine.