Simplified GST for Small Food Retailers

For those in the food retail industry, GST-free sales and purchases can often be difficult to ascertain; what is purchased as GST-free may not necessarily be sold as GST-free as ingredients get converted into different saleable goods.

Luckily, the ATO has come to the rescue with the creation of Simplified Accounting Methods (SAMs) especially designed for small food retailers.  In all there are 5 different SAMs, each optimised for different kinds of food retails. The most common 3 will be discussed.

Business Norms

This method is suitable for certain small food retailers such as cake shops, fish retails and bakeries and uses pre-determined percentages which are applied to total purchases and total sales to estimate the GST-free portion.

Stock Purchases Method

A method for resellers only (not converters) where your GST-free sales are estimated based on the percentage of GST-free purchases which can be accurately calculated from supplier invoices. This works on the assumption that all goods that are purchases GST-free and sold GST-free.  This calculation can be done for every BAS or a “snapshot” can be taken during a certain period of the year and used for multiple BAS periods.

The Snapshot Method

This method differs from the Stock Purchases method in the way that it is suitable for converters as well as resellers, as GST-free sales are calculated independently of purchases. Again the portion of GST-free sales and purchases can be calculated for every BAS or a snapshot can be taken and used for multiple BAS.

All the SAMs work on the assumption that your business does not operate using adequate Point of Sale (POS) for ascertaining the actual percentage of GST-free sales.

If you think a SAM would be beneficial for your business please contact us and we will determine which SAM is applicable for your food retail business and lodge an application to the ATO on your behalf.