The GST and ALIA - Arthur Andersen report

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Operating statement for year ended 30 June 1998		Operating statement for year ended 30 June 1998
Before GST		After GST		GST
Contributions to regional library service	5 389 869	Contributions to regional library service	5 389 869	538 987
Library fees	179 448	Library fees (2)	179 448	17 945
Interest	86 238	Interest	86 238	nil
Other	236 946	Other	236 946	23 695
Total	5 892 501	Total	5 892 501	*580 626*
Operating expenditure		Operating expenditure
Employee costs	3 339 285	Employee costs (1)	3 339 285	nil
Headquarter building costs	161 025	Headquarter building costs (3)	161 025	16 103
Depreciation	1 131 045	Depreciation	1 131 045	nil
Administration costs	597 881	Administration costs	597 881	59 788
Other	801 224	Other	801 224	80 122
Total	6 030 460	Total	6 030 460	156 013
Increase/(decrease) in net assets resulting from operations before abnormal items	-137 991	Increase/(decrease) in net assets resulting from operations before abnormal items	-137 991
Abnormal items		Abnormal items
Increase/(decrease) in net assets resulting from operations	-137 991	Increase/(decrease) in net assets resulting from operations	-137 991

Notes

We understand that the vast majority of these costs is comprised of salaries and wages expenditure. The provision of these services does not consitute a 'taxable activity'. Hence no GST liability arises to AB Corporation.
Library fees: we have assumed that these fees are not generated for either government or education services and therefore give rise to a GST liability.
It is difficult to quantify the amount of embedded Wholesale Sales Tax (WST) in the above expenses. We have assumed that the price of goods and services provided to AB Corporation is set irrespective of the WST component embedded. Hence there will be no short-term reduction in prices to AB Corporation.
We have used the 1997/98 financial data as this is the latest information we have available.

GST on a library corporation - SUMMARY
Revenue for 1997/98	5 389 869
GST liability	580 626
Less GST credits for business inputs	156 013
Net GST to be remitted to ATO by the library	426 613
Plus increase in operating expenses	156 013
Less amount claimed by local council as input credit	538 987
Net effect of GST	41 639