Eligibility for SAMs

Use this table to determine eligibility for the simplified accounting methods (SAM).

Table 1: Eligibility for simplified accounting method (SAM)

SAM	Nature of business	Point-of-sale equipment	Same premises	Turnover threshold
Business norms	Reseller and/or converter	Inadequate	Required	SAM turnover of $2 m or less
Stock purchases	Reseller only	Inadequate	Required	SAM turnover of $2 m or less
Snapshot	Reseller or converter	Inadequate	Required	SAM turnover of $2 m or less
Sales percentage	Reseller, or converter whose conversions are 5% or less of total sales	Adequate	na	GST turnover of $2 m or less
Purchases snapshot	Reseller or converter	na	na	GST turnover of $2 m or less

Nature of your business

To determine if you're eligible to use a SAM, you need to work out if you're a converter or a reseller.

Reseller

A 'reseller' is a business that buys GST-free goods that remain GST-free when they are resold. In other words, resellers sell GST-free products in an unchanged form. They don't convert them into taxable products. For example, a green grocer selling fruit and vegetables is a reseller.

Converter

A 'converter' is a business who purchases GST-free goods and converts them into taxable goods. For example, a food retailer who buys GST-free ingredients (bread, fruit, vegetable and meat) and converts them into taxable food and drinks (hot meals and drinks) is a converter.

If you are both a reseller and a converter, you are treated as a converter. For example, a snack bar that sells taxable hot food and GST-free drinks such as bottled water and juice is treated as a converter.

Point-of-sale equipment

Your point-of-sale equipment will be regarded as adequate if it can both:

• identify and record each separate sale as either GST-free or taxable
• identify and record separately the amount of your GST-free and total sales for a specified period.

Adequate point-of-sale equipment will generally include:

• electronic scanning systems
• touch screen registers
• product-specific cash registers.

This kind of equipment can retain and apply information on products, including whether they are taxable or GST-free.

Your point-of-sale equipment will be inadequate if it cannot separately identify and record your GST-free and total taxable sales for a specified period or is even less sophisticated.

For example, a cash register that has a GST-free or taxable key and relies on the operator to work out the GST status of each of the goods they sell is not adequate point-of-sale equipment.

Same premises

A SAM may specify that you must make both GST-free and taxable food sales from the same premises.

Turnover threshold

Your eligibility to use a SAM depends on you having a:

• SAM turnover of $2 million or less for the business norms, stock purchases and snapshot methods
• GST turnover of $2 million or less for the sales percentage method and purchases snapshot method.

If you meet the turnover threshold requirements when you choose your SAM, you can continue using it for the remaining tax periods in the first 12 months after you make your choice. However, you will not be eligible to use a SAM in tax periods that start after the first 12 months.

SAM turnover

To work out if you're below the SAM turnover:

• You apply the threshold test only to your trading sales, which means you include sales of trading stock and any other trading income but you ignore any sales of capital assets or other supplies you might make solely in ceasing or scaling down your business. Trading income includes things like receipts from services. Capital assets include things like land and buildings or plant and equipment.
• The threshold amount is GST-exclusive – this means you don't include the GST in your trading sales when you work out whether they are lower than the threshold.
• You may apply the threshold test to either  
  • your trading sales for the last financial year
  • your projected trading sales for the current financial year. If you started your business during the financial year, you can apply the threshold to your projected trading sales for the financial year as if it were a 12-month period.

GST turnover

Your GST turnover is your gross business income (not your profit), excluding any:

• GST included in sales
• sales not connected with an enterprise you carry on
• input-taxed sales
• sales not connected with Australia.

Your GST turnover is over the threshold if either:

• your turnover for the current month and the previous 11 months is more than $2 million (current GST turnover)
• your turnover for the current month and the next 11 months is likely to be more than $2 million (projected GST turnover).

In working out your projected GST turnover, you do not include amounts received for the sale of a business asset or any sale made, or likely to be made, solely as a consequence of ceasing or substantially and permanently reducing the size of the business.

Find out about:

• Notifying us
• Completing your activity statement