Issue
The default Accountancy Fee expense category in Class is set to 'Non-Creditable Acquisition', which means GST cannot be claimed on this expense type.
What should I do if I would like to claim GST on Accountancy Fees for an entity registered for GST?
To see if someone in your business has previously overridden the community default check the Scope. If it says Community, this is the Class default, if it says Business, this means something has been changed for this income/expense type.
Cause
Based on our interpretation of the ATO published GSTR 2004/1, accountancy fees should not be eligible to claim GST, however, fund administration fees can be used to claim a 'reduced credit acquisition' for GST.
Resolution
Option 1 - Use existing expense types
Use Class' two existing community-level expense categories Accountancy Fees and Fund Administration Fees and split invoices between these categories to calculate the correct GST to claim.
From an excerpt of the ATO ruling GSTR 2004/1, if the Accountancy Fees are in relation to the below activities, perhaps they are more appropriately classified as Fund Administration Fees expenses within Class.
Item 24: The following administrative functions are in relation to investment funds, including those
functions for superannuation schemes:
(a) maintaining member and employer and trustee records and associated accounting;
(b) processing of applications, contributions, benefits and distributions;
(c) processing transfer between funds and trusts;
(d) production and distribution of reports, statements and forms to members, employers and trustees;
(e) handling of inquiries and complaints made by members;
(f) archives storage, retrieval and destruction services;
(g) statement processing and bulk mailing;
(h) compliance with industry regulatory requirements, excluding taxation and auditing services
Option 2 - Override the GST Category for existing expense types
At the Business level, you are able to override the default community level classification type for income and expense accounts or create new ones. If you chose to do this you can find instructions on how to do this in the Help article here.
Caution should be taken when overriding business level default Income and Expense accounts as this will impact all entities in the Class business.