Goods and Services Tax: Simplified Accounting Method Determination (No. 38) 2016 for Restaurants, Cafes and Caterers – purchases snapshot method

The instrument introduces and operationalises a purchases snapshot SAM for restaurants, cafés and caterers. The core concepts are defined by their function in the method rather than by free-standing definitions in the instrument. Clause 8 imports meanings from the GST Act for expressions used in the determination, so terms such as trading stock, tax period, registered for GST and small enterprise turnover threshold are to be read as the GST Act defines them (cl 8).

Simplified accounting method (SAM): An optional, formulaic technique that replaces transaction-by-transaction input tax credit calculation for trading stock purchases, using sample-based percentages to estimate GST-free proportions for whole tax periods (cl 4 and cl 5).

Sample period and sampling windows: Each financial year, an entity selects two continuous four-week sample periods, one within 1 June to 31 July and the other within 1 December to 31 January. The samples must be continuous four-week blocks and are used to record both amounts and GST status of trading stock purchases (cl 5(1)(a)). For an entity that begins using the SAM outside those windows, the first sample may alternatively be a continuous four-week period in the tax period in which the entity starts using the SAM, or the most recently elapsed June-July or December-January window (cl 5(1)(b)). If the entity starts trading part way through the financial year, the first sample must be in the first two months of trading (cl 5(1)(c)).

GST-free percentage: For each sample period, the entity determines the monetary amount of trading stock purchases that relate to GST-free acquisitions and divides that by the total trading stock acquisitions in the sample, producing a percentage representing the share of GST-free trading stock purchases for that sample period (cl 5(3)(a)-(b)).

Cash-basis versus non-cash-basis accounting: The determination specifies alternative rules for calculating the amount of trading stock acquired in both sample and tax periods depending on whether the entity accounts on a cash basis. If the entity uses cash-basis accounting, the relevant amount is the total consideration provided during the relevant period (cl 5(2)(a) and 5(4)(a)(i)). If not on a cash basis, the amount is the total price of trading stock for which either consideration was first provided or an invoice was issued during the relevant period, whichever event occurs earlier (cl 5(2)(b) and 5(4)(a)(ii)). The same timing rule applies separately to sample periods and to tax periods.

Application of the sample percentages across tax periods: The two distinct sample percentages are applied to separate halves of the financial year for tax‑period calculations. The June-July sample percentage is used for tax periods in July to December, and the December-January sample percentage is used for tax periods in January to June (cl 5(4)(b)(i)-(ii)). For entities with an annual tax period equal to the financial year, the determination requires summing the July-December and January-June calculations as specified (cl 5(4)(b)(iii)).

Calculation of input tax credits: Once the GST-free amount for a tax period is calculated by applying the appropriate sample percentage to the period’s trading stock purchases, the taxable amount is the total trading stock purchases minus the GST-free amount (cl 5(4)(c)). The input tax credit entitlement for the trading stock acquisitions in that tax period is then computed by multiplying that taxable amount by 1/11th, consistent with the GST Act’s mechanics for deriving GST from GST-inclusive amounts, and the entity’s net amount for the tax period is otherwise determined under Division 17 of the GST Act (cl 5(4)(d)).

Recording and evidentiary rules: While the SAM requires the entity to record the amounts and GST status of trading stock purchases in the sample periods (cl 5(1)(a)), clause 7 specifies that the entity does not need to hold a tax invoice for an acquisition to include it in the SAM calculation while using the method. The determination otherwise delegates definitions and broader GST rules to the GST Act (cl 8).

Adjustment rule for later claims: If a creditable acquisition included in the SAM is then claimed as an input tax credit in a later return where the entity is not using the SAM, the entity’s net amount for the earlier tax period is required to be increased by the amount of that later credit (cl 6). This creates an explicit interaction between SAM calculations and later standalone input tax credit claims.

The instrument applies only to entities that meet the eligibility conditions set out in clause 4. Eligibility requires that the entity: be registered for GST throughout the tax period; have operated a restaurant, café or catering business during the tax period; and have GST turnover that does not exceed the small enterprise turnover threshold (cl 4). The determination therefore targets entities that combine the business characterisation of operating a restaurant, café or catering business with small enterprise turnover status, as defined in the GST Act (cl 4 and cl 8).

Choice and agency: Use of this SAM is elective. Clause 4 uses the modal verb may, so an eligible entity may choose to use the SAM for working out input tax credits on trading stock acquisitions for a tax period (cl 4). The decision therefore sits with the entity; the text does not mandate use nor prescribe an automatic application.

Accounting method coverage: The SAM is explicitly designed to operate with entities whether they account on a cash basis or not. The calculation rules differ depending on the entity’s accounting basis, because the timing of when an acquisition is taken into account differs between cash and non‑cash accounting (cl 5(2) and 5(4)(a)). Consequently, the instrument affects both entities that use cash accounting and those that use accrual accounting or another non-cash basis.

New and existing businesses: The determination contains transitional sampling rules for entities that begin using the SAM outside the standard June-July or December-January sample windows, and specific rules for entities that start trading part way through the financial year (cl 5(1)(b)-(c)). Therefore, both established businesses switching to the method and newly started businesses are within scope, subject to the sampling rules.

Recordkeepers and tax administrators: Practically, the entities that choose the method must collect and retain records of sample period purchases, calculate percentages, apply them to each tax period and make any necessary adjustments under cl 6. Although clause 7 removes the need to hold a tax invoice to include an acquisition in the SAM calculation, the instrument nonetheless requires recording the amounts and GST status of purchases in the sample periods (cl 5(1)(a) and cl 7). The ATO, as the statutory administrator empowered by the GST Act and the maker of the determination, is the decision-maker that issues the determination and will be the authority to which the entity’s returns and adjustments are submitted, but the instrument itself does not lay out administrative enforcement mechanisms beyond the calculation and return adjustments embedded in the GST Act (introductory text; cl 8).

Who does not qualify: Entities that are not registered for GST throughout the tax period, that do not operate a restaurant, café or catering business during the tax period, or whose GST turnover exceeds the small enterprise turnover threshold are outside the instrument’s applicability (cl 4). The determination does not extend to input tax credits for non-trading-stock acquisitions, so acquisitions outside the trading stock definition in the GST Act are not covered by this SAM as framed (cl 4 and cl 8).

Rights conferred

• Optional use: An eligible entity may elect to use this prescribed SAM for working out input tax credits for trading stock acquisitions for a tax period (cl 4). The instrument therefore grants a procedural right to adopt the method in place of standard transactional input tax credit calculations.
• Tax invoice exception while using the method: While using the SAM, the entity does not need to hold a tax invoice for an acquisition to include it in the SAM calculation for its trading stock purchases (cl 7). This is a limited relaxation of the usual tax invoice requirement insofar as the SAM calculation is concerned.

Duties imposed on entities that opt in

• Eligibility verification: The entity must ensure it qualifies under clause 4 for each tax period for which it elects to use the SAM, namely registration for GST throughout the tax period, operation of a restaurant, café or catering business during the tax period, and GST turnover not exceeding the small enterprise turnover threshold (cl 4).
• Sampling obligations: For each financial year, the entity must select a continuous four-week sample period during 1 June to 31 July and another continuous four-week sample period during 1 December to 31 January, and record the amounts and GST status of the entity’s trading stock purchases for each sample period (cl 5(1)(a)). The entity must follow the alternative provisions for first-time users or businesses starting part way through the financial year (cl 5(1)(b)-(c)).
• Measurement of trading stock purchases: The entity must measure trading stock purchases in sample periods and tax periods using the method appropriate to its accounting basis. If the entity accounts on a cash basis, it must record the total consideration provided during the relevant period (cl 5(2)(a) and 5(4)(a)(i)). If not on a cash basis, it must record the total price of trading stock for which the earlier of consideration being provided or an invoice issuance occurred during the relevant period (cl 5(2)(b) and 5(4)(a)(ii)).
• Calculation of GST-free percentage and application: The entity must determine the GST-free share of trading stock purchases for each sample period by dividing the GST-free amount by the total trading stock purchases in the sample (cl 5(3)(a)-(b)). The entity must then apply the June-July sample percentage to tax periods in July to December and the December-January sample percentage to tax periods in January to June, or aggregate appropriately if the tax period is a financial year (cl 5(4)(b)(i)-(iii)).
• Computation of input tax credits and net amounts: For each tax period, the entity must subtract the calculated GST-free amount from total trading stock purchases to obtain the taxable portion (cl 5(4)(c)), then multiply the taxable portion by 1/11th to establish the input tax credit entitlement for trading stock purchases in that tax period (cl 5(4)(d)). The entity’s net amount for the tax period is otherwise worked out in accordance with Division 17 of the GST Act (cl 5(4)(d)).
• Adjustment duty: If an acquisition included as a creditable acquisition under the SAM for an earlier tax period is subsequently claimed as an input tax credit in a later tax period in which the entity is not using the SAM, the entity must increase its net amount for that earlier tax period by the amount of the later credit (cl 6).

Recordkeeping expectations

• Sample records: The entity must record amounts and GST status for trading stock purchases within the sample periods (cl 5(1)(a)). Clause 7 removes the need to possess a tax invoice for inclusion in the SAM calculation, but clause 8 imports the GST Act definitions and by implication the wider recordkeeping obligations for GST administrative purposes (cl 7; cl 8). The instrument itself does not specify retention periods, but the obligation to calculate and, where required, adjust net amounts means records must be sufficient to support the calculations and any necessary adjustments (cl 5 and cl 6).

Delegation and decision rights

• Adoption and cessation: The entity determines whether to adopt the SAM; the instrument does not lay out procedural filings to notify the Commissioner or conditions for ceasing use, beyond the mechanical rules for calculation and adjustment (cl 4). The Commissioner’s broader powers and administrative procedures are governed by the GST Act, which the determination incorporates by reference (cl 8).

The determination sets out calculation rules and obligations for entities that elect to use the method, but it does not itself create a standalone penalty scheme or enforcement provisions. The instrument is made under subsection 123-5(1) of the GST Act and repeatedly links the outcome of its calculations to Division 17 of the GST Act for net amount computation (introductory text; cl 5(4)(d); cl 8). Therefore, enforcement, penalties and administrative remedies arising from incorrect returns, under‑ or over‑claimed credits, or failure to comply with broader GST obligations are matters governed by the GST Act and its enforcement framework, rather than by the determination itself.

Adjustment and correction mechanics

• Interaction with returns: The SAM produces an input tax credit figure that feeds into the entity’s net amount for the tax period. Clause 5(4)(d) specifies that the net amount is otherwise worked out in accordance with Division 17 of the GST Act, which contains the statutory provisions for GST liabilities, credits and adjustments. Accordingly, any reconciliation, assessment or amendment of returns will follow the procedures and potential penalties that Division 17 and other relevant provisions of the GST Act provide (cl 5(4)(d); cl 8).
• Required increases to prior net amounts: Clause 6 imposes a specific adjustment duty where a creditable acquisition already included in a prior tax period under the SAM is later the subject of an input tax credit claim in a subsequent tax period where the SAM is not used. In that circumstance, the entity must increase the earlier tax period’s net amount by the amount of that later credit (cl 6). This clause creates a direct adjustment obligation that can affect tax liability calculations for earlier periods.

Absence of new enforcement powers or penalties in the instrument

• No independent penalty regime: The instrument does not create new penalty offences, civil penalties or criminal sanctions within its text. It does not prescribe monetary penalties or enforcement steps specific to failure to comply with the sampling or calculation rules. Any repercussions arising from non-compliance will therefore be pursued under the GST Act and the Commissioner’s existing administrative powers, including assessments and amendment procedures in Division 17 and related enforcement provisions (cl 5(4)(d); cl 8).

Practical enforcement implications

• Reliance on ATO administrative practice: Because the determination prescribes a method that links into the GST Act’s return and adjustment framework, enforcement will rely on the Commissioner’s assessment powers, audit and review processes under the GST Act. The determination itself does not describe audit triggers or penalty amounts. Entities using the method should therefore assume that failure to perform the sampling, to calculate percentages correctly, or to make required adjustments under cl 6 may lead to assessment, amendment and penalty consequences under the GST Act rather than under the determination itself (cl 5 and cl 6).

The determination operates explicitly within the statutory architecture of the GST Act. Clause 8 states that expressions used in the determination have the same meaning as in the GST Act, thereby integrating the determination with the Act’s definitions and broader rules (cl 8). Several specific interactions are identifiable from the instrument’s text.

Interaction with the GST Act’s definitions and thresholds

• Definitions and thresholds: Terms such as trading stock, tax period, registered for GST and the small enterprise turnover threshold are to be understood as defined in the GST Act. The determination therefore relies on the Act for key eligibility criteria and conceptual boundaries (cl 4; cl 8). Eligibility under clause 4 requires compliance with the GST Act’s registration and turnover definitions for the relevant tax periods.

Interaction with Division 17 and net amount rules

• Net amount and Division 17: Clause 5(4)(d) directs that, after determining the input tax credit entitlement for trading stock acquisitions using the SAM, the entity’s net amount for the tax period is otherwise worked out in accordance with Division 17 of the GST Act. This explicitly ties the SAM’s outputs into the statutory regime that governs GST reporting, payment, and adjustments. The practical effect is that the SAM supplies a component,input tax credits for trading stock,to the Division 17 calculation framework (cl 5(4)(d); cl 8).

Tax invoice rules and evidentiary requirements

• Tax invoice exception and the GST Act: Clause 7 provides that an entity does not need to hold a tax invoice for an acquisition for it to be included in the SAM calculation while using the method (cl 7). The GST Act contains general tax invoice requirements that determine when a supplier must issue a tax invoice and when a recipient may rely on a tax invoice to claim an input tax credit. Clause 7 creates a limited exception for the SAM calculation, but clause 8’s incorporation of the GST Act means the broader statutory regime for tax invoices and other evidentiary standards remains applicable for purposes outside the SAM calculation (cl 7; cl 8).

Repeal and transitional interaction

• Repeal of prior determination: Clause 3 repeals the previous Simplified Accounting Method Determination (No. 1) 2006 on commencement. Entities transitioning from the prior determination to this instrument must apply the new sampling windows, definitions and calculation rules as set out here. The instrument does not provide transitional relief beyond the alternative first-sample rules in cl 5(1)(b)-(c), so interaction with existing records and prior treatment will be governed by the GST Act’s general provisions and by the practical arrangements for switching methods in the Commissioner’s administrative practice (cl 3; cl 5(1)(b)-(c)).

Adjustment interactions

• Later claims and adjustments under the GST Act: Clause 6 requires that if a creditable acquisition included in a previous tax period under the SAM is later claimed as an input tax credit in a subsequent period where the SAM is not being used, the earlier net amount must be increased. This is a direct cross-period interaction between the SAM and standard input tax credit claims, and again the mechanics for amending returns or adjusting liability will be those in the GST Act, especially Division 17 (cl 6; cl 5(4)(d); cl 8).

No express interactions with non-GST laws

• The determination addresses only GST mechanics and does not refer to income tax law, payroll tax, food safety or licensing statutes, or commercial laws. Any interaction with other regimes,for example recordkeeping obligations under other taxation laws or business regulation,will arise from those regimes directly, not from provisions in this determination. The only explicit statutory integration the instrument creates is with the GST Act by reference (cl 8).

The instrument itself provides a concise amendment and commencement history within its opening clauses. Key points are:

• Making and date: The determination is made by the Acting Deputy Commissioner of Taxation, Deborah Jenkins, and is dated 13 September 2016, as shown in the instrument header (introductory text).
• Commencement: The determination commences the day after registration (cl 1). The instrument therefore takes effect immediately after the registration event specified in the statutory registration procedures for legislative instruments.
• Repeal of prior determination: Clause 3 expressly repeals the A New Tax System (Goods and Services Tax) Act 1999 Simplified Accounting Method Determination (No. 1) 2006, F200L02632, which was registered on 9 August 2006, on commencement of this determination. The instrument therefore replaces the earlier SAM Determination for restaurants, cafés and caterers with the version contained in this instrument (cl 3).
• No other amendments recorded in the instrument: The instrument does not record subsequent amendments, revocations, renewals or schedules beyond the repeal of the 2006 determination. The text does not include savings, transitional or grandfathering provisions beyond the alternative first-sample rules for entities starting to use the SAM (cl 5(1)(b)-(c)). Any later amendments to this instrument would be recorded by registration of a subsequent legislative instrument.

Implication for users

• Entities previously using the 2006 determination would be subject to the new rules from the day after registration, unless administrative guidance from the Commissioner provides transitional arrangements. The determination itself provides alternative first-sample choices for entities beginning to use the SAM where their start date does not fall within the prescribed June-July or December-January windows (cl 5(1)(b)-(c)). Apart from that, the instrument contains no staged implementation timeline or explicit transitional relief beyond its sample-period options and the repeal clause (cl 3; cl 5(1)(b)-(c)).

Record of origin

• The instrument identifies its official title as the Goods and Services Tax: Simplified Accounting Method Determination (No. 38) 2016 for Restaurants, Cafés and Caterers - purchases snapshot method (opening paragraph and cl 1). That title should be used to trace the instrument in legislative registers and to identify the specific method being prescribed.

The determination itself contains no references to judicial decisions, litigation matters, or determinations of law by courts. It names no cases and records no dispute history. The instrument is an administrative determination by the Deputy Commissioner under subsection 123-5(1) of the GST Act and is intended to provide a prescribed method for calculating input tax credits for a defined class of entities. Any litigation that might arise from the application, interpretation or enforcement of the determination would proceed under the GST Act and related administrative review pathways, but the instrument contains no recorded litigation history or judicial interpretation to guide reading of its clauses.

Practical implications of the absence of litigation history

• The absence of prior judicial interpretations in the text means that the statutory language and the method’s procedures are the primary authorities for application. Interpretive disputes about concepts such as what constitutes a restaurant, café or catering business, the treatment of borderline acquisitions, the adequacy of sample documentation, or the interplay with later input tax credit claims under cl 6 would be resolved under the GST Act and, if litigated, through the courts, but the instrument provides no case law or precedent to clarify ambiguities.
• Entities and advisers should therefore rely on the instrument’s text, associated GST Act provisions, and any administrative guidance issued by the Commissioner when applying the SAM. The determination itself does not record prior controversies or judicial commentary.

This instrument contains several features that can produce practical pitfalls for entities that choose the method. The following items should be noted carefully, each grounded in specific clauses of the determination.

Timing and sample-window strictness

• Prescribed sampling windows: The determination requires two continuous four-week sample periods each financial year, one in 1 June to 31 July and one in 1 December to 31 January (cl 5(1)(a)). Misplacing the sample outside those windows, or using discontinuous weeks, would fail to comply with the sampling rule. Entities must ensure their selected samples are continuous four-week blocks within the prescribed windows.
• First-sample contingencies for new adopters: For entities that begin using the SAM outside the standard windows, the first sample can be either a continuous four-week period in the tax period in which the entity starts using the SAM or a continuous four-week period during the most recently elapsed June-July or December-January window (cl 5(1)(b)). The alternative is available only for the first sample on adoption, so failure to apply the correct alternative could produce calculation errors.

New businesses and initial-sample rule

• First two months requirement: If the entity starts trading part way through a financial year, the first sample period must be in the first two months of trading (cl 5(1)(c)). The instrument defines “first two months of trading” in a note as the first two months in which the entity started selling food to its customers. Entities that delay sampling beyond this window may not meet the determination’s requirements.

Cash versus non-cash basis differences

• Timing of inclusion differs: The amount of trading stock purchases that counts towards both samples and tax periods depends on whether the entity accounts on a cash basis or not (cl 5(2) and cl 5(4)(a)). For cash-basis entities the relevant amount is the total consideration provided during the period, whereas for non-cash-basis entities the relevant amount is the total price of goods for which either the provision of consideration or the issue of an invoice occurred during the period. Mistaking which rule applies will shift the monetary amounts used to calculate percentages and credits.

Monetary-share methodology

• Percentage is monetary, not volumetric: The GST-free percentage is derived by dividing the monetary amount of GST-free purchases by the total monetary amount of trading stock purchases in the sample (cl 5(3)(a)-(b)). If an entity attempts to use quantity or physical units instead of monetary value, the calculation will not conform to the determination.

Application across halves of the financial year

• Use of two separate sample percentages: The June-July sample percentage applies to tax periods in July to December, while the December-January sample percentage applies to tax periods in January to June (cl 5(4)(b)(i)-(ii)). This split means that seasonal changes in menu mix or procurement outside the sampled windows can produce mismatches between the sample-based estimate and actual GST-free proportions in non-sampled periods.
• Annual tax-period aggregation: If the entity’s tax period is a full financial year, the determination requires adding the two half-year calculations together, each using its respective sample percentage (cl 5(4)(b)(iii)). Entities with annual tax periods must ensure they follow the prescribed aggregation rather than a single averaged annual percentage.

Tax invoice relief is narrow

• No tax invoice needed for inclusion in SAM: Clause 7 states that an entity does not need to hold a tax invoice for an acquisition to be included in the SAM calculation while using the method. This is limited to inclusion in the SAM and does not necessarily relieve the entity of other statutory recordkeeping obligations under the GST Act that the instrument imports by reference (cl 7; cl 8). Reliance on cl 7 without understanding the broader GST Act obligations may leave gaps in evidence for other GST or tax purposes.

Adjustments for later credit claims

• Mandatory increase to earlier net amount: Clause 6 requires an increase to an earlier net amount where a creditable acquisition included under the SAM is later claimed as an input tax credit in a subsequent period in which the SAM is not used (cl 6). Entities that later seek to claim itemised input tax credits for acquisitions already folded into a SAM calculation must ensure they make the required prior-period increase, otherwise reconciliation with returns may be incorrect.

Sample documentation and audit risk

• Record sufficiency: Although the instrument removes the tax-invoice requirement for inclusion in the SAM calculation, the method depends on recorded amounts and GST status for sample periods (cl 5(1)(a) and cl 7). Entities must ensure that their sample records are robust, contemporaneous and sufficient to justify the calculated percentages and subsequent tax-period applications, because the determination links into Division 17 reporting and return rules (cl 5(4)(d); cl 8).

Potential for seasonal mismatch

• Snapshot limitations: The SAM uses two short four-week samples to estimate GST-free proportions for half-year blocks. Where the business experiences significant seasonal variation in the proportion of GST-free trading stock across the year, the two samples may not capture that variation adequately. The instrument itself does not provide corrective mechanisms for mid-period shifts aside from the twice-yearly sampling, so entities experiencing rapid menu or supplier changes must consider the sampling timing and the representativeness of their chosen samples (cl 5(1)(a) and cl 5(4)(b)).

Choice and cessation uncertainty

• No detailed procedural rules for electing or ceasing: The determination provides that the entity may choose to use the SAM, but it does not set out a formal election process, notice requirements to the Commissioner, or prescribed steps for ceasing use. Practical questions about recordkeeping at the point of change and the treatment of purchases spanning the switch will be governed by the GST Act and administrative practice rather than by specific clauses in the determination (cl 4; cl 8).

Compliance with this determination requires adherence to the eligibility criteria, careful selection and documentation of the prescribed sample periods, precise measurement of trading stock purchases according to the entity’s accounting basis, and accurate application of the sample percentages to each tax period’s trading stock purchases. The following is a step-by-step checklist mapped to the clauses of the instrument.

1. Confirm eligibility (cl 4)

   • Verify that the entity is registered for GST for the full tax period in which it plans to use the SAM.
   • Confirm the business operates as a restaurant, café or catering business during the tax period.
   • Confirm GST turnover does not exceed the small enterprise turnover threshold as defined in the GST Act.
   • Record the decision to use the SAM and the tax periods for which it will be applied.

2. Select and document sample periods (cl 5(1)(a)-(c))

   • For each financial year, choose a continuous four-week sample period in 1 June to 31 July, and another continuous four-week sample period in 1 December to 31 January.
   • If the entity is adopting the SAM outside those windows for the first sample, select either a continuous four-week period in the tax period in which the entity starts using the SAM, or the most recently elapsed June-July or December-January window, as applicable (cl 5(1)(b)).
   • If the entity starts trading part way through the financial year, ensure the first sample is within the first two months of trading (cl 5(1)(c)).
   • Record the start and end dates of each sample, and retain contemporaneous documentation that the samples are continuous four-week periods.

3. Record amounts and GST status in sample periods (cl 5(1)(a) and cl 5(3)(a))

   • During each sample period, record the monetary amounts of trading stock purchases and identify which purchases are GST-free and which are taxable for GST purposes.
   • Remember the GST-free percentage is calculated monetarily: divide the total monetary amount of GST-free trading stock purchases in the sample by the total monetary amount of trading stock purchases in the sample (cl 5(3)(a)-(b)).

4. Measure trading stock purchases consistently with accounting basis (cl 5(2) and cl 5(4)(a))

   • If the entity accounts on a cash basis, measure the amount of trading stock purchases in the sample and in each tax period as the total consideration the entity provides during the relevant period (cl 5(2)(a) and 5(4)(a)(i)).
   • If the entity does not account on a cash basis, measure the amount as the total price of trading stock for which either the provision of consideration or the issue of an invoice occurs during the relevant period, the earlier of those events (cl 5(2)(b) and 5(4)(a)(ii)).
   • Apply the same accounting-basis rule consistently across sample and tax-period calculations.

5. Calculate GST-free percentages for each sample (cl 5(3)(a)-(b))

   • For each sample period determine the GST-free purchases monetary amount and divide by total trading stock purchases monetary amount to produce the GST-free percentage for that sample.
   • Retain calculations and supporting documents for audit purposes.

6. Apply sample percentages to tax periods (cl 5(4)(b))

   • For tax periods in July to December, multiply the June-July sample GST-free percentage by the total trading stock purchases for the tax period (cl 5(4)(b)(i)).
   • For tax periods in January to June, multiply the December-January sample GST-free percentage by the total trading stock purchases for the tax period (cl 5(4)(b)(ii)).
   • If the entity’s tax period is a full financial year, perform both half-year calculations and add the results as specified (cl 5(4)(b)(iii)).

7. Compute taxable portion and input tax credit (cl 5(4)(c)-(d))

   • For each tax period, subtract the calculated GST-free amount from the total trading stock purchases to get the taxable portion (cl 5(4)(c)).
   • Multiply the taxable portion by 1/11th to derive the input tax credit entitlement for trading stock acquisitions for that tax period (cl 5(4)(d)).
   • Integrate this figure into the entity’s net amount for the tax period, and prepare the return in accordance with Division 17 of the GST Act (cl 5(4)(d)).

8. Retain records and documentation (cl 5(1)(a); cl 7)

   • Keep records of sample period dates, amounts, GST status determinations and calculations.
   • Although a tax invoice is not required to include an acquisition in the SAM calculation while using the method (cl 7), maintain sufficient evidence to support the amounts and GST status recorded in sample periods and tax periods, because the net amount is worked out under Division 17 and other GST Act obligations may still apply (cl 5(4)(d); cl 8).

9. Monitor later claims and make required adjustments (cl 6)

   • If a creditable acquisition that was included in a previous tax period under the SAM is subsequently included as an input tax credit in a later tax period where the entity is not using the SAM, increase the earlier tax period’s net amount by the amount of that later credit (cl 6).
   • Ensure systems (or manual processes) flag acquisitions included under the SAM that might later be itemised in a non-SAM return, so that adjustments under cl 6 are accounted for.

10. Review sampling representativeness and timing

    • Given that the SAM relies on two short four-week snapshots to estimate GST-free proportions for half-year blocks, periodically assess whether the chosen samples remain representative of the business’s sourcing and menu mix. If material change occurs, consider the timing of the two prescribed sample windows and use the allowed sample-selection options on first adoption if relevant (cl 5(1)(a)-(b)).

11. Transition from prior determination (cl 3)

    • If the entity was using the 2006 determination, confirm that the repeal in cl 3 means the entity must adopt the sampling windows and calculation rules of this instrument from the date it commenced. Use the alternative first-sample rules for an initial sample if the start date is outside the prescribed windows (cl 3; cl 5(1)(b)).

12. Seek administrative guidance if needed

    • The determination does not set out administrative processes for notification, nor does it contain procedural rules for electing or ceasing use. For operational clarity on elections, transitions and record sufficiency, consider seeking guidance from the Commissioner or consult the ATO’s administrative materials that accompany the GST Act and the Commissioner’s determinations (cl 4; cl 8).

Following these steps, with documentation retained to support each calculation and election, will align an entity with the mechanical requirements of the SAM as set out in this determination.