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Office of FINANCIAL SERVICES

Overview of payment of accounts

This topic covers:

Payment of accounts

The University operates a centralised payment system that is managed by the Accounts Payable section of the Office of Financial Services.

The Accounts Payable system is used to pay accounts for the purchase of goods and the provision of services except those services that require payment through the salaries and wages system.

The University's creditors are generally outside suppliers of goods and services but may include staff and students requiring reimbursements.

Policy

In determining whether to make a payment, Accounts Payable adheres to established policies and to statutory requirements as set out in the Public Finance and Audit Act.

Legal requirements

To comply with the provisions of Section 13, Public Finance and Audit Act, the University is required to ensure that payments are only authorised when:

  • The expenditure has been approved by a delegated officer in accordance with the University's Delegations of Financial Authority
  • Non-order payments requests and orders have been certified by the Financial Unit Administrator for:
    • Availability of funds for the nominated purpose
    • Performance of service
    • Rates of charge
    • Calculations
    • Discounts allowed
    • No double payments
    • Completeness and correctness of appropriation or postings
  • Invoices have been matched with orders and delivery documentation.

To meet these legal requirements, accounts can only be paid when:

  • A supplier's invoice is matched with an order generated by the Purchasing section
  • A correctly authorised Non-order Payment Request is received, with supporting documentation if applicable
  • A Library invoice on Library accounts is received authorised by the Library
  • The submission of non-order Library invoices on financial unit accounts.

A reconciled petty cash recoupment claim is received from a financial unit.

A New Tax System

Although the University is an accredited educational courses institution, and therefore is considered to be a provider of a GST-free supply, GST exemption does not apply. The University is required to initially pay the GST and then claim a tax refund from the Australian Tax Office, similar to any other enterprise claiming an input tax credit – the justification requirements are the same.

GST Implications - Payment Transactions

The successful recovery of GST paid in respect expenditure incurred during the conducting of University related activities will require that the following be adhered to:

  1. Tax invoices are requested
    Section 29-70(c) of the GST Legislation stipulates that a supplier must issue a "tax invoice" within 28 days of being requested (where the total GST-exclusive value of the supply exceeds $50).
  2. The University deals only with suppliers quoting an Australian Business Number (ABN).
    If a business does not have an ABN and the GST exclusive value of the supply is more than $50 the new tax system requires that the University withhold 48.5% of the total GST-exclusive costs charged, under the Pay As You Go Withholding [PAYG] legislation
  3. Original documentation is obtained.
  4. Tax invoice request (PDF) is available for a taxable supply where no tax invoice was provided.

GST Implications – Reimbursements

Section 111-5 of the GST Legislation allows the claiming of input tax credits for GST reimbursed to employees for expenses incurred during activities that directly relate to the enterprise. Such expenses are considered to be "creditable acquisitions" – BUT ONLY IF THE EMPLOYEE IS RECEIVES A TAX INVOICE. (Note: Proof of payment is required if not stated on invoice).

Tax Invoice Requirements in respect of Australian Suppliers

Supplies under $1,000:

Tax invoices for taxable supplies when the total amount payable on the invoice is less than $1,000 must include:

  • the Australian Business Number (ABN) of the entity issuing it
  • the GST-inclusive price of the taxable supply
  • the words "tax invoice" stated prominently
  • the date of issue of the tax invoice
  • the name of the supplier
  • a brief description of each item supplied, and
  • when GST payable is exactly 1/11 th of the total price, either a statement along the lines of "the total price includes GST", or the GST amount.
Supplies $1,000 and over:

Tax invoices for taxable supplies when the total amount payable on the invoice is $1,000 and above must include:

  • the ABN of the entity issuing it
  • the GST-inclusive price of the taxable supply
  • the words "tax invoice" stated prominently
  • the date of issue of the tax invoice
  • the name of the supplier
  • the name of the recipient
  • the address or the ABN of the recipient – Macquarie University ’s ABN is 90 952 801 237
  • a brief description of each item supplied
  • the quantity of the goods or the extent of services supplied, and
  • when GST payable is exactly 1/11 th of the total price, either a statement along the lines of "the total prices includes GST, or (b) the GST amount.

In some circumstances documents other than invoices are accepted as a "creditable acquisition" as long as an ABN is quoted and the document relates to the supply. GST Legislation Section 29-70 (1) refers. Such documents would include subscription renewal notices and order forms.

Cheques/Electronic Funds Transfer

For local payments, electronic funds transfer is the preferred method.

Accounts payable operates a once per week payment issue, on a Thursday.

For overseas payments, Accounts Payable makes payments by draft or telegraphic transfer through Citibank Worldlink service. Overseas payments are made as required.

Trading terms and prompt payments

The University operates under the specified trading terms of 'Nett 30 days' and payments are generally made in accordance with these terms. That is, payment of accounts is made within 30 days after the receipt of a valid invoice.

Payment is made when  all documentation has been received and authorised by the financial unit. Delays can occur when documentation is not authorised promptly.

If a supplier wishes to alter the normal University trading terms, arrangements must be agreed between the supplier and the Purchasing section prior to the requisition being processed.

Accounts Payable does not make payments outside the normal trading terms without instruction from the Purchasing section.

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