Despite its best efforts to educate the general public, the ATO continues to receive business activity statements (BAS) containing many GST related errors. Find out more about the most common GST mistakes and how you can avoid them.
The majority of errors relate to the over-claiming of GST input tax credits but could be the result of a lack of knowledge or misinterpretation of GST legislation.
If you’re a bookkeeper or business owner lodging monthly or quarterly BAS’s, make sure you’re not making any of the common GST mistakes identified below. The ATO has shifted its GST focus from an education to compliance phase and are imposing fines and penalties on those failing to comply.
Incorrect tax codes in the chart of accounts
To ensure your tax codes are correct, have your accountant set up your online accounting software. If you’ve already set up the software program yourself, speak to your accountant and have them review the tax codes.
Using the incorrect accounting method
Cash vs. Accrual – do you know the difference? If not, there’s a chance you may be preparing your BAS using the wrong accounting basis resulting in incorrect figures being reported. If you need help, speak with your accountant or tax agent.
Claiming GST against all expenses
Not every expense has a GST component. The following expenses should have the GST-free code applied to them:
– ASIC fees
– Bank charges
– Google Adwords
– Interest fees
– Motor Vehicle Registration
– Paypal transaction fees
Business and Private Usage
In order to determine the business usage percentage, you should be keeping a logbook. If you deem your business percentage for your mobile phone to be $100 including GST, then you are eligible to claim $50 including $4.54 GST.
Failure to comply with the GST rules may result in substantial penalties upon an audit by the ATO. If you require guidance or would like the expert advice of a qualified accountant to look after your BAS to avoid these common GST mistakes and ensure that your BAS is lodged correctly, contact the accountants at The Quinn Group. We have years of experience with bookkeeping, dealing with the ATO and lodging BAS’s. Contact us on 02 9223 9166 or make an online enquiry to discuss your individual situation.