Common GST Errors
25th November 2013
Wow, what a busy few months this has been!
Aside from our normal workload of maintaining the books for our awesome regular bookkeeping and BAS clients, we have been very busy setting up and training new customers on Xero accounting software. This has been a wonderful opportunity to meet and interact with many business owners in a variety of industries.
This BAS period has also been one of our busiest with a few new clients onboard. Luckily, BAS Agents are afforded an extra four weeks to lodge BAS's electronically, which gives us time to prepare and lodge for multiple clients.
When checking the work completed by clients, we come across some common GST errors and thought it worthwhile to bring it up here so that you can check your own bookkeeping processes.
Common Error No. 1
Claiming GST on purchases over $82.50 without holding a valid tax invoice
If your expense if over $82.50, you must hold a valid tax invoice in order to claim the GST credit in your BAS. Please see the following link for more information on this:
http://www.ato.gov.au/Business/Record-keeping/In-detail/A-basic-paper-record-keeping-system/Valid-tax-invoices-and-GST-credits/?default=&page=3
Common Error No. 2
Claiming 100% GST credits on insurance expenses
Insurance expenses often include components that do not include GST, such as MCIS Levies and Stamp Duty. Be sure to always check your insurance tax invoice for the correct amount of GST.
Common Error No. 3
Claiming 100% GST credits on telephone bills
There are often components on telephone bills that do not include GST, such as telephone handset repayments, overseas calls and late fees. Always check your telephone account for the correct amount of GST to claim - don't assume anything!
Common Error No. 4
Claiming GST on amounts paid to non-registered entities
Not all businesses are registered for GST; it is only compulsory to register if your annual GST turnover is $75,000 or more (or $150,000 for non-profit organisations). While all businesses must have an ABN, they will not necessarily be registered for GST. (Unfortunately many businesses who hold an ABN mistakenly assume that they are registered for GST!) If you are in doubt as to the GST status of a supplier, you can check it at the Australian Business Register - please see the following link:
http://abr.business.gov.au/
Common Error No. 5
Claiming GST on expenses with no GST in the price
I often see GST claimed on items such as car registration, bank fees and interest. If you are in doubt as to the GST status of an item, please seek help from your professional adviser such as your BAS Agent or Tax Agent.
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I hope that you have found this helpful; if you have any questions or would like more information on this topic, please give us a buzz on 0402 231750 or drop us a line at enquiries@kazron.com.au.