Australian Taxation Office (ATO) is still dealing with a number of BAS returns with faulty GST claims. The errors in GST returns can be prevented by educating businesses, even though ATO has highly endeavored to supply comprehensive information on GST throughout the last decade.
Frequent errors are listed below in two main categories having the first one as the general errors and the second discussing the input tax credit (ITC) mistakes:
General GST Mistakes:
A great deal of errors could be prevented if the accounting software used, like Xero, are set with the right tax and GST codes. When the GST class of accounts is not defined correctly, both input and output tax recorded would be false. To prevent this to happen, having a registered creditable BAS or tax agent setting/reviewing your charts of accounts is highly recommended.
Prevention is Definitely Better than Cure.
Self- explanatory is the incident of claiming GST without referring to the actual invoices provided by suppliers or customers.
Accounting through the wrong or inapplicable method is the other cause of BAS mistake in terms of GST reporting. (hint: the accounting type can also be found on your BAS).
Assuming government purchases to be GST free undervalues the input tax claimed. Like self-explanatory error, delving government organization invoices will assist businesses to reduce the GST payable.
Sales of some capital equipment or vehicles have to be done by charging GST on the selling price. The detailed information are here
Similarly, buying capital items with GST amounts charged on cost must be filled in G10 part of BAS forms if the GST-inclusive sales price of more than $ 1,000.
Distinguishing the accounting treatment of business supplies between the private and business use is not sometimes taken into account by sole traders or partnership entities. Examples of these costs are amounts paid for utilities and rents, although this apportioning can be done at the end of financial year provided the total turnover to be less than $2 million per annum.