10 common GST mistakes

Posted by admin on September 28, 2011 under Uncategorized | Comments are off for this article

There are many issues arising from the GST returns of small business operators throughout the country. Although there has been an effort to promote the intricacies of the Government Sales Tax, many problems continue to be made by owner operators, attempting to conduct their own bookkeeping, that unfortunately do not have the experience or time to fully comprehend and submit valid claims. This ultimately results in more time and hassle when the ATO reject the credits that have been incorrectly calculated.

We also find some bookkeepers submitting incorrect revenues and expenditures which bring on interest charges and even penalties further down the line. Some of the more common mistakes that are made when compiling GST returns are:

1. No Tax Invoice
It is essential that you have a tax invoice to back up your claims on business expenses. If you do not have any proof of the transaction, you will need permission from the ATO to claim it or possibly not be able to at all.

2. GST Free Items
There are many items and services which do not attract the GST, therefore it is not viable to include them in your claim as you will not be legally allowed to collect a return if it was never charged in the first place.

3. Uncharged GST on Bank Fees
Banks don’t charge GST on their fees so these are not eligible as a GST rebate. They can however be claimed on credit card merchant fees as these do have GST attached.

4. Wages & Super Payments
These are non-taxable supplies and have no GST attached, therefore it can be a big mistake to treat them as such as it will involve large recalculations and affect your profit and loss assessment.

5. Company Vehicles
If your car is classed as a ‘luxury car’, then it has a limit on how much of the GST can be claimed. This limit does change periodically so must be checked before submission.

6. Sale of Equipment
This includes vehicle sales, telephone equipment – www.businesstelecom.com.au and business assets will be subject to the GST, much the same as any other transaction would be.

7. Residential Properties
Residential properties are input taxed, so GST can’t be claimed on any expenses that may arise from them. This being applicable for an entity registered for GST.

8. Government Grants
Where your business has received a government grant or an incentive, you will need to include it in your GST return as it must be accounted for without exception.

9. Stamp Duty
On an insurance policy, there is stamp duty that does not have any GST attached and has to be excluded from your return. The correct amount will be stipulated on the renewal form or tax invoice.

10. Entertainment Expenses
A maximum of 50% can be claimed in agreement with the fringe benefits tax, but to claim the full 100% GST amount is incorrect and will be questioned by the ATO.

If your bookkeeper is not alerting you of these issues, or if you perform your own bookkeeping services and are having trouble collaborating your data in the proper manner, we are more than capable of solving these problems and making sure they are never repeated. This will result in better efficiency and most likely end up costing you less in the long run. Feel free to contact us and let us help you to improve your business.

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