Learn From BAS Agents To Avoid GST Mistakes In BAS

April 28, 2022    Accounting Services Perthwa

Every business registered in Australia under GST has to submit Business Activity Statements (BAS). Depending on whether they choose monthly, quarterly, or yearly submissions, their deadlines will differ. This statement includes a range of taxes businesses usually pay, which include GST (Goods and Services Tax), PAYG (Pay-As-You-Go) instalments and withholding, FBT (Fringe Benefits Tax), etc. You may make a mistake because you have to put a lot of information in the statement. Experts recommend using accounting software or hiring registered BAS agents to avoid this. Read this blog to learn the ways to prevent common GST mistakes.

When Do You Need to Register Your Business for GST?

Before going into the main topic, you must first understand when a business requires a GST registration.
If your business earns at least $75000 in a financial year, make sure to register your company for GST. Below this threshold, GST registration is optional unless you run a taxi service business. Keep in mind that Uber now comes under the general taxi business classification.
Once you make your business GST-registered, your reporting obligations will continue as long as your registration stays valid. You can choose to cancel it if your annual business turnover comes under $75000. However, there are some exceptions, which include the following.

  • Your business offers Uber or taxi travel and is operated by an individual.
  • Your company has gone bankrupt and needs to stay GST-registered.
  • Your business has reached the liquidation phase and is GST-registered.

What to do to Avoid Common GST Mistakes?

People make several common GST mistakes while lodging their business activity statements. Check these methods discussed here to avoid these errors.

Check the purchase invoice and BAS records for an accurate monthly payment recording

Business owners make mistakes in the Hire Purchase or Equipment area of their business activity statements. It will not create a problem in the initial stage as the accountant can easily claim the full GST component in the first quarter.
But the real problem starts when they begin recording their monthly payments. Your accountant is likely to code it as a Capital Expense or a GST. As a result, codes for both the taxes will be included in the BAS reporting sheet, which will cause a ‘double dip’ on the GST.
So, it is always suggested that you review your BAS records and purchase invoices.

Ask Your BAS Agent to Set up Your Tax Codes

Including incorrect tax codes is another typical mistake committed by business owners while preparing BAS reports. To avoid this, it is better to ask your BAS agents in Perth to set up your tax codes or your accountant to prepare a default chart of accounts before preparing your BAS using the software.

Know which expenses do not involve GST components

Make sure that you do not claim GST against all the business expenses. Certain costs do not involve any GST component. These costs include:

  • Bank charges
  • Motor vehicle registrations
  • ASIC fees
  • Google Adwords
  • Paypal transaction fees
  • Interest and director fees

Be aware of services and products not including GST

In addition to the costs mentioned above, you must also be aware of the services and products that do not include GST.

Several medical and healthcare services do not have any GST component. Basic human consumption food items are also not subject to GST.

Know where to include your wages and superannuation

While preparing your BAS, make sure that you report wages in W1 and not in G11. The latter includes non-capital purchases, machinery component purchases, maintenance costs, etc.
Also, keep in mind that you are not required to include superannuation as part of your gross wage in W1.

Keep records of all cash sales and purchases

Note that you will face a lot of trouble when you discount the GST even after receiving cash payments.
The Australian Taxation Office (ATO) is strict about these things. The officials follow a systematic process to cross-match data, especially in the construction and building industry, where company owners must submit a Taxable Payments Report at the end of a fiscal year. So, you must not forget to mention all your cash payments.
For better reporting, it will be good to discuss your GST credits and tax deductions with your accountant or bookkeeper.

Know whether private purchases involve a GST credit

Director’s fees, personal loans, and other private purchases do not involve any GST credit. So, you must not include them in your BAS report.

Keep in mind the following things while including your capital purchases

  • Capital purchases include business assets that cost over $1000. Typical examples are motor vehicle expenses, office equipment costs, computer equipment costs, etc.
  • You must report these capital expenses in G10 of your BAS. For advice, you may consult with your accountant.
  • Sometimes, people wrongly include them in G1, which reports total sales.

Check if your supplier is registered for GST

Sometimes, people claim GST credits on purchases even when the supplier is not registered for GST. To avoid this mistake, always check the source invoice. You can also open the ABN lookup page and search for this information using the supplier’s ABN.
Whenever you decide to purchase products or services from your supplier, they have to provide an ABN. If they refuse to provide that, you may withhold a specific amount of payment known as ‘No ABN withholding.’
Usually, this amount is 46.5% of the total owed payment.

Develop good record-keeping habits

It is good for any businessman to develop efficient record-keeping habits.

What is the main benefit of hiring a BAS agent?

Hiring a certified BAS agent offers a range of benefits. However, the most important one is getting extended submission deadlines. To hire the best professional, search by typing “top BAS agents near me” and explore the top results.

BAS Agents at Accounting Services Perth Can Help You

Accounting Services Perth is a top-rated firm in Perth, WA, which has served some top clients over these years. Whether you need BAS agents or tax accountants, you can contact them at any time.

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