These are the ones we see often and the ATO says occur most regularly.

1.  Double Dipping

When a vehicle is purchased, the accounting entry is to put the cost to an asset account, claim the GST paid, and record the loan as a liability.  As repayments are made each month, these reduce the loan, so no GST can be claimed on the payment.

2. Incorrect tax codes

Codes are nominated when the chart of accounts is opened, and determine if GST is to be claimed or paid.  It is worthwhile having this code checked, especially if you are opening new accounts.

3. Collecting GST on all Sales

Most services and products are subject to GST;  however, medical and health care are not, nor education, nor basic food.

4. Claiming GST on all Expenses

Some categories do not include GST;  like vehicle registration, bank charges, ASIC fees, interest paid, salaries and director fees, and council rates.

5. Excluding capital sales from G1 (Total Sales)

Equipment sold (vehicles and office equipment) need to be included in Sales (for GST purposes).

6. Including Wages and Super in G11 (Non-Capital Purchases)

Salaries and Wages are recorded in W1 (Wages) so must be excluded from Purchases G11.  Super is not part of Gross Wages so is not included in W1.

7. Claiming GST on private expenses

It is possible for the business to pay for items for private use, but the cost and GST should be charged to a Loan Account.  Because the company paid for the item it does not make the GST deductible, eg., private travel, entertainment, a non-business vehicle.

8. Reporting capital items under the wrong tax code

If it is being written off in the same year, report these at G11 (non-capital purchases).  If over this term, it is a capital cost and so goes under G10 (capital purchases).

9. Claiming GST from suppliers not registered for GST

Check the invoice to see it if is a 'tax invoice' or to see if GST is shown.  If in doubt, go to the ABN Lookup website and enter the suppliers ABN, to verify that they are registered.

10. 'Overlooking' the  recording of cash sales and cash purchases .  It is surprising how many businesses forget to claim for small cash purchases (petrol, hardware, stationery, tools, tolls).  These add up and there can be a lot of GST.  So, reimburse yourself so there is a record, pay by credit care, or try a service like: https://www.shoeboxed.com.au/  .  On the other side, all cash sales have to be shown too;  if you discount, amend the invoice or register tape.

With the quality of software now, keeping good records is not difficult.  But, if it takes too much time or is too difficult, use a good bookkeeper or accountant.  We provide this service for many clients now as a fixed cost, and we can refer you to capable bookkeepers.

GST is really quite simple, but there are always industries or circumstances that are not straightforward, like property.  A really quick email or phone call (we don't charge for these) could save a lot of anguish later.