Top 10 GST mistakes in BAS reports

It’s easy to make a mistake when preparing your BAS. The key is to be aware of common pitfalls so you can avoid them. Thankfully, with online accounting software , preparing your own Business Activity Statement (BAS*) is easier. Even so, the ATO has identified a number of mistakes commonly made in the BAS reporting form. Here are the top 10 mistakes that I see regularly. 1. Accidental ‘double dipping’ on GST Many business owners make mistakes in the Hire Purchase/Lease of Vehicle of Plant or Equipment area of the BAS. Initially, the client (or their accountant) will claim the full GST component in the first quarter that they purchase their vehicle. The confusion sets in when they record their regular monthly payments. The client will either continue to code it as a GST or as a Capital Expense. Both the tax codes GST and CAP appear on their BAS Reporting sheet, effectively causing them to ‘double dip’ on the GST. Always check your purchase invoice and BAS records to make sure you code your monthly repayments accurately. 2. Incorrect tax codes in your chart of accounts I would advise you to ask your accountant to provide a default chart of accounts or ask a BAS agent to set up your tax codes before you begin using your online accounting software. 3. Claiming GST against all expenses There are expenses that do not have a GST component. They include: Motor vehicle registrations Bank charges ASIC fees Paypal transaction fees Google Adwords Interest and director fees / drawings 4. Claiming GST against all sales Some services and products in the medical and health care areas also do not...

GST on low value imported goods 1st July 2017

New Australian law applying GST to imported digital products and services will take effect from 1st July 2017 On 16 February 2017, the Government introduced law to Parliament that will amend the law to extend Goods and Services Tax (GST) to low value imports of physical goods imported by consumers from 1 July 2017. A vendor registration model will be used and suppliers with an Australian turnover of $75,000 or more in a twelve month period will be required to register and charge GST. The existing processes to collect GST on imports above $1,000 at the border are broadly unchanged. The change was designed to harmonise tax rules for Australian and foreign retailers after local stores blamed sluggish sales on their overseas competitors having an unfair price advantage on goods priced below $1000. According to Treasury, the measure will see a bump of $300 million in GST revenue over the forward estimates period, not accounting for collection expenses. Common questions Question: How is the $75,000 registration threshold calculated? Businesses will be required to register for GST if their GST turnover in Australia exceeds $75,000 (which will include sales of low value imported goods). However, if they do more than $75,000 of sales into Australia, but some of these sales are through an electronic distribution platform (a digital marketplace) and the balance of their direct sales is $75,000 or less then they will not be required to register for GST. Instead, the electronic distribution platform will register for and charge GST, provided it has more than $75,000 of Australian turnover. Question: How is GST applied by the vendor, electronic distribution platform or...

Simpler BAS for Small Businesses Commences 1st July 2017

The ATO are introducing changes to the GST/BAS system for small businesses. The ATO has been working on ways to deliver a simpler business activity statement (BAS) to simplify account set-up, record keeping, BAS preparation and lodgment for agents and their clients, and make it less costly. To achieve this, several GST labels will be removed from the BAS, with small businesses only required to report: GST on sales (1A); GST on purchases (1B); and Total sales (G1). They will begin user testing from 1 July 2016 and a simpler BAS should be the standard option for all small business from 1 July 2017....

GST on Imported Digital Products and Services Will Apply In Australia From 1st July 2017

  New Australian law applying GST to imported digital products and services Australia has introduced a new law applying the Australian Goods and Services Tax (GST) to international sales of digital products and services provided to Australian consumers. Under the new law, overseas businesses will be required to pay GST on these sales from 1 July 2017. What services and digital products are covered by the measure? Examples of digital products include downloaded movies, games and electronic books. Examples of services include architectural, legal or educational services. The new law applies very broadly to sales of anything except non-digital goods or real property. If you sell through an electronic distribution platform, for example an app store, the platform operator is responsible for registering, reporting and paying the GST. Do I need to register for the Australian GST? If you sell digital products or services to Australian consumers and you meet the registration turnover threshold, you need to register for GST with us. You will meet the registration turnover threshold if your sales to Australian consumers in a 12 month period are A$75,000 or more. Once registered, you need to report and pay GST to the ATO on sales made from 1 July 2017. How do I register? A simplified system will be available for you to electronically register, lodge and pay the GST. You can access this service on the ATO’s website from 1 April 2017. Under the simplified registration system, you: will register electronically with minimal proof of identity will lodge and pay GST quarterly do not need to provide a tax invoice or adjustment note to your...