Account Keeping Plus – Administration, Bookkeeping, Compliance News & Tips MYOB Reckon Quickbooks Xero Software TrainingSmall Business

Making Business Books and Accounting Come Alive! MYOB Reckon Xero

Avoid These 6 GST Mistakes Part 1

1 Comment


Incorrectly classifying your expenditure or revenue for GST, may be exposing you to future penalties and interest charges from the ATO. A massive education campaign by the Australian Taxation Office (ATO) has still not eliminated many errors and omissions made by small businesses on their BAS returns. Most errors relate to the over-claiming of GST credits.

The more common GST mistakes made and how to correct them, include:  

  1.  Accounting method If the business is using the cash accounting method for GST, but not for income tax purposes, and the turnover of the business is expected to be $2 million or more, the business needs to change to the accruals or invoice basis
  2. Chattel Mortgage financing of an asset enables you to claim the total GST credit upfront
  3. Asset sale of cars and equipment and trade-in of motor vehicles. The sale of a business asset is subject to GST just like any ordinary business transaction unless the going concern exemption is claimed
  4. Bank fees monthly, annual fees, cheque book and loan establishment fees. Bank fees are treated as “input taxed” meaning the bank doesn’t charge GST to the customer. But GST is charged on credit card merchants fees and therefore a GST credit can be claimed on these expenses. We see this can often be missed – one client had $5000 to claim back after we corrected the coding of merchant transactions
  5. Business insurance policies. As there is a stamp duty component in the premium which is not subject to GST, there is no GST on that portion. The actual amount of GST payable on an insurance premium is usually stated on the renewal form
  6. Commercial hire purchase (CHP).
    1. Accrual – an up-front GST credit is available for businesses accounting for GST using the accruals or invoice basis of account reporting
    2. Cash – NO up-front credit is available where the business uses the cash basis. The GST credit is calculated as 1/11th of the “principal” portion of the total CHP payments made during the relevant month or quarter, (i.e. the credit is claimed progressively over the term of the CHP loan).

For more, click on           “Avoid These GST Mistakes”      at      http://www.accountkeepingplus.com.au/free-how-to

Advertisements

Author: accountkeepingplus

Administration, bookkeeping and compliance for small business, Training, trouble-shooting, or we can do the books and payroll for you! Self Managed Superannuation Fund Service Provider, free support MYOB Certified Consultant, Reckon/QuickBooks Professional Partner.

One thought on “Avoid These 6 GST Mistakes Part 1

  1. Good day I was luck to search your website on bing
    your topic is superb
    I obtain a lot in your Topics really thank your very much
    btw the theme of you site is really superb

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s