With the year end comes a chance to prepare an annual reconciliation of your GST account and match against the quarterly BAS you've lodged to date.
This will ensure you have included everything to be claimed and make any adjustments for errors that may have occurred (T&Cs apply).
The advent of cloud accounting has given the small business owner the opportunity to look after their own bookkeeping and to even lodge their own BAS, saving them time and money with the right guidance.
The ATO has highlighted a number of common mistakes found in the BAS/IAS reports relating to general errors in form filling or lack thereof, and errors in reporting and claiming GST correctly and in reporting PAYG withholding.
In practice the errors we commonly pick up are as follows:
Default tax codes in Chart of Accounts are incorrect - if in doubt always seek out the assistance of a registered tax or BAS agent
Incorrectly claiming GST credits
Not all expenses have a gst component eg bank fees, Facebook advertising, Google Adwords, interest expense, water rates
Claiming GST credits for the full amount of a purchase when the goods are to be used partially or wholly for private purposes - GST credit must be apportioned
Claiming GST credits where the contractor or supplier is not registered or required to be registered for GST - in these circumstances you must witthold 48.5% and remit to ATO
Claiming GST credits without a valid tax invoice (unless the supply is less than $82.50 inc GST)
claiming GST credits at the commencement of a hire purchase or lease contract, or insurance premium funding when accounting on a cash basis as they may only be claimed at the time a repayment is made.
Including private expenditure when claiming GST credits and deductions on business tax returns
Including wages and superannuation contributions as non-capital purchases (G11) rather than at label W1
It is valuable for a small business owner to have first hand knowledge of the financial circumstances of their business however it pays to ensure that the systems are correctly set up by a registered Tax or BAS agent and regularly reviewed. Errors can be costly - penalties, interest or an increased tax debt and cost you more in the long run.