If you are in business, it is important to get your BAS (business activity statements) correct so that you pay the correct amount of GST (goods and services tax). Unfortunately, there are some common BAS mistakes that can see you paying more GST than you need to.
Common mistake #1 – not claiming all your GST credits
Any GST you pay on goods and services for your business can be claimed as a GST credit (also called an input tax credit) on your BAS. A GST credit reduces the amount of GST your business needs to pay on the sales of your goods or services.
Common mistake #2 – not paying GST on a cash basis
If you are a Small Business with an aggregated turnover (your business’s turnover and the turnover of closely associated entities) of less than $10 million, there are two options for paying GST – cash and non-cash (accrual).
If you pay GST on a cash basis, you pay GST in the BAS period when you receive payment from your customers.
If you pay GST on a non-cash (accruals) basis, you pay GST in the BAS period when you invoice your customers. This may not necessarily be the same BAS period as you receive payment from your customers, especially if you have 30, 60 or 90-day payment terms.
Paying GST on a cash basis can help with your cash flow because you aren’t paying GST before you actually need to (and potentially before you can afford it).
Common mistake #3 – including GST-free sales
Some products and services in Australia are GST-exempt. They include food and some medical/health services.
If your business sells any GST-exempt products or services, you do not need to pay GST on those sales.
FAQs
If a customer does not pay me, when can I claim the invoice as an expense?
You can write a bad debt off as a tax-deductible expense and receive a GST credit on your next BAS provided that you have:
- genuinely tried to recover the amount owing without success.
- included the debt as business income in either the current or a previous financial year.
- formally written off the debt in your accounting records prior to the end of the financial year.
If I make a mistake on my BAS, can I correct it?
Yes, you can either revise your original statement or correct the mistake on your next BAS when it is due for submission.
What if goods I sold and reported on my BAS are subsequently returned by my customers for a refund?
You can make an adjustment to reflect the return/s on your next BAS.
How we can help
Our experienced team of business accounting and tax advisors at Wilson Pateras in Richmond can answer any BAS/GST questions you have. We can also help you with:
- bookkeeping and BAS lodgements
- tax advice and planning
- strategic business advice
- setting up or restructuring a company
- financial reporting
- government grant applications.
Contact us today for a complimentary, obligation-free consultation to find out how we can help you!
