Common GST mistakes
Here are some of the mistakes the Tax Office has noted being made by small business.
The list is not exhaustive, but may serve to underline areas that others have come to grief on.
- Claiming a credit without a valid tax invoice.
- Bank Fees are treated as "input taxed" meaning the bank does not charge GST to the customer. GST is not charged on
bank fees, such as cheque book fees, annual or monthly fees and loan establishment fees. GST is charged on credit card merchant fees and therefore a GST credit can be claimed on these expenses.
- Government Fees where no GST has been charged should be coded FRE. Examples of these include land tax, council
rates, water rates, ASIC filing fees and motor vehicle registration.
- Business insurance policy As there is a stamp duty component in the premium which is not subject to GST, a GST
credit can not be claimed on this portion of payment.The actual amount of GST payable on an insurance premium is
usually stated onthe renewal form.
- Sale of cars and equipment including the trade 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.
- Government grants and incentives which are received inclusive of GST.
- GST free purchases such as basic food items, some health and medical services and exports
- Other GST free items include milk, tea, coffee, international travel, donations and some first aid supplies.
- Wages and Superannuation payments are non-taxable supplies.
- Motor Vehicles with a purchase price in excess of the luxury car limit for 2015-2016 of $ 63,184 GST inclusive.
- Yellow pages advertising Where the business chooses to pay for the cost of advertising by instalments, the entire
GST is charged up-front. Businesses that account for GST on an accruals or invoice basis can claim this up-front amount
in their next BAS return, whereas businesses that use the cash basis can only claim a GST credit equivalent of 1/11th
of each instalment.
- Interest income should have ITS (Input Taxed Sale) as the code
- Private purchases items like personal loans, directors fees and any other purchase for private consumption can not
have the GST credit collected on your BAS statement.