We all know that mistakes do happen from time to time. When you are trying to get everything up to date for your BAS lodgement running your busy business can be a great distraction. This can distract you away from lodging your BAS.
You have been putting it off in favour of other important aspects of your business, right? That means that by the time you get to it, in the rush to lodge it, you are more likely to make a couple of mistakes.
It might be that this is your first foray into the world of BAS. That can be intimidating and more than a little scary! Whatever the reasons, mistakes happen. We have come up with these top tips to help you avoid some of the most common mistakes that small business owners who are doing their own lodgements can make. We have used data from the ATO as well as our many years of experience to come up with this list. It isn’t exhaustible though – there are many more! These are simply the most common!
Double Dipping your GST
Do you Lease a vehicle or have one on a Chattel Mortgage / Hire Purchase? If you do, you really need to take this one on board!
In the Chattel Mortgage/Hire Purchase of a vehicle – the GST is claimed in full on the next BAS – some business owners, however, ALSO claim the GST when they record the Monthly Repayment which is incorrect.
In the Lease of a vehicle – the GST portion can only be reclaimed on a BAS based on the actual physical payments made within each BAS period.
That means you have just double dipped.
Incorrect tax codes in the Chart of Accounts
Are you aware that the Chart of Accounts has standardised codes that must be used? You should ensure that you talk to your accountant to provide a default chart of accounts. Or you can ask a BAS agent, like those at Keeping Numbers Bookkeeping and Training Services, to set up your tax codes for you. This needs to be done before you begin using any accounting software.
Claiming GST against every expense
Surprisingly, not every expense a business pays out carries a GST component. You should ensure that you and your staff keep receipts for all your expenses. This way you can keep track of which expenses had a GST component and which did not.
Common expenses without a GST component include:
- Vehicle Registrations
- ASIC fees
- PayPal transaction fees
- Bank charges (Except Merchant Fees – they DO have GST)
- Interest and director fees/drawings
Claiming GST against every sale
Just as every expense does not necessarily contain a GST component, the same is true for every sale. There are many items that are GST-free. If you sell a GST-free item you should not claim GST against its sale. Some services and products that are GST free include:
- Staple foods
- Medical and health care
- Certain child care services
- And more
To read more about GST-free sales you can visit the ATO website here.
Placing wages and superannuation as a purchase in G11
You should not report wages in G11 on your BAS. This section is for non-capital purchases only. Instead, you should report wages in W1. In W1 you do not need to include super as a part of the gross wage.
Forgetting some cash sales and purchases
Ensure that you declare all your cash sales and purchases you make. Keep all receipts so that you can remain 100% accurate when reporting these sales or purchases. The ATO has set up sophisticated cross-matching data processes to ensure reporting is accurate.
Remember that you can get into a lot of trouble if you do not report cash sales or purchases. Any genuine deductions or GST credits should be chatted through with your bookkeeper or accountant to ensure the correct eligibility.
Claiming GST on private purchases
Any personal purchases cannot have a GST credit claimed on your BAS. These include personal loans and director’s fees. If you made purchases that are for both business and private use, you may only claim a portion of GST as a GST credit. This part should be based on the percentage of business use.
Reporting purchases of capital items using an incorrect tax code
Any purchase for a business asset costing over $1000 must be reported under G10 in your BAS not G11. This should be completed under capital purchases. If you need assisAny purchase for a business asset costing over $1000 must be reported under G10 in your BAS not G11. This should be completed under capital purchases. If you need assistance ask a BAS agent at keepingnumbers.com.au or your accountant. They will help you allocate to the correct code.
Not including capital sales in G1
Your total sales should be included under G1 in your BAS. This total must include the sale of any motor vehicle, trade-in, or office equipment.
Claiming GST credits on purchases from a non-GST registered supplier
For any purchase that you make, including those from a supplier, you should keep your receipt or invoice. When lodging your BAS check to see if the purchase from the supplier included GST. If it did not, it is likely either a GST-free item or they are not registered for GST.
You should not claim a GST credit on these purchases. If you are in doubt whether they are GST registered or not we suggest that you look up their ABN or business name on the ABN lookup page to check. They will have supplied you with an ABN by law when your buy their goods or services. If they have not you must withhold 46% of the total payment owed unless they provide you:
- An invoice or some other document with their ABN
- The supplier’s agents’ ABN is quoted
What is the easiest way to remain compliant?
The easiest way to ensure your BAS remains compliant is to complete it with a bookkeeper who can help you! We are BAS Agents. That means that we can assist you in The easiest way to ensure your BAS remains compliant is to complete it with a bookkeeper who can help you! We are BAS Agents. That means that we can assist you in ensuring your BAS is completed correctly and lodged in time. BAS Lodge is also allowed to provide a 4 weeks extension to the due date of your BAS. To find out more about how to lodge your BAS with us today you can email Liz Peacock and the team here. Or you can call Liz on 0405 801 119