Common GST Mistakes That You Might Be Making In Your IAS

GST is an area that commonly has mistakes made in it – mistakes that can be costly and require additional measures to correct it if they aren’t caught in time.

Many small business owners continue to make errors when claiming GST credits in their GST returns or Business Activity Statements.

A vast majority of these errors are easily avoidable and often relate to the over-claiming of GST credits. Here are the top ten common GST mistakes that can be made (and what you might be encountering yourself). 

  • Residential rental property: Incorrectly claiming GST credits on expenses relating to residential rental properties where the entity is registered for GST.
  • Bank fees: Generally, annual fees, monthly fees and loan establishment fees are input-taxed, and therefore, there is no GST to claim. However, GST is charged on credit card merchants’ fees and can be claimed.
  • Private expenses: GST is not claimable on private expenses such as personal loans, director fees and drawings etc.
  • Interest: Interest paid on loan or chattel mortgage repayments or credit card payments does not incur GST, and cannot be claimed.
  • The total cost of a business insurance policy: Insurance policies usually include stamp duty (which is GST-free), however, the rest of the policy is subject to GST. A GST credit cannot be claimed on the stamp duty portion of the policy as no GST is paid.
  • Government fees: GST is not charged on government fees i.e. council rates, land tax, ASIC filing fees, motor vehicle registration and water rates, and therefore, GST credits cannot be claimed.
  • GST-free purchases: Incorrectly claiming GST credits on purchases without GST, such as basic food items, exports and certain health services is a common mistake. Remember not all suppliers are registered for GST, so check the tax invoice before claiming credit.
  • Entertainment expenses: Claiming the entire GST credits on entertainment expenses where the business has elected to use the 50/50 split method for fringe benefits tax is incorrect. Only 50 per cent of the GST credits can be claimed.
  • Wages and superannuation payments: Both wages and super do not attract GST and cannot be claimed. Wages are not an expense to be included in G11; they are to be reported in W1 in your BAS. Superannuation is not included in BAS.
  • Sole traders and partnerships: When claiming expenses that are used for both private and business use, you must apportion the expenditure to exclude private usage. 

If you find that a mistake was made on a previous activity statement, the ATO says you are able to:

  • correct the error on a later activity statement if the mistake fits the definition of a “GST error” and certain conditions are met;
  • lodge an amendment – the time limit for amending GST credits is 4 years starting from the day after the taxpayer was required to lodge the activity statement for the relevant period, or
  • contact the ATO for advice.

If you find this process is too time-consuming or too difficult to complete yourself, the best way to ensure that you remain compliant and avoid making these mistakes is to contact a registered BAS agent for assistance. 

COVID Deductions Rely On Work-Related Purposes (So Here’s What You Might Be Able To Claim)

People across different industries may have different items for work that they can claim a deduction on their tax returns for, but this season may see a few common occurrences across individual tax returns for 2022.

On your individual tax return this year, you may notice a few expenses pertaining to COVID-19-related purchases, such as masks, hand sanitisers and RATs tests that you may be able to claim (depending on your circumstances). These deductions may have specific conditions and requirements that must be met, and failure to comply may result in the Australian Taxation Office disallowing these claims.

Masks and hand sanitiser are claimable deductions for those who have required them to work in their industry (e.g. retail, hospitality, education). This is because they can be claimed as PPE (Personal Protective Equipment), but they must be directly connected to how you earn your income (for example, many State governments mandated at various points last year that hospitality workers were required to wear masks while working). If your place of employment did not provide this PPE to you, and you had to purchase it yourself, it may be claimable.

Rapid Antigen Tests (RATs) however, must be purchased for a work-related purpose. There have been plans to specifically allow deductions for Covid-19 tests such as RATs by the Government to be claimed on individual tax returns.

This legislation is scheduled to be introduced on 1st July to specifically address this, but a COVID-19 RAT test can still be claimable if it is for a work-related purpose. This is the critical point to understand. It is a claimable deduction in this instance because it has been purchased for a work-related reason, or to be able to attend your place of work.

When claiming a deduction, it is important that you keep accurate records (such as receipts) to provide evidence of your purchase, and that these purchases weren’t reimbursed by your employer. If they were reimbursed, you will not be able to claim it back.

If you were working from home during 2021, you may be able to claim back some of the expenses related to this. One of the ways that you may be able to do so is through the ‘shortcut method’. This method allows you to claim 80 cents per hour for each hour worked from home (from 01 March 2020 to 30 June 2022). Importantly though, this includes everything – you don’t need to make other claims for work from home items such as phone, internet, stationery or furniture/equipment depreciation separately.

Depending on your circumstances, choosing the wrong method means you could cheat yourself out of big dollars on your tax return. Discuss your situation with your trusted tax agent so that you can understand what exactly is required from you in the lead up to tax return time. 

Tax Season is officially upon us and what a year so far!

Welcome to the 2020 Concord Tax, Tax Season The 2020 Tax Season is officially upon us and what a year we have had so far!  This year has seen us working in our office as we normally would to working from home for two months to hiring an additional FOUR staff members to join the Concord Tax Family in the lead up to our Infamous Tax Season! 
Have you booked in for your appointment yet? For the next couple of months we be extending our trading hours to:
Monday to Friday 8am to 7pm
Saturday 8am to 5pm
This year we also have had to change the way we do things a little and as a result we have accommodated a more flexible way of doing your tax return.  We now have 4 ways you can complete your tax this year.
1. In house appointments at 60 Thuringowa Dr, Kirwan.  Taking into account the current COVID-19 Social-distancing restrictions, measures have been put in place in the office to accommodate our usual in-house appointments. 2. Tele-Tax Appointments. These are appointment can be completed in one of two ways for your convenience, either over video conferencing using Zoom or over the phone.
3.Email Appointments.
This is where you can email through all of your documents and the accountant will complete your return and email it back to you for signature. Did you know you can book online? Online booking is another service we are providing to make it easier for you to make an appointment with your accountant. While we will always have our phones mans during trading hours, we understand that sometimes people remember at odd hours of the day to make appointments, therefore having our online booking system means that you can literally make the appointment when you remember at midnight on a Sunday night when our phones are not being manned!

To book your appointment online simply click here
and choose which appointment you would like to make.

What to expect this Tax Season Over the next few weeks and months we will be sending out regular emails and Facebook blasts with our tax time hints and tips as well as introducing all our Concord Tax Family members, so stay tuned for our updates!   This Year’s Checklist Keep an eye on your email over the next couple of days for this year’s 2020 Tax Time Checklist! We are looking forward to seeing you this Tax Season and can’t wait to hear about your past year.