GST can be a challenge for even the best bookkeeper! We have had the privilege of working with a heap of great businesses across many industries and have put together five of the most common GST mistakes we see.
- Adding GST to your sales invoice when you aren’t registered for GST
We see this a lot, where businesses who are not registered for GST add GST to the invoices they send their customers. If your business is not registered for GST, you can simply issue an Invoice to your customer for the total amount of the sale, disregarding any reference to the 10% GST.
Not sure whether your business is registered for GST? You can easily look this up using the link below, searching by your ABN.
- Claiming GST on GST free/exempt items
When recording your business transactions (whether it be in your accounting software or on a spreadsheet), make sure you double check what GST has been included in the bill/receipt. Some common expenses that businesses incur that are not subject to GST are:
- Motor vehicle registration
- Bank fees
- Wages and superannuation
- Expenses that are personal
- Claiming GST on your new motor vehicle
Did you know that there is a limit to how much GST you can claim on your new motor vehicle? For the 2020/21 financial year, if the purchase price of your vehicle (excluding GST) exceeds $52,340, you are only able to claim a maximum GST credit of $5,234 through your Business Activity Statement.
In some limited circumstances, you could claim the full GST credit. These include:
- You are in the business of buying and selling cars;
- It is a commercial vehicle that is not primarily designed to carry passengers; and
- You carry out research and development for the manufacture of the car.
- JobKeeper and Cashflow Boost
There are businesses across Australia that have done it tough throughout the COVID pandemic and, as a result, has received either the JobKeeper or Cashflow Boost (or both!) payments over the last 9 months.
We make special mention of these payments as, given their nature, it is a little confusing how these should be accounted for in your books. Both JobKeeper and Cashflow Boost are NOT subject to GST. These transactions should be coded as BAS Exempt deposits and should not be included in your monthly/quarterly Business Activity Statement.
(On a side note, the JobKeeper payment is assessable for income tax, where the Cashflow Boost is not – confusing much!).
Not sure about the GST implications of a transaction for your business? Hit the live chat button and get in touch!