Top 10 Mistakes You Can Make In Your BAS Lodgement
Mistakes do happen from time to time when lodging a BAS. A busy business can be a great distraction from lodging your BAS. Unfortunately, by the time you get to it, in the rush to lodge it, you make a couple of mistakes. Or perhaps it is your first BAS, which can be intimidating. But the mistakes happen either way.
To help small business owners avoid some of the most common mistakes we have created a list of the top 10 mistakes with data from the ATO.
Double Dipping in GST
In the Hire purchase/Lease of Vehicle of Plant or Equipment area of the BAS, many business owners accidentally double dip on their GST claims. Often, they will claim the full GST component in the first quarter they purchase the vehicle.
The mistake happens when some business owners continue to code their regular monthly repayments as a GST or Capital Expense. Both the GST and CAP appear on their BAS. Essentially the GST claim appears twice, effectively causing business owners to double dip.
Incorrect tax codes in chart of accounts
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 BASLodge.com.au, to set up your tax codes. This must be done before you begin using any accounting software.
Claiming GST against every expense
Not every expense a business incurs has a GST component. You should ensure that you 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:
- Google Ads
- Vehicle Registrations
- ASIC fees
- PayPal transaction fees
- Bank charges
- Interest and director fees/drawings
Claiming GST against every sale
Just as every expense does not necessarily contain a GST component, so to does 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, read this article 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. 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 cash sales and purchases you make. Keep all receipts in order to remain accurate when reporting these sales or purchases. The ATO has set up sophisticated cross-matching data processes to ensure reporting is accurate. 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 discussed with your bookkeeper and accountant to ensure 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, only claim a portion of GST as a GST credit. This portion should be based off 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 assistance ask a BAS agent at BASlodge.com.au or your accountant.
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, including those from a supplier, you should keep the 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 you can look up their ABN or business name on the ABN lookup page to check. They will have supplied you an ABN by law when your purchase 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
- Or they are not entitled to an ABN or required to have one as the payment is less than $75
What is the easiest way to remain compliant?
The easiest way to ensure your BAS remains compliant is to complete it with BASLodge.com.au. We are BAS Agents, meaning 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. Lodge your BAS with us today.