BAS Pitfalls to avoid!

Are you worried about making mistakes on your Business Activity Statement (BAS)?

 Whether you’re on Monthly, Quarterly or Annual lodgements; the nerves start emerging days leading up to the due date. Now, that might be because your books aren’t up to date, and you’ve just been dumped with a pile of receipts that need entering, or maybe you’re not quite sure if you’re doing it right.

The Australian Taxation Office (ATO) reported that 80% of BAS mistakes were unintentional. 

The most common industries which are prone to making mistakes on their BAS are retail & wholesale, equipment hiring, logistics, professional services, and building and construction.

We get it, it’s a loveless job and if your sales are higher than your expenses (yay) then you’re most likely have a payable to the ATO on your BAS, and no-one likes parting with money.

Often a BAS requires payment to the ATO and there simply isn’t any cash available to pay. To alleviate this, you may want to setup a new ‘GST’ bank account and transfer 10% of your sales to this each week or month.  

Come BAS time, you’ll find your payable will often be less than the amount you’ve put aside, as you would’ve received GST credits from purchases. Better to put more aside than nothing. The amount to put aside can be fine-tuned if you’re finding that too much is sitting in the GST account after a BAS payment. 

Some tips to avoid BAS mistakes

·      Check every expense is only entered once.

·      Don't assume every transaction is GST inclusive. Check the receipts and Invoices when entering.

·      Don’t claim GST on private expenses, mark these as BAS excluded.

·      Check your bank reconciliation report. Make sure your bank statements are reconciled and there aren’t any out of balance amounts. 

·      Watch out for platform fees, while bank fees are GST free, some PayPal, stripe and square fees are GST inclusive. Be sure to check your agreements and invoices.

·      Look out for stamp duty!

·      Triple check your insurance premiums, car registrations and lease agreements for GST applicable expenses and GST free expenses.

If you’ve realised a mistake has been made, what now? 

If the ATO comes back and requires you to check your lodgement, don’t panic! The ATO understands errors happen and are often honest mistakes, that’s why they have them checked and give you the opportunity to rectify.

Some examples of common errors:

·      Recording GST-Free sale as taxable 

·      Recording Bank fees as GST on expenses 

·      Recording an overseas transaction as taxable 

If you’ve made a mistake, it is easily rectified. The ATO website has a lot of information on how to amend your BAS if you do not have a BAS or Tax Agent. Often, you can rectify the error on your following BAS.

Feel free to reach out if you need help in preparing and Lodging your BAS’s or if you just wanting some clarification on any of the above.