Don't Let These 8 GST Errors Derail Your EOFY!

Running a small business is challenging enough without getting tangled in GST (Goods and Services Tax) issues. Yet, every year, many SMEs find themselves on the wrong side of the ATO due to simple GST mistakes. Here are eight common errors that could catch you out — and how to avoid them.

1. Missing Your GST Registration Deadline

If your business earns more than $75,000 a year, you’re required to register for GST. It’s easy to overlook this if your revenue grows quickly or unexpectedly. You’ve got just 21 days to register once you realize you’ve crossed the threshold. Miss it, and you could be liable for GST on past sales — a nasty surprise for your cash flow!

2. Incorrect GST Claims on Expenses

Not every expense qualifies for a GST refund. For example, bank fees, interest on loans, or purchases from overseas suppliers generally don’t include GST. Always double-check your claims to avoid penalties. If you're ever in doubt, a quick call to your accountant can save a lot of hassle down the road.

3. Forgetting to Adjust for Personal Use

If you’re using business purchases for personal use (like driving your work vehicle on the weekend), make sure you only claim GST on the business portion of the expense. A little oversight here can lead to complications when the ATO checks your claims.

4. Skipping Regular GST Reconciliation

Reconciling your GST is crucial for accurate reporting. If your bank records don’t match your invoices, you could end up with unreported income and GST discrepancies. Reconciling regularly or using an automated system ensures you're not blindsided by inconsistencies at tax time.

5. Using the Wrong Accounting Method

Did you know there are two different ways to account for GST? The "payments" method (cash basis) lets your account for GST when payments are made, while the "invoice" method (accruals basis) records GST when an invoice is issued, even if payment hasn't yet been received. Choose the wrong method for your business, and it could cause cash-flow headaches.

6. Not Updating Your Business Type

Business structures change — from sole trader to company, for example — and when they do, your GST registration needs to change as well. If your ABN changes, you’ll need to update your GST registration. Talk to your accountant about the best timing for structural changes, so you don’t miss a beat with the ATO.

7. Claiming GST on Wages and Superannuation

It’s a common mistake to try to claim GST on salaries and superannuation. While these are business expenses, they don’t attract GST, so there’s nothing to claim back. However, if you use contractors or labour hire companies, GST may apply.

8. Losing Track of GST Invoices

When making business-related purchases over $82.50, always keep the GST invoices handy. You’ll need them to claim GST credits at the end of each period. If you forget to request an invoice at the time of purchase, you can ask the supplier for one — they’re required to provide it within 28 days.

Need Help with GST?

If you want to avoid common EOFY mistakes and get your GST right, get in touch with our team for expert advice. We're here to help you streamline your accounting processes and ensure you meet your obligations.