Business Activity Statement (BAS) is defined by the Australian Taxation Office as a monthly or quarterly tax reporting requirement for businesses. Aside from reporting, it is also used for paying goods and services tax (GST), pay as you go (PAYG) installments, PAYG withholding tax and other tax obligations. BAS is submitted to the Australian Taxation Office, who is in-charge of reviewing the contents and accuracy of the documents.
During these reviews, the Australian Taxation Office noticed the common mistakes committed by companies in BAS preparation and lodging. These include wrong GST credits, incorrectly claiming GST credits on super or salary payments, and claiming a credit without a valid tax license. Here’s a list of the common mistakes noticed by the Australian Taxation Office:
- Claiming a credit without a valid tax invoice.
- Wrongly claiming GST credits on super or salary payments.
- Erroneous claims for GST-free purchases.
- Claiming the total credits for a car bought for more than the luxury car limit.
- Incorrectly claiming GST credits on bank fees.
- Mistakenly putting in a claim for credits from government charges such as land tax, council rates.
- Not reporting the GST on some government grants and incentive schemes that are received inclusive of GST.
- Incorrectly claiming full credits on entertainment expenses when the business has elected for FBT purposes to use the 50/50 split method (which allows only 50% of input credits to be claimed).
- Wrongly claiming a credit on the full cost of an insurance policy.
- Sole traders and partnerships not apportioning input tax credits on expenditure that is for partly business and partly private use, such as vehicle expenses.
Though they seem minimal, these problems can involve serious amount of money. For example, the Australian Tax Office (ATO) was able to raise an extra AUD 363 Million in GST liabilities only. Just imagine how much more it would cost to make bigger mistakes than these!
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