Common mistakes

COMMON GST MISTAKES

GST has now been active since 1 July 2000; the ATO is now very focused on businesses being GST compliant. If your bookkeeper is incorrectly classifying your expenditure or revenue for GST, you may be exposing yourself to future penalties and interest charges from the ATO.

GST free purchases are items such as basic food items, exports and some health services.

Wages and superannuation payments are non-taxable and therefore you can not claim GSTBank fees (e.g. account keeping fees) do not attract any GST as they are treated as "input taxed" meaning the bank doesn't charge GST to the customer. GST is however charged on credit card merchants fees and therefore a GST credit can be claimed on these expenses.

Business insurance policy. There is a stamp duty component in the premium which is not subject to GST, a GST credit cannot be claimed on this portion of the payment. The actual amount of GST payable on an insurance premium is usually stated on your renewal form.

Sale of cars and equipment, including the trade of motor vehicles. The sale of a business asset is subject to GST just like any ordinary business transaction unless the going concern exemption is claimed.

Motor Vehicles with a purchase price in excess of the luxury car limit of $57,123 GST inclusive. The maximum GST credit that can be claimed is limited to $5,193 (Note: current to 30/06/08 and can change as the ATO see fit)