Goods & Services Tax (GST) is a standard part of running a business, but getting it right isn't always straightforward.
From claiming GST on the wrong expenses to putting off bookkeeping until BAS time, small mistakes can lead to reporting errors, cash flow issues, and unnecessary stress.
The good news? Most GST mistakes are preventable with accurate records, consistent bookkeeping and the right support.
Here are 10 common GST mistakes Australian small business owners should avoid.
1. Claiming GST on Expenses That Don't Include GST
Not every business expense includes GST. Some goods and services are GST-free or input-taxed, while some suppliers aren't registered for GST.
If GST wasn't charged, you generally can't claim a GST credit for that purchase.
How to avoid it: Check your tax invoices and confirm the correct GST treatment before claiming credits.
2. Claiming GST on Personal Expenses
Business owners who mix personal and business spending can accidentally claim GST on private purchases.
Where an expense has both business and personal use, you can generally only claim the business-use portion, subject to the relevant rules.
How to avoid it: Keep business and personal transactions separate and maintain records to support any apportionment.
3. Charging the Wrong Amount of GST
Incorrect GST calculations can affect your profit margins and BAS reporting.
For example, a $1,100 sale including GST generally consists of $1,000 in sales and $100 in GST. If you intended to charge $1,100 plus GST, the total would be $1,210.
How to avoid it: Clearly state whether your prices include or exclude GST and check that your invoicing software is configured correctly.
4. Forgetting to Register for GST
Most businesses must register for GST when their GST turnover reaches $75,000. The threshold for non-profit organisations is generally $150,000.
You may need to register before you actually reach the threshold, depending on your projected turnover.
How to avoid it: Monitor your turnover regularly and seek advice if your business is approaching the registration threshold.
5. Assuming Every Business Purchase Qualifies for a GST Credit
Not every business expense automatically qualifies for a GST credit. The purchase must meet the relevant requirements, including being for a creditable business purpose.
Special rules can also apply to certain expenses and purchases relating to input-taxed activities.
How to avoid it: Review each transaction rather than relying solely on the expense category in your bookkeeping software.
6. Using the Wrong GST Codes in Xero
Xero can make bookkeeping easier, but incorrect tax codes can still lead to errors in your GST calculations and BAS.
Common mistakes include incorrectly coding GST-free purchases, claiming credits where no GST was charged, and using the wrong treatment for overseas transactions.
How to avoid it: Review your GST coding regularly, reconcile your accounts and investigate unusual amounts before lodging your BAS.
7. Confusing GST With Business Income
GST collected from customers isn't the same as revenue you get to keep.
For example, a $5,500 invoice including GST generally consists of $5,000 in sales and $500 in GST.
If you treat the entire amount as available income, you could spend money you'll need for your next BAS payment.
How to avoid it: Understand how GST flows through your business and plan for upcoming tax obligations.
8. Leaving Bookkeeping Until BAS Is Due
Leaving months of bookkeeping until the BAS deadline makes it harder to spot missing receipts, incorrect transactions, and unreconciled accounts.
It also means you're making business decisions without up-to-date financial information.
How to avoid it: Reconcile your accounts, record expenses and review transactions regularly throughout the month.
Consistent bookkeeping makes BAS time much less stressful.
9. Lodging Your BAS Without Checking the Figures
Your bookkeeping software can generate your BAS, but that doesn't mean the figures are automatically correct.
Incorrect GST codes, missing transactions and unreconciled accounts can all affect your reporting.
How to avoid it: Before lodgement, reconcile your accounts, ensure transactions are correctly coded, and check that the figures match your underlying records.
If something looks unusual, investigate it before submitting your BAS.
10. Assuming Your BAS Is Only About GST
Depending on your business, your BAS may include other obligations, such as PAYG withholding or PAYG instalments.
Focusing only on GST can mean overlooking other amounts you need to report.
How to avoid it: Understand which reporting obligations apply to your business, and make sure your bookkeeping processes capture the information required for each section.
A registered BAS agent can help you understand your obligations and prepare and lodge your BAS appropriately.
Bonus Tip: Don't Ignore GST Errors
Discovered a mistake after lodging your BAS? Don't ignore it.
Depending on the type and value of the error, you may be able to correct it on a later BAS or need to amend the original statement.
How to avoid it: Keep supporting documentation and seek advice on how to fix the error correctly.
Make GST and BAS Time Less Stressful
Getting your GST right comes down to accurate records, consistent bookkeeping and understanding the rules that apply to your business.
If you spend too much time managing your books or worrying about BAS deadlines, professional support can make all the difference.
At Her Way VA, we provide bookkeeping and BAS support to help small business owners stay organised, keep their records up to date, and reduce BAS-related stress.
Whether you need ongoing bookkeeping, quarterly BAS lodgement or help getting your Xero file back on track, we're here to help.
Ready to take the stress out of your bookkeeping?
Contact us to find out more about our bookkeeping and BAS services.
Disclaimer: This article provides general information for Australian small businesses and is not taxation or financial advice tailored to your circumstances. Consult a registered BAS agent like Her Way VA or a suitably qualified professional for advice specific to your business.
