Explaining GST (Goods and Services Tax) to clients can feel like walking a tightrope—keep it too simple, and they may not understand their obligations; make it too technical, and they’ll quickly tune out. As accountants, especially those early in their careers, mastering the art of clear and concise communication is essential.

Here’s how to break down GST in a way that ensures clients understand their responsibilities without feeling overwhelmed.

1. Start With the Basics

Before diving into the details, make sure your client understands what GST is and how it works.

✅ What to Say:

• GST is a 10% tax on most goods and services sold in Australia.

• Businesses with a turnover of $75,000 or more per year (or $150,000 for not-for-profits) must register for GST.

• GST is collected from customers and passed on to the Australian Taxation Office (ATO) through Business Activity Statements (BAS).

💡 Pro Tip: Use real-life examples relevant to their business, such as selling a product for $110 (where $10 is GST).

2. Explain Input Tax Credits Clearly

One of the most misunderstood aspects of GST is Input Tax Credits (ITCs)—the GST businesses can claim back on their purchases.

✅ What to Say:

• If your business is registered for GST, you can claim back the GST paid on business-related expenses (e.g., office supplies, equipment, utilities).

• Keep detailed tax invoices, as the ATO requires these for claiming ITCs.

📌 Example: If they spend $550 (including $50 GST) on office supplies, they can claim the $50 GST back as a credit when lodging their BAS.

💡 Pro Tip: Highlight exceptions like GST-free items (e.g., basic groceries or medical services), which don’t involve GST credits.

3. Break Down BAS Filing Responsibilities

For clients new to GST, lodging BAS can feel intimidating. Simplify the process for them.

✅ What to Say:

• BAS is a form submitted to the ATO to report your GST collected and paid.

• BAS is typically lodged quarterly, but some businesses may file monthly or annually depending on their turnover.

• The ATO calculates whether you need to pay GST (if you’ve collected more than you’ve paid) or receive a refund (if you’ve paid more than collected).

💡 Pro Tip: Recommend using accounting software like Xero or MYOB to automate GST tracking and BAS preparation.

4. Simplify Common Scenarios

Clients often struggle with applying GST to specific transactions. Help them by breaking down common scenarios:

✅ Taxable Sales: Most goods and services. Example: Selling clothing in-store or online.

✅ GST-Free Sales: Basic food items, some health services, and educational courses.

✅ Mixed Supplies: Sales that include both taxable and GST-free items (e.g., a café selling coffee and GST-free bread).

💡 Pro Tip: Encourage clients to ask questions if they’re unsure about specific items—avoiding confusion now prevents errors later.

5. Use Visual Aids and Tools

Some clients understand better through visuals than words. Use charts, diagrams, or accounting software to explain GST concepts.

✅ How to Help:

• Show them a breakdown of a sample invoice with GST amounts highlighted.

• Walk them through their BAS preparation screen in their accounting software.

• Use dashboards to show how GST is calculated and tracked.

Final Thoughts

Explaining GST doesn’t have to be complicated. By focusing on the basics, addressing common questions, and tailoring your explanation to their specific business, you can ensure clients feel confident and informed.

As you gain experience, you’ll find your own style of simplifying GST concepts while maintaining professionalism. Remember, a well-informed client is less likely to make costly mistakes—making your job easier in the long run.

Common GST Mistakes Businesses Make (and How Accountants Can Fix Them)

For many small business owners, GST compliance can be a headache. From incorrect coding to late lodgments, common mistakes not only cause stress but can also lead to penalties from the ATO. As accountants, it’s our role to guide clients in avoiding these pitfalls while ensuring their compliance processes run smoothly.

Here’s a look at the most frequent GST mistakes and how accountants can step in to fix them.

1. Incorrectly Claiming Input Tax Credits

One of the biggest areas where businesses go wrong is claiming GST credits on ineligible purchases.

✅ Common Mistakes:

• Claiming GST on personal expenses, like meals or travel unrelated to the business.

• Claiming GST on GST-free items such as basic groceries or medical services.

• Failing to keep proper tax invoices to support their claims.

💡 How to Fix It:

• Review all purchase invoices for GST eligibility.

• Set up clear expense categories in their accounting software to separate personal and business expenses.

• Educate clients on which items are GST-free to prevent future errors.

2. Misclassifying Transactions

Errors in GST coding are common, especially for businesses managing their own books without professional help.

✅ Common Mistakes:

• Coding GST-free items as taxable.

• Failing to apply GST to mixed supplies (e.g., a package that includes both taxable and GST-free products).

💡 How to Fix It:

• Perform a reconciliation check between GST reports and general ledger accounts.

• Set up automated rules in accounting software for recurring transactions to ensure consistent GST treatment.

• Offer training sessions to clients on how to classify transactions correctly.

3. Missing BAS Deadlines

Late BAS lodgments are a frequent issue, often resulting in ATO penalties or interest charges.

✅ Common Reasons:

• Disorganized record-keeping leading to delays.

• Lack of awareness about BAS deadlines.

• Forgetting to allocate time for BAS preparation.

💡 How to Fix It:

• Encourage clients to use cloud-based software to track GST and generate BAS reports in real time.

• Set reminders for BAS deadlines, and schedule check-ins to ensure records are complete ahead of time.

• Consider offering a BAS lodgment service to reduce the burden on clients.

4. Ignoring GST on Overseas Transactions

With the rise of e-commerce, many businesses fail to apply GST correctly to cross-border transactions.

✅ Common Mistakes:

• Not charging GST on imports valued below $1,000, as required by ATO rules.

• Misreporting GST on services provided to overseas clients.

💡 How to Fix It:

• Review the ATO’s guidelines on GST for cross-border transactions.

• Advise clients to use software tools that can handle multi-currency and international GST requirements.

5. Poor Record-Keeping

Failing to maintain accurate records makes GST compliance a nightmare and increases the likelihood of errors or audits.

✅ Common Mistakes:

• Not keeping proper tax invoices for purchases.

• Failing to track petty cash or small transactions.

💡 How to Fix It:

• Set up a document management system to store digital copies of receipts and invoices.

• Recommend tools like Hubdoc or Receipt Bank to automate data capture for client expenses.

Final Thoughts

By helping clients avoid these common GST mistakes, you can save them time, money, and stress while strengthening their trust in your expertise. Regular education, hands-on support, and proactive communication are the keys to minimizing GST errors and ensuring smooth compliance for your clients.

Which GST challenge do you encounter most often in your work? Share your experiences below!