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.