Business owners have the advantage of claiming a credit for any GST included in the price of goods and services purchased for their business. However, many businesses fail to claim their credits correctly.
The vast majority of mistakes are avoidable and relate to claiming credits for ineligible items or including GST-free items. Here are three top mistakes:
- Not registered for GST: To claim a GST credit, your business has to be registered for GST.
- Claiming GST-free purchases: Businesses can only claim GST on goods and services where the supplier has included GST. To find the GST paid, check your tax invoice instead of dividing your total business purchases by 11.
- Not keeping records: GST is not claimable if you do not keep valid tax invoices for business purchases over $82.50, including GST. Documents such as bank statements, purchase orders or delivery receipts are not sufficient to meet the tax invoice requirements.
If you are unsure of your GST requirements, Contact your accountant.
DFK Crosbie has a great receipt management tool available on the DFK Crosbie app to help manage receipts for GST, download the app here.