Do EFTPOS Merchant fees include GST

Nowadays, keeping your books in order has never been easier when you use an online accounting software. Small business owners get to enjoy the flexibility of having their accounts online, and benefit from the time and money saved. With online accounting, preparing your own *BAS (business activity statement) is also easier.

1. Double Dipping on GST

Hire Purchase/Lease of Vehicle of Plant or Equipment is an area that I see many business owners making a mistake when doing the books. Initially, the client (or their accountant) will claim the full GST component in the first quarter that they purchase their vehicle.

The confusion sets in when they record their regular monthly payments. The client will either continue to code it as a GST or as a Capital expense. Both the tax codes GST and CAP will appear on their BAS Reporting sheet, effectively causing them to “double dip” on the GST.

Always check your purchase invoice and BAS Records to ensure you code your monthly repayments accurately.

2. Incorrect tax codes in your chart of accounts

I would advise you to ask your accountant to provide a default chart of accounts or ask a BAS agent to set up your tax codes BEFORE you begin using your online accounting software.

3. Claiming GST against all expenses

There are expenses that do not have a GST component. They include:

• Motor vehicle registrations
• Bank charges
• ASIC fees
• Paypal transaction fees
• Google Adwords
• Interest and director fees / drawings

4. Claiming GST against all sales

Some services and products in the medical and health care areas also do not include GST. Basic food for human consumption do not include GST.

6. Forgetting to include all cash sales and purchases

You can get into a lot of trouble when using the great Aussie practice of discounting the GST if paid by cash. The ATO has a sophisticated process of cross matching data. So make sure you declare all cash payments. On the flipside, do not throw away genuine tax deductions and GST credits into the bin.

7. Claiming on GST for private purchases

Items like personal loans, director’s fees and any other purchase for private consumption cannot have the GST credit collected on your BAS Statement.