Sometimes tax can be confusing. So, in order to help you avoid making common errors, we have created a list of the most common mistakes that sole traders or drivers make when preparing their BAS.
Claiming expenses you are not entitled to.
You cannot claim a GST credit:
- When you are not registered for GST purposes
- For purchases over $82.50 (GST inclusive) without a valid tax invoice. For more information on this, click here
- For purchases that do not have GST included in the price.
- For items such as most basic foods (e.g. fruit & vegetables or water), overseas exports and some health services as these are considered GST-free. For more information click here.
- For items like personal loans, personal insurance and any other purchase for private consumption.
- For expenses related to motor vehicle registration as this is an expense which generally does not include GST. However, there may be other expenses listed on your invoice which do include GST so it is important to separate these and only claim the expenses which do include GST if you are entitled to do so.
- For the entire amount on the purchase of a luxury vehicle. Click here to find out more.
- For food you consume while working (as it is considered private in nature by the ATO)
Items you need to be careful about when you fill your BAS form:
- Purchases from suppliers who are not GST registered cannot be claimed as these expenses will not include GST in the price. To check if a supplier is registered for GST, simply take the ABN or business name from the supplier’s invoice and look it up on the ABR website here.
- You can only claim expenses which were incurred while you were on the job. For example, if you pay for parking while you are not working then you cannot claim that expense in your BAS.
- Tax invoices which include both GST inclusive expenses and GST exclusive expenses. Make sure you only claim the specific items listed which include GST, not the whole invoice amount.
Things to keep in mind when filling out your BAS form:
- When submitting the BAS, if you get an error message saying ‘Required’ in any column, the system is asking you to fill a value in that particular column. This must be done before you can proceed with the submission.
- The BAS form only accepts rounded numbers for the income column. For example, $360 (Correct) and $360.15 (Incorrect).
- For all expenses being claimed in the Airtax form you will need to include a business use percentage. This should reflect the percentage of each expense which was used to earn your business income (i.e. not used for personal use).
Not lodging a BAS for a particular period.
Even if you did not earn any business income during a particular period you still need to lodge a BAS if you were registered for GST during that period.
Claiming GST credits in the wrong period.
If you are registered for GST on a cash basis, we recommend you claim GST credits in the period in which the associated expense was paid. However, you are not obliged to as you have four years to claim credits.