Common GST mistakes and how to avoid them¶

Most GST mistakes are simple ones, made in a hurry. They usually come down to claiming a GST credit you were not entitled to, or handling GST on a sale the wrong way. This lesson pulls the common ones together as a practical checklist, so you know what to look for before you lodge your BAS.

Each mistake below is framed as a "what to check". None of this is tax advice — for your own situation, the ATO is the source to rely on.

In one line

Most GST mistakes come from claiming credits you cannot claim or handling GST on a sale wrongly — a few checks before you lodge catch most of them.

Why this matters¶

Getting GST wrong means your BAS is wrong, and that can mean paying too much, claiming too much, or having to fix it later. A short set of checks each time you record a sale or purchase saves time and stress down the track.

What you will learn¶

The most common GST mistakes small businesses make
What to check before you claim a GST credit
How registration and accounting method can cause errors

Understanding the concept¶

Here are the common mistakes, each with a plain "what to check".

1. Claiming GST credits on GST-free or input-taxed purchases. Some purchases have no GST in the price — for example GST-free items (like many basic foods) and input-taxed items. If there was no GST, there is no GST credit to claim. What to check: was GST actually charged on this purchase? If not, do not claim a credit.

2. Claiming the full GST on something used partly for private purposes. The ATO says you cannot claim a GST credit for the private or domestic part of a purchase. If something is used partly for business and partly privately, you claim only the business portion. What to check: is this used only for the business? If it is part private, claim only the business share of the GST.

3. Claiming without a valid tax invoice. The ATO says that for a purchase costing more than $82.50 (including GST), you need a valid tax invoice to claim the GST credit. What to check: do you hold a valid tax invoice for purchases over that amount? No valid invoice, no credit.

4. Charging GST when you are not registered. You can only charge GST if you are registered for GST (or required to be). What to check: are you registered for GST? If not, you should not be adding GST to your prices.

5. Using the wrong accounting method. There are two ways to account for GST — the cash basis and the non-cash (accruals) basis — and they change which period a sale or purchase falls into. Mixing them up puts amounts in the wrong BAS. What to check: are you recording GST on the method you actually use, consistently?

6. Missing adjustments. Sometimes GST already reported needs an adjustment — for example when something is returned, a price changes, or the business use of a purchase changes. Missing these leaves your BAS out of step with what really happened. What to check: has anything changed since you first reported it that needs an adjustment?

For accountants & bookkeepers

These map to well-worn ATO guidance: no creditable acquisition where the supply was GST-free or input-taxed; apportionment for partly-creditable (private/domestic) use; the $82.50 (GST-inclusive) tax-invoice threshold for claiming; the "registered or required to be registered" condition for taxable supplies; consistent application of the chosen attribution basis (cash vs non-cash); and adjustment events / change in creditable purpose driving increasing or decreasing adjustments. Treat this as a client-facing checklist and confirm edge cases (e.g. apportionment method, adjustment thresholds) against the current ATO material.

Example¶

Sam runs a small cafe and does the BAS himself. In one quarter he makes a few classic slips. He buys plain milk and bread for the cafe — both GST-free — but tries to claim GST credits on them, even though there was no GST in the price. He buys a laptop he uses about half for the cafe and half for personal things, and claims the full GST instead of just the business half. He also claims GST on a $200 tool but cannot find the tax invoice for it.

Before lodging, Sam runs the checklist. He removes the credits on the GST-free milk and bread, adjusts the laptop claim down to the business share, and holds off on the tool credit until he tracks down a valid tax invoice. His BAS now matches what actually happened.

Common mistakes¶

Claiming GST credits on GST-free or input-taxed purchases that had no GST.
Claiming the full GST on something used partly for private purposes.
Claiming a credit without a valid tax invoice for purchases over $82.50.
Charging GST when you are not registered for GST.
Using the wrong accounting method, so amounts land in the wrong BAS period.
Forgetting adjustments when a sale or purchase changes after you reported it.

How this works in myaccountant¶

In the app — myaccountant helps you record the GST on your sales and purchases so the right amounts flow through to your BAS. Keeping your income and expenses recorded as you go makes these checks easier and helps you avoid the common slips before you lodge.

Key points¶

If there was no GST in the price, there is no credit to claim.
Claim only the business share of GST on anything used partly privately.
You need a valid tax invoice to claim GST on purchases over $82.50.
Only charge GST if you are registered for GST.
Record GST on the accounting method you actually use, consistently.
Watch for adjustments when things change after you have reported them.

Learn next¶

General information only — not tax, super or financial advice.

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