Businesses selling goods or services to other businesses without charging GST are being warned they will not get away with the practice.
While the purchasing business may be entitled to claim the GST back as an input-tax credit, this does not remove the obligation for the selling business to charge the tax.
"There appears to be a misconception that if there is no revenue impact to the ATO (Australian Taxation Office), there will be no impact on either entity involved in a transaction which is incorrectly classified simply to save on administrative headaches," PricewaterhouseCoopers' (PwC) leader Ken Fehily says.
"Many enterprises may be applying incorrect GST charges to items in business-to-business transactions in the mistaken belief that ‘it will all come out in the wash'."
But, Fehily warns, the ATO is on the trail of any "missing socks".
ATO audits are finding a number of businesses with either GST liabilities or Australian Competition and Consumer Commission (ACCC) pricing liabilities.
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