More than two years in, up to 90% of businesses are getting their Business Activity Statement (BAS) wrong - running a high risk of mounting tax penalties, according to a GST expert at PricewaterhouseCoopers.
National indirect tax partner Kevin O'Rourke says that while businesses throughout Australia are in the process of submitting or finalising their fourth-quarter BAS, most businesses are likely to submit incorrect BAS statements with errors in GST paid and credits claimed.
"In our experience the vast majority of businesses are currently getting their BAS wrong. In an environment where the Australian Taxation Office (ATO) is heavily focused on enforcement activities, this could expose those businesses to substantial penalties," he says.
"With a record $1.6 billion allocated to revenue enforcement activities over the next four years, business needs to understand that the ATO is moving from 'GST education' to 'GST compliance' mode, and that it is now more important than ever to look in detail at the information they are providing the ATO to ensure they are not creating problems for themselves further down the track."
More than two years after the introduction of the GST, there are a number of common errors that accounting staff are still making.
The top-10 errors made in the BAS include GST paid or credits claimed in the wrong tax period because of system design or manual errors, and non-deductible expenses not recognised, resulting in over-claimed input tax credits.
In most cases, these errors can be attributed to:
- lack of experience/skills in staff who undertake BAS work
- regular turnover of accounting staff
- dispersal of original specialisation in GST
- highly manual nature of some aspects of BAS preparation
- reliance on information provided by parts of the business who are not familiar with GST requirements.
"A business facing these issues are also potentially at risk of poor GST systems and processes, which will come under ATO scrutiny during the new co-operative compliance reviews," O'Rourke says.
"Under these reviews, the ATO will request a map of your business's BAS processes to determine the integrity of the data, processes and the number of manual interventions applied before the BAS is submitted.
"This information will allow the ATO to calculate the probability that your company has incorrectly claimed credits or made errors in GST payments.
"With over 1,000 pages of GST rulings over the past two years, and with more on the way, it is crucial that businesses get their BAS and GST processes and systems in order so GST risks are kept to a minimum."
To read the top-10 errors made in BAS, see this week's Queensland Business Review newspaper, emailed to subscribers every Friday morning. Call 1800 649 578 or email subs@pubserv.com.au for details.