Common GST mistakes to avoid.
Here I explain some of the common GST mistakes made by kiwi businesses, so you can ensure your next return is looking ship-shape.
1. Claiming GST on overseas transactions and unregistered suppliers.
GST cannot be claimed on services and products sourced from overseas suppliers. Often these are often overlooked. For instance, services or goods from overseas might be Microsoft, Facebook, MailChimp, Google Apps. The GST on these cannot be claimed.
2. Registering for GST too early or too late.
For a new or small business deciding when and whether to register for GST can be tricky. In New Zealand a business is required to register for GST when they earn $60,000 or more per year. If your business sells mostly to the public, registering early will see you paying more tax than you may have had to, but if you register too late you pay face financial penalties from the IRD.
3. Leasing and hire purchase.
If you’re buying assets or equipment (or there’s an option to take ownership) you can claim GST up front. But if you’re only leasing or hiring an asset the GST is claimable on each payment. There are many different types of leasing deals out there, so be careful with the fine print as GST may only apply to part of the regular payment.
4. Missed claiming business purchases paid from personal account.
When buying assets for business use, you can claim a GST deduction, especially when it is to be used 100% for business purposes. When a purchase is made through a personal account it may be missed from the business records and as such GST is forgotten about & not claimed. Keep in mind that where there is private use, such as vehicles, you can’t claim all of the GST – because you need to adjust for the expected private use component.
5. Incorrect figures and accountancy practices.
We’re all human and mistakes do happen, so it’s easy to enter the wrong numbers or miss an invoice when completing your GST return. Like registering too early or too late, you may face penalties for this from the IRD.
We offer accounting knowledge at bookkeeping prices so we can help manage your GST returns, payments, invoicing and even your financial statements. To find out more give us a call on 033795338.