Hello Chasers,
If you are involved in the hospitality industry or purchase food and health products there are traps in the way many inadvertently treat the GST component.
These GST classification errors can lead to significant under-reporting of GST for some taxpayers, and as a consequence, if audited, large penalties and interest liabilities that accrue from when the underreporting was first detected!
The ATO recently issued guidance for small to medium businesses on self-reviewing GST classification of food and health products.
The use of this guide is not mandatory, although the ATO encourages small to medium businesses to regularly self-review the GST classification of supplies, and adopt better practice processes and controls as listed in the accompanying checklist.
The checklist provides practical, step-by-step guidance for entities to:
- self-review the GST classification of their supplies (products they import, purchase as stock or produce for sale); and
- assess the robustness of their business systems, processes and controls that directly impact their GST classification systems.
There is a simpler option though, if you don’t want the tedious way of sifting through each transaction.
Small business food retailers with turnover of $2 million or less may use one of the ‘GST simplified accounting methods’ to account for GST instead.
Reah out to our experienced team on 03-55612643 if you are unsure or need some help to manage your GST compliance.
Have a great day!
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