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Incorrectly Calculated GST – What are the Consequences? Posted on October 9, 2018
CEO of Shoeboxed Simon Foster, says most Australian businesses, both large and small, are still getting their GST calculations wrong.
“Where it often goes wrong is when someone has simply subtracted 10 per cent from the total invoice instead of dividing the total by 11 and subtracting that amount.” Foster explains. “Whilst that might not seem like much, if it’s on a six or seven figure invoice, or it’s happening on a monthly basis, that can add up to some big numbers missing from your bank account.
“Unfortunately, when the organisation issuing the invoice or receipt gets it wrong, it can have a serious knock-on effect with the business up or down the line. We’d estimate 10 per cent of tax invoices are incorrect – but those 10 per cent of invoices will affect a much greater percentage of businesses. That, in turn, causes a considerable drain on time-poor business owners having to make amendments to their invoices when the mistake is realised.”
Although the ATO will refund any GST overpayments, the onus is on the business owner or their accountant to bring the error to the ATO’s attention. However, Foster says most overpayments are never found or reported.
To learn more about how you can avoid GST overpayments, click here.