Here Peter Schotter and Simmone Cottom, product specialists at Thomson Reuters address the risks of incorrect GST reporting in a recent Indirect Tax webinar in the new series, Key Challenges: Answered.
GST is not your ordinary tax. As it’s a transaction-based tax, reporting errors can occur in any part of any transaction across your business. The risk of incorrect reporting can yield not only tax liability or penalties, but loss in revenue from missed credits.
The ATO is naturally enough targeting this potential hive of inaccuracies. Its GST assurance program, under its Justified Trust initiative, features 12-month streamlined assurance reviews (SARs) to validate the way your business is meeting its GST compliance obligations.
The regulator expects that you undertake assurance and verification procedures that are tailored to your unique operating environment, with data and transaction testing as a typical aspect of this process. The ATO has already slated 30 Top 1,000 GST assurance reviews in August.
In a GST assurance review, the ATO checks that you have GST controls within your tax control framework and that they’re working effectively. This includes “the design of business systems to create, capture and report transactions correctly for GST purposes”.
So, what could go wrong?
Lots, if you’re manually reporting your GST transactions to the ATO – with risks across the whole process involving manual GST report extraction, entering details in an Excel template with a link to the BAS form, then lodgment in the ATO portal.
According to Simmone Cottom, Senior Solution Consultant in Indirect Tax at Thomson Reuters who in the Indirect Tax webinar points out the following common problems that emerge from this time-consuming manual process:
- GST is hard-coded/ not regularly updated
- a misallocation of tax codes on transactions
- it relies on the vendor’s GST selection, which could be incorrectly entered
- irregular ABN validations
- not checking ALL transactions
- relies on Excel being correctly updated and the BAS links to be correct.
And that’s just the beginning.
By automating your GST process you can not only avoid all the above risk factors, but you can also review your historical transactions through verification testing, explains webinar co-presenter Peter Schotter, Business Development Manager at Thomson Reuters. This prepares you nicely for the ATO’s SARs, and well as identifying any overpaid GST payments that you could apply to the ATO for refund.
An automated solution will check all the details across all your transactions, indicating warnings if any information is missing in your transactional data, such as an invoice date or ID. It will also:
- check that correct credits have been claimed
- cross-match ABN details and validity with the Australian Business Register (ABR) website.
- check supplier vendor tax codes with transactions
- electronically lodge your GST report with the ATO portal.
“The range of testing that an automated solution offers will give you the confidence that any errors are being picked up and that the numbers you are lodging with the ATO are accurate and correct,” concludes Schotter.
So, how confident are you that you’re reporting correct numbers to the ATO?
Watch our webinar to find out how you can automate the GST process to ensure accurate reporting!