Businesses beware | The real costs of GST compliance and director responsibility

by XBert Team ~ 4 min read

XBert can help resolve GST risks, ensuring compliance and saving you time and money.

GST compliance is complex and is recognised as a significant burden for small businesses. It takes hours to meet requirements and to complete reporting, and the confusion around compliance causes risk and can lead to money loss. Directors are also on notice, with a proposal to make them personally liable for a company's GST liabilities.

XBert connects with the Australian Business Register (ABR) and analyses your cloud accounting data hourly to detect any GST and ABN risks or errors, saving you time and helping ensure GST compliance.

XBert will alert you to changes in the GST registration of businesses so that you don't pay GST when you shouldn't, or to make sure you pay when you should.

Businesses can change GST registration status at any time. XBert automates the checking process for you so that your BAS and GST claims are accurate.

You'll also see snapshots of GST amounts for income and expenses due in the current quarter and current ATO liabilities to pay.

Now it's personal

Under the Directors Penalty Notice (DPN) scheme, directors are responsible for meeting the company's Pay As You Go (PAYG) withholding and Superannuation Guarantee Charge (SGC) obligations. A recent proposal has been made to also make directors personally liable for outstanding GST.

In this mybusiness article, Managing 'sleeper issue' of directors' GST risks, special counsel Jim Koutsokostas states:

It's a big risk for company directors, because GST liabilities are arguably more pervasive... The consequences for a director of a non-complying company can be severe — including bankruptcy.

If a company has an outstanding GST liability, it is proposed that a new director will become personally liable for a penalty equal to the amount of that obligation unless, within 30 days of their appointment, the company pays its outstanding debt, appoints an administrator or begins to wind up the company.

To avoid a DPN liability risk, Koutsokostas recommends ensuring reporting and payment of tax liabilities is done on time.

XBert can assist business owners and bookkeepers to stay on top of GST reporting. We're developing even more alerts to align with TPAR requirements and expand our GST compliance offering.

  • XBert currently integrates with Xero accounting software. MYOB and Quickbooks integrations are coming soon.

The real cost of compliance and GST risk

How much time do you spend collecting, complying, and reporting GST?

A few hours a month, a week, a day? Does everything else need to come to a halt at reporting time?

What impact does GST compliance have on you and your business when measuring time, money, health and wellbeing, and opportunities for business growth?

GST and reporting causes a lot of stress which can lead to mistakes and oversights that then create financial risks and means loss of money.

XBert will alert you to risks before you know the risks exist!

XBert automatically monitors the GST status of businesses you trade with and will detect errors in your bookkeeping data and discrepancies with the ABR records. Using XBert, you can resolve these risks quickly and easily and save valuable time and money.

It may be hard to quantify the time you spend on GST compliance, but an MYOB special report found that two-thirds of the time Australian small and medium-sized businesses spend on tax administration comes from the GST, and on average it is more than 84 hours per year.

That is precious time away from clients and customers, training, and other business activities and operations that provide income and growth.

The 2015 report, The Hidden Costs of GST Hitting Small Business Hardest, also found that GST compliance was the biggest source of red tape burden for small business

Key findings:

• It costs an average of $6778 in time to comply with GST reporting each year (collecting, remitting and accounting for the GST).

• 84.1 hours time each year is spent on GST compliance, this equates to an average of $6778 internal costs each year.

• On top of this, small businesses are spending on average an additional $2433 in fees to accountants and bookkeepers to assist them with GST compliance.

According to the report:

Time and money are not the only costs of GST compliance. Tax experts note that the biggest issue for small business is the unnecessary complexity in the tax system and, in particular, ambiguous requirements that can expose the business to risk.

XBert in action

XBert connects with the Australian Business Register regularly, so any updates to their records are also updated in XBert. You will receive an XBert risk alert if there are any discrepancies with a supplier's GST status or their ABN and your records.

XBert Blog InPost Images GST Alerts FullScreen

XBert advises you confirm the supplier's GST details and request a revised invoice. If any GST has been paid, you can ask that the amount gets refunded or credited to your account. Once the GST status is clarified, update the contact's financial details and tax rate in your linked accounting software to ensure GST is correctly applied based on their status.

  • XBert currently integrates with Xero accounting software. MYOB and Quickbooks integrations are coming soon.

Peace of mind knowing any GST risks and ensuring compliance

With XBert, you can catch any problems early - before it costs you money, a tax debt, and causes you unnecessary stress.

GST risks and errors are just some of the many XBert will find reviewing your accounting data on an hourly basis. Using sophisticated algorithms, predictive analytics, and machine learning, XBert is there to detect business risks, saving you time and money.

If you're serious about business success, sync your accounting data with XBert, and in just a few minutes, you'll discover the amount of money at risk and how to prevent losing it. Book a demo or start your FREE 14-day trial now!

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