Keep the tax auditor away! Don't claim GST from a non-registered supplier

by XBert Team ~ 3 min read

XBert helps you reduce risk, save money, and ensures your business is GST compliant.

Are you or your bookkeeper unnecessarily putting your business at risk of losing thousands of dollars? When the ATO GST auditor comes knocking demanding you pay back GST you shouldn't have claimed in the first place, can your business, or your client's business, take the cash flow hit?

XBert is a simple way to keep the ATO auditor away by ensuring you as a business owner or bookkeeper never make a claim from a non-registered business again.

You think you know someone

It's not uncommon to set up a supplier in your accounting software, then never check their GST status again. If you claim GST from a non-registered supplier (even by accident), you're putting your business, or your client's business, at risk of needing to pay the ATO back thousands of dollars.

Let's say you raised a bill for a subcontractor for $10000 + GST. You've paid this subcontractor many times before and don't know they recently changed their GST status to Not Registered. You assumed they were still registered since the bill they sent you had GST included.

You continue to work with the subcontractor, becoming aware of the issue only when the ATO audits you. Can your business take the hit of having to pay back years (thousands and thousands of dollars) of incorrectly claimed GST?

Businesses can deregister for GST at any time. A supplier could forget to instruct their bookkeeper or finance team not to charge GST on future invoices.

Once added to your records, it's unlikely that anyone doing your books is going to manually check the GST status of the business each time you receive a bill or invoice. Can you imagine how much time this would take for every business you trade with?

However, the danger is that you're working from outdated records and business information.

The scarier scenario is that you or your bookkeeper might be facing a case of fraud where a supplier deliberately charges you GST depsite being unregistered.

Juggling all of the things and the crap can still hit the fan!

Small business owners wear many hats, including managing their own day-to-day bookkeeping. Some have basic knowledge of accounting but squeeze in balancing the books between everything else that demands their attention.

Businesses work with a range of subcontractors and suppliers. Some are registered for GST and others aren't. Some products and services attract GST and some don't. It's hard to be across the ins and outs all the time, and it's no surprise that mistakes can happen.

It can be easy to pay an invoice expecting that the supplier has done the right thing on their end. Especially if you are a bookkeeper, who has hundreds of entries to make across multiple clients each day. The last thing on your mind is whether the GST status of a supplier has changed.

Contact records are rarely (if ever) checked again and updated after they're first entered.

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 notification if there are any discrepancies with the ABR and your records.

The XBert advises you that a bill has been raised for $10000 + GST with your subcontractor. It includes GST for $1000; however, this business does not appear to be registered for GST.

XBert SupplierRisk 10k

If you pay GST and claim on your BAS, you may be liable for the GST amount, $1000 in this case. As the business owner or bookkeeper, you shouldn't pay the invoice until the supplier's GST status is confirmed.

This time, the subcontractor issues a revised invoice exclusive of GST and you update your expense entry.

Peace of mind and keeping the ATO off your back

XBert alerts you to check the Australian Business Register to determine GST registrations. Once 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.

Congrats, you successfully avoided a disastrous hit on your cash flow and avoided a tax debt with the ATO by not claiming imaginary GST.

"XBert offers me so much more peace of mind when I am doing my books. It's so intuitive, easy to use and really effective in picking up those little human errors that are so simple to make when you've got lots on the go. The last thing I need is the headache of sorting out a tax debt from a simple mistake. Just picking up one error is more than enough to cover the minimal monthly cost". Small business owner Cath is an XBert convert.

GST errors are just one of the many risks 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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