If your business buys from overseas or sells to customers outside Australia, it’s important to understand how GST works. Getting it wrong can mean missed tax credits, penalties, or problems with the ATO—especially for small and growing businesses. Here are some of the most common GST mistakes importers and exporters make, and how you can avoid them.
1. Failing to Account for GST on On-Sales of Imported Goods
Businesses that import goods and sell them domestically must include GST on the on-sale if their annual turnover exceeds $75,000. Although GST is paid at the border upon importation, GST-registered businesses are generally entitled to claim input tax credits for the GST paid on imports. However, this does not exempt them from charging and remitting GST on the subsequent domestic sale of those goods.
2. Overlooking GST on Assembly and Installation
Even if you’re not the official importer, when you purchase and assemble or install imported goods, you’re required to include GST on those activities. This must be reported on your Business Activity Statement (BAS).
3. Misclassifying Exports
GST-free status hinges on accurate export classification and correct usage of Incoterms (e.g., DDP vs. EXW). If shipment terms shift the exporter role, the GST liability may change too—so document your delivery terms carefully.
4. Incorrectly Categorising Services as Offshore
Any service physically performed in Australia is subject to GST if your annual turnover exceeds $75,000—even if provided remotely or by a non-resident. Only services truly designated as “to a recipient overseas” qualify as GST-free.
5. Misreporting GST Refunds for Non-Residents
Non-resident businesses eligible for GST registration in Australia must only claim credits on Australian-related inputs. It’s common to see incorrect or excessive refund claims. Ensure every claim is tightly linked to Australian-sourced expenses.
6. Overclaiming Non-Deductible Expenses
Non-residents sometimes incorrectly claim input tax credits on non-business or entertainment expenses, which can trigger Fringe Benefits Tax (FBT) issues. Always distinguish between eligible business inputs and personal or staff entertainment outlays.
Don’t Let GST Mistakes Cost Your Business
Staying compliant with GST isn’t just about ticking boxes—it can also mean saving thousands in missed credits or avoiding unnecessary fines. If you’re unsure whether you’re getting it right, speak to our team at Chan & Naylor. Contact us today.
About Chan & Naylor
Established in 1990, Chan & Naylor has been a trusted partner for thousands of businesses and investors across Australia. Based in Sydney, we provide expert accounting services tailored to your needs. Choosing Chan & Naylor means you’re not just selecting a service provider; you’re gaining a partner aligned with your business goals. You’ll have access to a dedicated client manager supported by a team of accountants that specialises in business tax and investments. Contact us today so we can discuss how we can help you.
Disclaimer
This article serves as general information only and may not account for the unique circumstances of individual readers. For personalised and strategic solutions tailored to your specific situation, we invite you to seek professional advice from Chan & Naylor. Our highly experienced team is dedicated to helping you navigate the complexities of Australian taxation, ensuring that your financial strategies align with the latest regulations. Contact us today to embark on a path of informed and customised tax planning for your property investments.
