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

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 help keep the ATO auditor away by alerting you when raise a bill or invoice that includes GST to a business not registered to charge it.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 that money.

Let's say you raised a bill for a subcontractor for $10,000 + 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 includes GST. 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 the 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 However, the danger is that you're working from outdated records and business information, or you or your bookkeeper might be facing a case of fraud where a supplier deliberately charges you GST despite being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, and it's no surprise that mistakes 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 since last month. 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 alert advises you that a bill has been raised for $10,000 + GST with your subcontractor. It includes GST for $1000; however, this business does not appear to be registered for GST.

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.

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. You can request a revised invoice exclusive of GST. Congrats, you successfully avoided a disastrous hit on your cash flow and avoided a tax debt with the ATO by not claiming imaginary GST. GST errors are just one of the many risks XBert will find reviewing your accounting data multiple times per day. Using sophisticated algorithms, predictive analytics, and machine learning, XBert is there to detect business risks, saving you time and money.

XBert is an easy-to-use, powerful Xero add-on for business owners, finance teams, bookkeepers and accountants to stay a step ahead in business.

If you're serious about business success, sync your accounting data with XBert. In minutes, you'll know the amount of money at risk and how to prevent losing it.