This by far is the most common mistake made by bookkeepers and is the most important. Incorrect use of GST tax codes can cost businesses thousands of dollars and waste time trying to track and correct mistakes.
It is commonly thought that N-T means GST free but what it means that the transaction is not reportable on your BAS.
Generally it is considered that as they are both 0% , that it doesn’t matter which one you use but what they fail to realise that FRE is reportable on your BAS at G3 GST Free Sales so it is important to get it right.
Use coding N-T for anything not reported on your BAS like cash transfers, deposits paid, depreciation, recording stock movements, Government charges such as FID, BADT, Owners Drawing and Director Fees.
Use coding FRE for GST free Sales and Purchases. For example basic food stuff, sewerage and water, eligible childcare, non commercial activities of charitable institutions and most education and health services. Remember FRE is recorded on your BAS form.
Small Business owners need to develop good record keeping habits and avoid unnecessary mistakes. If you find this too difficult and time consuming the best way to ensure that you are preparing your BAS correctly would be to engage the services of a qualified BAS Agent.
I am a Registered BAS Agent Number 2480 65 84 and you can contact me on 0400 102 358 or email me at bookkeepingfairy@eftel.net.au. if you have any queries on GST.
Check out my website www.bookkeepingfairyperth.com.au or contact Jaleana 0400 102 358