If you’ve read our Beginner’s Guide to GST, you’ll know how to file a GST return like a pro. But sometimes, as we’re coding transactions throughout the GST period, mistakes are made, so it’s important to take a few minutes before you file to check that the information you’re sending to IRD is correct. Filing incorrect GST returns can lead to penalties and interest and can be a pain to resolve, so let’s talk about how to check the accuracy of your GST return before filing it.
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Make sure your bank accounts balance
Log in to your accounting software as normal and you’ll see your bank balance. Regardless of what software you use, you can run a bank reconciliation report. (If you’re not sure how to do this for your software, reach out and we can guide you through it).
As you near the end of each GST period, we recommend running this report. Check that the bank balance according to your accounting software matches the balance your bank provides.
If the two balances do not match, it often means that you have made an error somewhere along the way, which will result in your GST return being incorrect. Work out when the account last did balance and use a process of elimination to determine which transactions are causing the variance.
Systems such as Farm Focus or Xero make this process very easy as they tend to highlight the problem transactions.
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Ensure all of your Bills and Invoices have been entered for the period
Note: This is only relevant if you are on Invoice basis GST or use the debtor/creditor modules in your accounting software (such as invoices and bills in Xero).
Check that all invoices and bills have been entered for the GST period.
Also, take a minute to check that the aged receivable or aged payable reports at the end of the GST period are correct. For example, if your aged payables report is showing a bill as unpaid even though it has actually been paid, then this will cause your GST return to be incorrect.
If you are seeing errors such as the above, you will need to go back and correctly allocate your bank payments to these invoices/bills.
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Review your coding
The quickest and easiest way to review your coding is through your GST Audit Report. All accounting systems will have a variation of this report. It will show you each transaction that has occurred during the GST period. It will also show how each transaction has been treated for GST and which code you have allocated that transaction to.
This is a great opportunity to look over this list and double check that the GST treatment and code is correct. In some systems, such as Xero, you can click on the transaction from the Audit Report to quickly edit any errors. If you use another system, such as MYOB Essentials and Farm Focus, you will have to go back and find the transaction in your bank account to fix any errors.
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Triple check any big sales or purchases made throughout the GST period
If you have made any big sales or purchases during the GST period it is a good idea to check these extra closely – if you get these wrong and still file with IRD they may sting you with penalties and interest when you try to correct it in the future! You can check these transactions in the same way you check your coding for all your transactions (just take a minute to triple check these ones).
Additionally, if you bought something using finance (such as a loan or hire purchase) you can claim the GST on the transaction up front so make sure you talk to your accountant to ensure these transactions are recorded correctly.
Ticked all these boxes? Confident your GST return is correct? Go ahead and file the return with the IRD, and don’t forget to make the payment if required. Or, if you’d like someone to manage this process for you and give you back a bit of extra time, get in touch–we’d love to help.
