Filing a GST return is a routine task for many businesses, but even small mistakes can lead to penalties, delays, or inaccurate financial records. Whether you are a sole trader or running a growing company, understanding the common pitfalls in filing GST returns can save time, money, and stress. From missing receipts to incorrect calculations, these errors happen more often than many business owners realise. In this guide, we’ll walk through the most common mistakes businesses make when filing GST returns and share practical tips to help you submit your return correctly and with confidence.
What Is a GST Return?
A GST return is a report that businesses registered for Goods and Services Tax (GST) must submit to the Inland Revenue Department. It summarises the GST a business collects from customers and the GST it pays on business expenses during a specific reporting period. Filing a GST return allows Inland Revenue to determine whether your business needs to pay GST or if you are entitled to a refund.
In New Zealand, GST is charged on most goods and services. When a business sells products or services, it collects GST from customers. This is known as output tax. Businesses also pay GST when purchasing goods or services for business use, which is called input tax. A GST return records both amounts and calculates the difference.
If the GST collected from sales is higher than the GST paid on expenses, the business must pay the balance to Inland Revenue. If the GST paid on purchases is greater, the business may receive a refund.
Most businesses file GST returns through the myIR, and entering their sales and purchase figures for the reporting period. Maintaining accurate records and organised bookkeeping helps ensure the information reported is correct and makes filing GST return easier and more efficient.
In simple terms, a GST return shows how much GST your business has collected, how much it has paid, and whether you owe GST or are due a refund. But with deadlines, reporting rules, and record-keeping requirements involved, are you confident your business is preparing everything correctly before filing your GST return?
Common Mistakes When Filing GST Return
Filing GST returns is a routine part of running a business, but even small errors can cause problems with compliance, reporting accuracy, and cash flow. Many of the most common mistakes happen when records are incomplete, calculations are incorrect, or returns are submitted without proper review. Understanding these mistakes can help businesses avoid penalties and reduce the need for amended returns later.
Here are some of the most common mistakes businesses make when filing GST returns:
1. Missing Receipts or Invoices
One of the most frequent issues when filing a GST return is incomplete documentation. Businesses must keep proper records of all sales and purchases, including invoices, receipts, and expense records. Without these documents, it becomes difficult to confirm the GST paid on business expenses or the GST collected from customers.
Missing records may result in incorrect GST claims or unverified deductions. If Inland Revenue reviews your return and the supporting documents are not available, the GST claim may be denied.
2. Incorrect GST Calculations
Another common mistake involves miscalculating the GST payable or refundable amount. GST returns require businesses to report the GST collected on sales (output tax) and the GST paid on purchases (input tax). If the numbers are entered incorrectly, the final GST amount may be inaccurate.
Errors in GST calculations can occur when totals are manually calculated or when sales and purchase figures are not reviewed carefully. This may lead to underpayment or overpayment of GST and could require corrections after submission.
3. Claiming Non-Business Expenses
Businesses can only claim GST on expenses that are directly related to business activities. Claiming GST on personal or non-business purchases is a common mistake when filing a GST return.
For example, claiming GST on personal items, entertainment expenses, or mixed-use purchases without proper adjustments can lead to inaccurate reporting. If these claims are identified during a review or audit, the return may need to be amended and penalties could apply.
4. Filing the GST Return Late
Meeting GST return due dates is essential for maintaining compliance. Filing late can result in late payment penalties and interest charges from the Inland Revenue Department.
Late filing often occurs when businesses delay their bookkeeping or do not track GST reporting deadlines. Keeping organised financial records and setting reminders for GST reporting periods can help avoid this issue.
5. Incorrect GST Coding in Accounting Software
Many businesses rely on accounting platforms such as Xero to manage their GST reporting. However, if transactions are coded incorrectly within the system, the GST reports generated may contain errors.
For example, classifying GST-free sales as standard-rated transactions or coding purchases incorrectly can distort GST totals. Regularly reviewing transaction coding helps ensure GST reports are accurate before filing GST returns.
6. Not Reconciling Accounts Before Submission
Submitting a GST return without reconciling bank accounts is another common mistake. Bank reconciliation ensures that the financial transactions recorded in accounting software match the actual transactions in the business bank account.
If accounts are not reconciled before filing the GST return, some sales or expenses may be missing or duplicated in the GST report. This can lead to incorrect GST figures and may require corrections later.
When Should You Get Help From an Accountant?
Many small businesses manage filing GST returns themselves, especially when their finances are straightforward and transactions are limited. However, there are situations where getting help from your accountant can save time, reduce errors, and ensure your business stays compliant with tax requirements. Professional guidance can be particularly valuable when your business grows or when GST reporting becomes more complex.
Below are some common situations where seeking GST return assistance from an accountant may be beneficial.
1. Complex Business Structures
Businesses with more complicated structures often face additional reporting requirements. For example, companies with multiple entities, partnerships, or shareholder arrangements may need careful coordination when preparing GST returns.
An accountant can help ensure that transactions between related entities are recorded correctly and that GST is reported accurately. This reduces the risk of incorrect reporting or compliance issues during filing the GST return.
2. High Transaction Volume
As a business grows, the number of sales and purchase transactions can increase significantly. Managing large volumes of invoices, receipts, and expense records can make filing a GST return more time-consuming and prone to mistakes.
A GST accountant can review financial records, verify GST calculations, and ensure transactions are coded correctly in your accounting system. This helps maintain accurate reporting and prevents costly errors.
3. GST Corrections or Amendments
Sometimes businesses discover errors in previously submitted GST returns. These may include incorrect figures, missing expenses, or transactions recorded in the wrong reporting period.
In these cases, an accountant can guide you through the process of correcting the return and submitting amendments through myIR. Professional advice ensures that adjustments are handled properly and reported in accordance with Inland Revenue requirements.
4. Tax Planning and Compliance
Beyond simply filing a GST return, accountants can also provide strategic advice on managing your overall tax obligations. They can help businesses improve record keeping, review GST reporting processes, and ensure compliance with the rules set by the Inland Revenue Department.
Tax planning can also help businesses understand how GST affects pricing, cash flow, and financial decision-making. By reviewing financial data regularly, accountants can identify potential issues before they become larger compliance problems.
5. Saving Time and Reducing Stress
Running a business involves many responsibilities, and managing tax reporting can be stressful for business owners who are unfamiliar with the process. Working with a GST accountant allows business owners to focus on running their business while ensuring their GST returns are prepared accurately and submitted on time.
Professional GST return assistance can also provide peace of mind, knowing that your financial records and tax obligations are being handled correctly.
In many cases, businesses start by filing GST returns themselves and later seek help as their operations expand. If your GST reporting is becoming more complicated or time-consuming, it may be worth considering whether professional support could make the process easier and more reliable.
Frequently Asked Questions About Filing a GST Return
1. What is filing a GST return?
Filing a GST return is the process of reporting the GST a business has collected from sales and the GST paid on business expenses during a specific reporting period. Businesses submit this information to the Inland Revenue Department to determine whether they need to pay GST or receive a refund.
2. How do I file a GST return in New Zealand?
To file a GST return in New Zealand, log in to your tax account through myIR. Select the relevant GST period, enter your sales and purchase figures, review the GST totals, and submit the return. After submission, you either pay the GST owed or wait for a refund if applicable.
3. How often do businesses need to file GST returns?
Most businesses file GST returns monthly, two-monthly, or six-monthly depending on their chosen GST filing period. The reporting frequency is usually determined when a business registers for GST and may depend on turnover or administrative preference.
4. What records are needed when filing a GST return?
Businesses should keep accurate records of sales invoices, purchase receipts, expense claims, and bank transactions. These records help confirm the GST collected and the GST paid on purchases, ensuring the GST return is accurate.
5. What happens if you file a GST return late?
Filing a GST return late may result in penalties and interest charges from Inland Revenue. If a return is missed, businesses should submit it as soon as possible and pay any GST owed to minimise additional charges.
Need Help Filing Your GST Return?
Filing a GST return doesn’t have to be stressful or time-consuming. At WK Advisors and Accountants, we help businesses stay compliant, avoid costly mistakes, and keep their finances organised.
Whether you’re unsure about your GST reporting, need help correcting a return, or simply want peace of mind that everything is filed correctly, our team can support you with practical advice and reliable GST return assistance.
Let our experts handle the details so you can focus on running your business.
Get in touch with WK today to make filing your GST return simple and accurate.