Why It's Essential to Check Supplier ABNs

Are you in the habit of checking your suppliers’ Australian Business Numbers?

Have you been verifying your supplier ABNs? Having the right tax codes is vital for accurate GST calculations on the BAS. Now is the perfect moment to double-check your supplier ABNs and GST status.

When you make business purchases, it's important to receive a valid tax invoice from your supplier to ensure that your purchase is considered a business expense. The ABN contains important information such as contact details, business structure, and GST registration.

Unfortunately, many business owners neglect to check the ABNs of their suppliers, which can lead to incorrect GST claims. This can result in either claiming too much or not enough GST.

Here's how you can check a supplier's ABN:

• Visit the ABN Lookup website: ABN Lookup
• Enter the supplier's ABN as provided on their bill.
• Review the current details, including the GST registration date. This will indicate whether the business is registered for GST and from what date.
• The entry will also indicate if the ABN has been cancelled.
• Save or print the PDF extract and attach it to the supplier record in your accounting software.
• If you have multiple ABNs to check, you can upload an Excel spreadsheet template for a more efficient search.

When to Check Supplier ABNs

It's a good practice to check the ABNs of all new and major suppliers, as well as any large or unusual payments. Always check the ABNs of suppliers who are new to business.

You can also explore add-ons for your accounting software that automatically check ABNs for you. Alternatively, you may choose to audit ABNs quarterly or annually for smaller businesses. If you opt for an annual check, make sure to do it in the March quarter so that any necessary GST adjustments can be made in the June BAS.

Even better, consider checking the ABN of every new supplier and saving the details in your software. This way, you'll always have the correct information and tax codes on hand.

What if you discover that the ABN is incorrect? It's not uncommon for suppliers, especially those new to business, to charge GST on their invoices when they are not yet registered for GST. Some suppliers may also provide the ABN of another business, such as using both a sole trader ABN and a company ABN. In such cases, they may issue an invoice from the wrong entity.

If you review your suppliers' ABNs and discover that some of them have mistakenly charged GST, make sure to inform the supplier and request a refund or credit for the incorrect GST amount. Additionally, ask the supplier to issue new tax invoices with the correct information.

Another common mistake is claiming GST on purchases from small overseas businesses that are not registered for GST in Australia.

BAS adjustments

BAS adjustments are changes you make to your Business Activity Statement (BAS) to correct the amount of GST you reported for a previous reporting period. There are two main types of BAS adjustments:

Increasing adjustments: These adjustments increase the amount of GST you owe to the ATO. This could happen if, for example, you:

• Sold goods or services for a higher price than you originally reported.
• Received a refund for goods or services that you previously claimed input tax credits for.
• Used goods or services for a private purpose that you originally claimed input tax credits for.

Decreasing adjustments: These adjustments decrease the amount of GST you owe to the ATO.This could happen if, for example:

• You returned goods or services and received a refund.
• You wrote off a bad debt.
• You discovered that you claimed input tax credits for goods or services that you were not entitled to.

How to make BAS adjustments:

There are two ways to make BAS adjustments:

• In your next BAS: You can report the adjustments on your next BAS. This is the simplest way to make adjustments, but it can mean that you will pay more or less GST than you should in the current reporting period.
• By lodging a revision: You can lodge a revision to your original BAS to report the adjustments. This is a more complex process, but it means that you will pay or receive the correct amount of GST for the reporting period that the adjustments relate to.

Here are some resources that you may find helpful:

• The Australian Taxation Office (ATO) website has a section on BAS adjustments: ATO BAS Adjustments
• The ATO also has a tool that you can use to work out your BAS adjustments: ATO tool for BAS adjustment

Need Help with BAS Adjustments?

If you need assistance with BAS adjustments, once you have fixed the entries in your software, you will need to make a GST adjustment on your next BAS. Correcting the GST for multiple BAS periods can be challenging, especially if there have been significant changes.

If you would like to conduct an audit of supplier details and make the necessary GST adjustments, feel free to reach out to us. Keep in mind that amending prior BASs may result in either additional GST payable or a potential refund!

Looking for help with your accounting, bookkeeping or taxes? We can help! Click below to call or book an appointment with us.