GST compliance, record keeping and penalties

Record keeping basics

You must keep records that explain your GST transactions for five years from the date you prepare or obtain them, or from the completion of the transactions to which they relate, whichever is later. Records should be in English or easily converted to English, and can be kept electronically provided they are secure and retrievable.

• Tax invoices issued and received
• Adjustment notes, credit notes and receipts
• Bank and credit card statements
• Cash register records and sales summaries
• BAS worksheets and workpapers

Lodging on time

The ATO can apply a failure to lodge penalty if your BAS is late. The penalty is calculated using penalty units and the length of delay, and the value of penalty units is set by the law and changes from time to time. Lodging a nil BAS on time is much better than not lodging at all.

Interest and penalties on late payment

Unpaid amounts accrue the general interest charge, which compounds daily and is based on a rate the ATO publishes quarterly. Shortfall penalties may apply if you underreport GST, with the amount depending on whether the error was reasonable care, carelessness, recklessness or intentional disregard.

Fixing a mistake

If you find an error, correct it as soon as you can. In many cases you can adjust the mistake in a later BAS, within limits. Larger or older errors may need to be amended formally. Making a voluntary disclosure before the ATO contacts you usually attracts lower penalties.

ATO reviews and audits

The ATO uses data matching to find BAS patterns that look unusual, such as large refunds. Be ready to show source documents for any figure. Keep clean records and be able to explain your method.

Where to get help

If you are struggling, talk to a registered tax or BAS agent, or contact the ATO. A payment plan is usually easier to get when you reach out early.