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GST and business systems: large business

Identifies common errors made by businesses and explains how ineffective business systems and processes can cause GST reporting errors.

15 March 2017

Large businesses may report incorrect amounts of goods and services tax (GST) if their systems for capturing and recording GST information fail.

Failure may occur because systems have weaknesses or issues to start with, or because they are left unchecked for long periods of time.

Human error can also be a major factor. The need for human intervention and interpretation increases where systems are amalgamated, or there is a need to identify and treat unusual transactions.

To limit errors occurring, we encourage you to review your business systems, processes and controls regularly:

Check whether you are at risk

Businesses going through change are most at risk of reporting GST incorrectly. This includes businesses that are:

  • growing rapidly
  • restructuring
  • going through a merger or demerger
  • installing new accounting software
  • experiencing a change in accounting staff.

We recently identified almost $350 million in unreported GST liabilities after contacting over 1,000 large business taxpayers that we considered were at risk of incorrectly reporting GST.

The industries that had the highest number of GST reporting adjustments as a result of our contact were:

  • manufacturing – accounting for 33% of adjustments
  • electricity, gas, water and waste services – 18%
  • wholesale trade – 12%
  • financial and insurance services – 11%
  • construction – 5%.

The remaining 21% of adjustments were spread across the other 14 industries listed in our business industry codes (hierarchical index).

Common errors

The following table is based on recent statistics and shows some common examples and types of GST reporting errors made by large businesses.

Area of error

% of total errors in the period

Types of error

BAS preparation


  • Transposition errors
  • GST control accounts not cleared
  • Not including invoices produced outside normal accounting systems 

Transaction classification


  • Over-claimed international travel and entertainment expenses
  • Early termination fees charged under retail customer contracts incorrectly treated as being not subject to GST
  • Claiming GST on total tax invoice amounts when part of the transaction was not subject to GST
  • Incorrect interpretation/review processes for amended legislation concerning taxable supplies 

Communication between related entities


  • Both entities claiming the same expense item
  • Incorrect transfer of GST information between entities
  • GST credits being claimed for tax invoices created by recipient although no agreement had been established between the recipient and the supplier 



  • Processing rebates incorrectly
  • System errors when using luxury car tax (LCT) software
  • Incorrectly treating sales as taxable when supplied to a member of a GST group
  • Not adjusting for bulk purchase discount
  • Using outdated formulas 

One-off supply of assets


  • Making incorrect attributions in relation to a hire purchase arrangement
  • Errors in calculating GST on adjustments at time of settlement of land purchase 

Business structure change


  • Coding errors when merging two business systems 



  • Problems associated with staff turnover
  • Technical understanding and interpretation 

Check your business systems

Our interactive guide, GST governance and risk management guide for large businesses, will help you assess the effectiveness of your internal assurance processes and procedures against a list of best-practice actions.

If you would like assistance in conducting an assessment, contact your ATO client relationship manager. Your advisers may be interested in reviewing the results with you or assisting with the assessment or its findings.

How to get the form

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Report an error

After reviewing your business systems and controls you may discover an error or discrepancy with your reported GST. If this happens, we encourage you to contact your ATO client relationship manager to discuss your business' options for correcting the error.

See also