Example Supplementary annual GST return 2025

1. Name of entity

Klume Luxe Pty Ltd

2. ABN

12 345 678 912

3. Period this return covers

01/01/2024 to 31/12/2024

4. Are there any actions that remain outstanding for the entity to take in relation to:

• ATO recommendations in the entity’s most recent GST assurance review (including subsequent ATO interactions), or
• areas of low assurance or red flags outlined by the ATO in the entity’s most recent GST assurance review?

Yes.

5. Provide an explanation of how you have:

• actioned each of the ATO recommendations, and/or
• resolved each of the areas of low assurance or red flags outlined by the ATO.

The ATO had 5 recommendations for KL in its earlier GST assurance review. There were no areas of low assurance or red flags.

1. BLC 4: Periodic internal controls testing

The ATO recommended that KL evidence independent testing of its GST control framework. KL has a board-endorsed testing plan with testing occurring over a 3 to 5-year rolling audit period.

In November 2024, an independent tester conducted testing of MLC 4 and issued a report with the outcome that KL's GST data controls were operating effectively. The remaining controls will be tested in 2025–26.

2. MLC 6: Documented control frameworks

KL was recommended by the ATO to consider the following enhancements to improve the design effectiveness of its BAS Manual:

• embed the relevant checklists used in preparing the BAS in the 'BAS preparation' process
• include checkboxes in its checklists to verify that the BAS has been prepared in accordance with the steps outlined in the BAS manual.
  
  

KL has updated the BAS manual to include the ATO recommendations listed above. Additionally, KL has also increased the segregation of duties between the preparer, reviewer and approver of its BAS lodgments which has been updated and documented in its processes.

3. MLC 7: Procedures to explain significant differences

To obtain Stage 2 for MLC 7, the ATO recommended that KL adopt the GST Analytical Tool (GAT) methodology or implement a process to identify, explain and review variances in its GST position in comparison to annual financial statements and to document this process in its policies or procedures.

KL has prepared the GAT for the period this return covers and is in the process of documenting the procedure.

4. Recipient created tax invoices

The ATO recommended that KL include suggested wording as a part of its written agreements with its customers in regard to recipient created tax invoices (RCTIs) and undertake periodic checks to ensure the suppliers remained GST-registered.

KL has adopted the suggested wording into its written agreements and ensured that the RCTIs issued by its customers satisfy the requirements prescribed. KL has also added additional procedures to its routine monthly GST checks to ensure that ABN and GST registrations are checked against the ABR database to ensure the RCTIs it issues are valid.

5. Financial acquisitions threshold

It was recommended that KL document procedures for a monthly review of the application of the financial acquisition threshold and undertake a review to ensure it has not exceeded the threshold.

KL has documented these procedures and undertook an internal review in July 2024. During the internal review, KL determined that the threshold had been exceeded and input tax credits had been incorrectly claimed in relation to financial supplies. We have made a voluntary disclosure as outlined in the response to Question 11.

6. Provide an explanation of any actions that remain outstanding for the entity to take in relation to ATO recommendations or areas of low assurance or red flags outlined by the ATO?

As above, KL is in the process of documenting the procedure for the GAT, and completing the internal controls testing in 2025–26 in accordance with the board-endorsed testing plan.

7. Have you had material business changes or material systems changes that impact the entity’s GST control framework since your most recent GST assurance review?

If no, go to Question 8.

If yes, explain the changes.

Yes.

100% of shares in Brinkley Pty Ltd and Macpherson Pty Ltd were acquired on 1 July 2023 by KL and a GST group was created as at that date with KL as the representative member. Since 1 September 2023, Brinkley Pty Ltd and Macpherson Pty Ltd have migrated to the KL ERP system effective and operate under the KL tax control framework. A post-migration review was conducted in December 2023, revealing no material concerns.

8. During the period this return covers, do you consider you meet the criteria needed to maintain or increase the GST governance stage rating given in the entity’s most recent GST assurance review?

Yes – maintained.

9. Provide your reasoning to support your response to Question 8, including how you took into account any:

• governance uplifts, or
• material changes to your business or systems.

KL has implemented almost all recommendations made by the ATO in the prior assurance review – those that are not yet fully implemented are underway. While the acquisition of 2 entities and the formation of a GST group represents a material change to the KL business, all entities now use the same ERP system and tax control framework, both of which were previously reviewed by the ATO. Therefore, KL considers the rating is maintained.

KL has not completed internal periodic control testing and therefore does not consider it meets the criteria for an increased rating.

10. For the period this return covers, have you completed the GST analytical tool (GAT) reconciliation, or similar reconciliation, to understand the variance between audited financial statements and GST reported on the entity’s business activity statements?

If no, go to Question 13.

Yes.

11. If the GAT or similar reconciliation was conducted for the year, provide the following to 2 decimal places:

• effective GST rate on sales
• effective GST rate on expenses
• net effective GST rate.

• Effective GST rate on sales of 10.01%
• Effective GST rate on expenses of 10.19%
• Net effective GST rate of 10.04%

12. If the GAT or similar reconciliation was conducted, please provide any comments on the remaining variance between the outcomes of the reconciliation and the business activity statements.

The remaining variance has not been linked to a particular adjustment and is likely related to timing differences between accounting and GST recognition that could only be quantified at the transactional level. It is $0.4m and not considered material by KL in its circumstances.

13. If you did not conduct the GAT or similar reconciliation, provide an explanation of the reasons for this (e.g. you are a predominantly input-taxed business).

n/a

14. During the period this return covers, have you taken a material uncertain GST position in your business activity statement?

If yes, provide a description of each position.

Yes.

Our acquisition due diligence of Macpherson Pty Ltd revealed that Macpherson had maintained an uncertain GST position in relation to allowances (i.e. input tax credits have been claimed in respect of various allowance payments on the basis that they are creditable acquisitions under Division 111 of the GST Act). We acknowledge that this is not in accordance with the published ATO position. Input tax credits totalling $260,000 were claimed in the period covered by this return.

15. During the period this return covers, have you identified any material GST reporting errors or claimed any material amounts of input tax credits referable to earlier periods?

If yes, for GST reporting errors, provide a description of the error, the amount, how it has been rectified and addressed going forward. For input tax credits referable to earlier periods, provide the amount, a description of what gave rise to the entitlement and any methodology used to determine the amount.

Yes.

In August 2024, in line with ATO recommendations, KL undertook an internal review in relation to the financial acquisitions threshold. It identified an error of $310,409 of overclaimed input tax credits for the periods between July and September 2023.

KL submitted BAS revisions for the periods via Online Services on 19 October 2024.

Going forward, this has been rectified as KL has documented a procedure to check whether the financial acquisitions threshold is exceeded on a monthly basis, and appropriately quarantine and treat costs related to financial supplies.