How to check GST coding on bills before you lodge your BAS

Short answer

1. Run the GST report for the BAS period.
2. Check each bill for a valid tax invoice.
3. Check each tax code against what the invoice says.
4. Fix errors, then re-run the report.

Before you start

Reconcile your bank accounts and enter all bills for the period first.

Know the ATO rules. These are the ones that matter for bills:

• To claim a GST credit on a purchase over $82.50 including GST you need a tax invoice from your supplier. Source: ATO, When you can claim a GST credit.
• An invoice with incorrect or incomplete information is not a valid tax invoice. Same source.
• A GST credit is for GST in the price. Purchases of GST-free items, and purchases from a supplier not registered for GST, do not carry GST to claim. Same source.
• If a purchase is part business and part private, you can only claim the business part. Same source.
• The time limit is 4 years from the BAS due date for the first period you could claim. Source: ATO, Time limits on GST credits.

The manual way in Xero

1. Run the GST report. Go to Accounting > Reports and find your GST report for the period. Note the GST on purchases.
2. List the bills. Run Account Transactions for the period, or open Business > Bills to pay and filter by date. Look at the tax rate shown on each line.
3. Check tax invoices. For each bill over $82.50 including GST, check the attached file is a tax invoice. The ATO says a tax invoice must show the supplier’s ABN and make clear it is a tax invoice. Source: ATO, Tax invoices. The tax invoice template page lists the fields.
4. Check the codes. Compare each line to the invoice. Common Xero codes are GST on Expenses, GST Free Expenses, GST on Capital and BAS Excluded.
5. Fix wrong codes. Open the bill and change the tax rate on the line. Draft and awaiting approval bills are easy to change. Paid bills may need the payment removed first.
6. Re-run the report. The GST on purchases should now match the corrected bills.

Limits: you fix tax codes bill by bill. Capital purchases coded as expenses are the most common miss. The Xero G10 capital purchases post explains the code. Check the ATO page on claiming GST credits before you rely on the label rules.

The Pulsify way

1. Forward the supplier invoice to your Pulsify address.
2. Pulsify reads the GST rate printed on each line and picks the matching tax code in your Xero file. It learns from how that supplier was coded before.
3. It flags a tax rate that matches no code in your ledger. It flags an ABN that is invalid or not registered for GST while the invoice charges GST.
4. Check the codes on the review screen, then approve. The bill is created in Xero with the source file attached.

You still decide the treatment. Pulsify reads the invoice. It does not know whether the item is a capital purchase.

Worked example

Example Plumbing Supplies sends an invoice with two lines:

Line	Amount ex GST	GST	Coded
Pipe	$800	$80	GST on Expenses
Water heater	$1,200	$120	GST on Expenses

The water heater is a business asset. Your accountant treats it as capital. You change its code to GST on Capital. GST stays $120. The amount moves from non-capital purchases to capital purchases on the BAS worksheet.

Common mistakes

• Claiming GST on a bad invoice. Incomplete details, such as a missing ABN, mean no valid tax invoice.
• Claiming GST on GST-free items. The invoice shows no GST, so there is nothing to claim.
• Waiting until BAS night. Check codes when you approve the bill.

Next step

Try an invoice and review the GST code on each line before it reaches Xero. Use the free BAS worksheet generator and the GST reconciliation generator. Read the invoice checks guide and the post on BAS preparation and GST coding errors.