XBert Type: Standard
Accounting Software: Xero, MYOB, QuickBooks Online
Country Restriction: Australia only
Risk Type: Tax Risk
Business Function: Purchases
Overview
This XBert checks your purchase bills to make sure the GST recorded on each one matches the GST the tax rate should produce. On a standard-rated cost, the GST should be one eleventh of the net amount, or the net amount times the rate. When the GST that was keyed in does not line up with that figure, your activity statement can be over or under-stated. Catching it before you lodge your BAS lets you fix the amount now, rather than dealing with an ATO correction or amendment later.
What it does
It looks at the individual lines on each purchase bill. For every standard-rated line it works out the GST the rate should produce from the net amount, then compares that to the GST actually entered. It adds these up across the whole bill and reports the difference in dollars, so you can see exactly how much the GST on that bill is out by and whether it has been over or under-claimed.
How it works
The XBert raises a flag when the GST keyed onto a bill clearly does not equal the rate times the net amount across its standard-rated lines. This usually points to a manual GST override or a calculation that has been edited by hand. To keep flags accurate and avoid false alarms, it is careful about what it includes and ignores:
It works at the bill level, adding up the expected GST and the entered GST across all standard-rated lines. If the right total GST has simply been booked onto one line of a multi-line bill, the bill still balances overall and nothing is flagged.
It only looks at standard-rated lines. Lines that are GST-free, input-taxed, exempt or have no rate are left out, because no GST is expected on them.
It ignores bills where almost no GST has been entered despite standard rates. A missing-GST situation is a separate matter, not a rate calculation error, so it is not flagged here.
It skips reverse-charge and self-accounted tax codes, where a nil GST amount is correct by design.
It allows for normal rounding and small currency differences, and stays quiet when the difference is below a small materiality amount, so you are not chased over a few cents.
In short, it only fires when there is a genuine, material gap between the GST entered and the GST the rate should have produced for the bill as a whole.
Example/Use Case
Priya enters a supplier bill for $2,200 of standard-rated equipment. The correct GST is $200, but while keying it she overrides the tax field and types $20 by mistake. Left alone, the bill would claim $180 less GST than the business is entitled to, quietly under-stating the GST credits on the next BAS. XBert flags the bill, shows that the entered GST of $20 does not match the expected $200, and points to a $180 gap. Priya corrects the GST amount on the line before the activity statement is prepared, and the BAS figure is right.
Accounting software
This XBert runs on purchase bills from Xero, MYOB and QuickBooks Online.
Which countries it supports
This XBert applies to Australia only. It uses Australian GST rules and BAS labels.
Processes
Business area: Purchases (accounts payable). To resolve a flagged bill:
Open the bill and review the standard-rated lines, comparing the GST entered against the net amount and tax rate on each line.
Work out the correct GST for the bill, which on a standard-rated cost is one eleventh of the GST-inclusive amount, or the net amount times the GST rate.
Correct the GST amount, or the tax code, on any line where the entered figure does not match the rate, so the GST on the bill is right.
Confirm the line is genuinely standard-rated rather than GST-free, input-taxed or a reverse-charge cost, as those carry no standard GST.
Check whether the same override or miscalculation has been repeated on earlier bills from the same supplier, and correct those too.
If the bill falls in a BAS period you have already lodged, work out the adjustment and follow the ATO's process for correcting GST on a later statement.
Once corrected, mark the XBert as resolved.