Business self-review checklist: GST classification of products

GST classification errors can lead to significant under-reporting of GST for some taxpayers.

The ATO recently issued guidance for small to medium businesses on self-reviewing GST classification of food and health products.

The use of this guide is not mandatory, although the ATO encourages small to medium businesses to regularly self-review the GST classification of supplies, and adopt better practice processes and controls as listed in the accompanying checklist.

The checklist provides practical, step-by-step guidance for entities to:

• self-review the GST classification of their supplies (products they import, purchase as stock or produce for sale); and

• assess the robustness of their business systems, processes and controls that directly impact their GST classification systems.

Small business food retailers with turnover of $2 million or less may use one of the 'GST simplified accounting methods' to account for GST instead.