Employers may be surprised to discover they are inadvertently paying more tax than they need to by failing to accurately calculate their GST and FBT liabilities.
It is something that Murray Warner, a director at expense management provider Concur, says he sees all too often, which can easily contribute to cash flow woes, especially around tax time.
“What most companies do today is they leave a lot of money on the table for both GST and fringe benefit tax,” Murray says on the My Business Podcast.
“They look at the risk versus the reward in terms of the time spent on trying to calculate all that tax and they basically say, ‘Alright, let’s just shoot for the middle because it’s too hard to actually work out to check thousands and thousands of line items’.”
According to Murray, the results of calculating the exact tax liabilities for businesses can leave them with an unexpected windfall.
“For a lot of companies, we find when we sit down and take them through a calculation on what they could do … a lot of money can pour back into the business.”
It’s not the first time SMEs have been warned about ‘leaving money on the table’.
BMT Tax Depreciation’s Brad Beer used the same phrase when speaking with My Business recently to describe the amount of cash businesses let slip through their fingers by not accurately depreciating business assets.
“Even if you have the total of the costs and just claim things at a slower rate than you could, then you’re still leaving some money on the table for the long term,” he said.