Every business which is registered for GST needs to lodge a Business Activity Statement (BAS) at least once a year. GST, which stands for “goods and services tax”, is a value-added tax that applies to most goods and services sold for consumption on a domestic scale. Businesses selling goods and services must remit the gained tax to the government.
Whilst the GST system helps simplify things by removing state-based consumption taxes like sales tax, service tax and excise duty tax, the requirement to lodge a BAS can cause many business owners to break out in a cold sweat. What actually is BAS, and when does it have to be paid? Keep reading this Legal Kitz blog to find out more and avoid all the anxiety surrounding BAS.
What is BAS?
A Business Activity Statement (BAS) is a form that businesses must submit to the Australian Taxation Office (ATO) to report and pay their tax liabilities. A BAS will help report and pay:
- goods and services tax (GST);
- pay as you go (PAYG) instalments;
- PAYG withholding tax; and
- other taxes, such as wine equalisation tax, fuel tax credit and fringe benefit tax (if they apply to your business.
A BAS form essentially reports the GST amount collected on sales, minus any that you have paid on your purchases. The difference is the refund, or what you owe to the ATO.
For example, your business charges $100 for your goods, so your customer will be charged $110. The additional $10 is GST which needs to be paid to the ATO. You also purchase $110 in supplies for your business. You are charged $10 (10%) in GST on a $100 good, which you can claim back from the ATO as credit.
You must register for GST if:
- Your business has a GST turnover (gross income minus GST) of $75,000 or more per financial year;
- Your non-profit organisation has a GST turnover of $150,000 or more per financial year; or
- You are a taxi driver and ride-sharing driver, no matter what your turnover is.
What is an instalment activity statement (IAS)?
We know that a BAS is a form to submit: but what is an activity statement, and is a BAS the only one? Activity statements are issued by the ATO for businesses to report and pay their tax liabilities on one form at the same time. Alongside a BAS, an instalment activity statement (IAS) is a simpler form that is issued quarterly and is available for eligible businesses.
On an IAS, the ATO will tell you what your GST instalment amount is and (where applicable), what your PAYG instalment amount is.
If you opt for the IAS system, you will simply be sent an amount that needs to be paid to the ATO for each of the next three quarters.
If the instalments advised are too much or not enough, the amounts can be varied. Alternatively, you can opt to wait until the end of the year and pay in one lump sum. Adjustments for GST will be calculated when the annual GST return is lodged and will result in an amount payable or refundable when the income tax return is lodged.
How do I lodge a BAS?
1. Prepare your information
Your first step should be to reconcile your accounts to ensure that all your information is accurate and current. This involves collating your business transactions, including receipts and invoices, to ensure they match your accounting information with no discrepancies.
2. Calculate totals and enter figures
After collating your financial information, you should calculate your totals. This can be via a report in your accounting software, or manually adding up your numbers: make sure to double-check your GST calculations! Once you have the total amounts, you can fill in your BAS form.
3. Lodge and update
To lodge your BAS, you can:
- Mail a hard copy of your BAS form to the ATO;
- Lodge a BAS statement online through the ATO’s Business Portal;
- Engage a BAS or tax agent to lodge it for you.
Make sure you save a copy of your BAS statement and update your accounting information.
BAS due dates
When you must submit your BAS depends on how much business you’re doing.
My business has more than a $20 million annual turnover
You must lodge your BAS monthly, within 21 days of the month closing.
My business has less than a $20 million annual turnover
You must lodge your BAS quarterly. The deadlines are:
- Quarter 1 (July-September) is due on 28 October.
- Quarter 2 (October-December) is due on 28 February.
- Quarter 3 (January-March) is due on 28 April.
- Quarter 4 (April-June) is due on 28 July.
If your turnover is less than $10 million, you may be able to lodge annually, but you must still pay a quarterly instalment of your GST owing.
My business has less than $75,000 annual turnover (or $150,000 for non-profits)
You must lodge your BAS annually with your income tax return.
Legal advice
Submitting your BAS doesn’t have to be intimidating: but don’t forget about all of your other back-end business needs. Check out our sister company, Business Kitz’ subscription service today to access our full range of legal, commercial and employment documents to begin your business with a solid foundation that ensures compliance. If you are unsure about how to best protect yourself and your future business, Legal Kitz can assist you. To arrange a FREE consultation with one of our highly experienced solicitors, click here today, or contact us at [email protected] or 1300 988 954.