There are terms and acronyms every Australian business owner needs to be familiar with to avoid trouble in tax collection. One of the most common acronyms you’ll hear is BAS. If you’re a new entrepreneur, you’ve probably wondered what it is. In this article, we will talk about what a BAS is, what you need to know about it, and how it affects your business. We’ll also guide you on some other essential acronyms you need to know.
What is a BAS?
The acronym BAS stands for Business Activity Statement. You need to issue this monthly, quarterly or annually. This document lets the government know how much money your business has collected and how much it has paid out. It encompasses a wide range of payments involving Goods and Services Tax (GST), Pay as You Go (PAYG) tax installment and PAYG tax withheld, fringe tax benefits, fuel tax credits, wine equalization tax (WET), luxury car tax (LCT), and all your other tax obligations.
Do I Need to Lodge a BAS?
Not everyone needs to lodge a BAS. Your business will only be required to submit one when you have registered for goods and service tax. GST registration is necessary when the gross income of your business is equivalent to or more than $ 75,000. If you are still starting your business, a GST registration may not be necessary. However, once you earn more, it will be a mandatory requirement; so it is better to be aware early on to avoid legal issues.
How to Lodge a BAS?
There are different ways to lodge a BAS.
You can choose to complete your BAS online via the Australian Tax Office’s (ATO) business portal, your myGov account if you are an individual or a sole trader, or through an SBR enabled software, which allows you to have a secure online lodgement directly from an accounting software.
You can lodge your completed BAS by mail using the pre-addressed envelope provided in your BAS package. However this method is fading out in recent years.
Through a Tax or BAS Agent
Your registered tax or BAS agent can also lodge and pay on your behalf through preferred electronic channels.
nil BAS (Nothing to Report)
You can lodge your BAS as “nil” online or over the phone if you have nothing to report for the period.
The ATO will let you know when a BAS is due to be lodged when you register for an Australian Business Number (ABN) and GST. Before submitting a BAS, be sure to consider your business type. Requirements for sole traders and other business structures vary. Learn more about BAS requirements here.
BAS Due Date
You determine your BAS date based on your business reporting and payment cycle.The due date is shown on your BAS statement. Your GST reporting and payment cycle could fall on one of the following:
If your business’ GST turnover is more than $20 million, you need to report your BAS monthly. BAS due date for monthly reporting is the 21st day of the month at the end of the taxable period. For instance, you BAS for the month of January would be due on the 21st of the next month (February).
You need to report your BAS quarterly if your GST turnover is below $20 million, and if you did not receive advice from ATO to report monthly. The quarterly due dates are:
1st Quarter (July, August and September) – October 28
2nd Quarter (October, November and December)- February 28
3rd Quarter (January, February and March)- April 28
4th Quarter (April, May and June)- July 28
If your GST turnover is less than $75,000 ($150,000 for non-profit organizations) or if you are voluntarily registered for GST, you only need to report annually. The due date for annual reporting is on the 31st of October of every year.
What is GST?
We’ve been talking about the amount of GST for BAS reporting, but what exactly is GST? GST stands for goods and services tax. This is the broad based tax of 10% charged on most goods and services. You add this on top of your invoice, but this is not your money. You need to pay this to the ATO.
In your GST report, ATO allows you to reduce the GST by the amount of GST you payout on your business purchases and expenses.
What is PAYG Withholding?
Another term you may encounter in doing your BAS is PAYG withholding or Pay As You Go tax withholding. This is the tax withheld from your employees’ wages. It is your role as an employer to help your employees meet their tax liabilities.
It is important to note that you need to register for PAYG withholding before you are required to make any payment subject to withholding. This is necessary, even if you are not withholding any amount from payments made. You can cancel your PAYG withholding registration when you no longer become an employer. Remember also that PAYG Withholding differs from payroll tax.
Business Activity Statement vs. Installment Activity Statement
There are two types of activity statements that ATO issues to businesses so they can pay a number of tax liabilities in one form at a time. One is the BAS while the other is IAS or Income Activity Statement.
The Income Activity Statement is the simpler form. This is issued quarterly but you lodge this form only when your Pay As You Go Withholding reaches $25,000 a month. The quarterly due dates are similar to the BAS.
The Importance of Keeping Track of Your BAS
Your BAS can actually help you monitor your business finances. When you keep track of your income and expenses, you’d be able to calculate your GST and other liabilities in your BAS ahead of time. With this, you can submit your reports and make payments to ATO even before the end of the quarter. This is a good practice to ensure you don’t miss out on anything and avoid any legal issues and fines from the ATO.
By successfully doing your BAS, you can also infer where your business is going and give attention to the areas that need it most.
How ACT Bookkeeping Group can Help your Business
ACT Bookkeeping Group is a registered BAS agent by the Australian Tax Practitioners Board. Our expert bookkeepers can help you with your BAS lodgement requirements. We can also assist you with your bookkeeping, payroll, and rescue bookkeeping needs. Contact us for a free consultation today.