As a small business owner, it’s important that you understand GST and BAS – what it means, how you can register your business, and the most efficient way to pay it. So, let’s jump in and take a look.
What exactly is BAS?
BAS or Business Activity Statement is a government form that all businesses must lodge to the Australian Tax Office (ATO). It's a summary of all the business taxes you have paid or will pay to the government during a specific period, including Goods and Services Tax (GST), PAYG Instalments, PAYG Withholding tax and other tax obligations dependent on your industry.
Most Australian businesses will lodge their BAS monthly, quarterly or annually and although it may seem a bit daunting this guide should help you head in the right direction.
To prepare your BAS accurately we suggest you use an accounting software that reconciles all GST transactions, PAYG withholding from wages and other tax obligations, like Xero. We like Xero because it makes make preparing your BAS a breeze and calculates GST automatically for you, making it simple to collect everything you’ll need to send to the ATO.
Do you need to register for GST?
When you register for your ABN for a business you can also register for GST.
If your annual turnover is under the $75000 threshold, you don’t have to register for GST or prepare quarterly Business activity statements. However, you can voluntarily register for GST. In some cases there are benefits of registering your business for GST, but there will also be extra things for you to think about including more administration so it’s good to weigh up your options first.
Once you’re GST registered, you don’t end up paying GST on business expenses. You’ll still get charged the GST-inclusive price when you make the purchase, but you can claim that money back against the GST you collect when you file your quarterly return with the ATO.
It is very important to note that If you are not registered for GST you do not charge GST.
Preparing your BAS
You’ll need a record of how much GST you collected on sales, and how much was paid on purchases. You don’t submit tax invoices when you lodge your BAS, but you will need to have them handy in case the ATO may ask to see them.
Because your BAS may be used for other taxes there may be some other amounts to report including Total Sales and Employee Wages and Tax withheld from wages.
In July 2017 Simpler BAS became the default reporting method for small businesses with a GST turnover of less than $10 million. If you are a small business, you will now have less GST information required to be reported on your BAS. The Simpler BAS will only require you to report:
1. G1 Total sales.
2. 1A GST on sales.
3. 1B GST on purchases.
You can learn more by contacting me, you accountant or BAS agent or you can learn more on the ATO page about business activity statements - Click Here
Some extra resources:
What if you have nothing to report? If you have nothing to report in your BAS (a nil activity statement) you can use the ATO’s automated phone service 13 72 26 (available 24/7) to lodge your BAS. The BAS form or nil lodgement must always be complete as you can incur penalties for non lodgement.
The ATO has a small business webinar series has been split into different session topics that cover both general and industry specific areas of tax obligations. You can check them out and sign up for them - Click Here
Your quick guide to GST and BAS in Australia by Xero - Click Here
If you'd like to speak to us about getting help with your BAS book in for a free 15 minute call HERE and we can discuss your needs.
You can also ask us about our solution that has no big bills, just a manageable monthly fee that includes quarterly BAS and business analysis, tax planning and your end of year financials ✔️
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