It's BAS Time! Here's What You Need To Know

July 28 is fast approaching – are you feeling the pressure of BAS? 
 

Quarter 4 Business Activity Statement Instalments are almost here and the last thing you want is to miss this crucial deadline. In this comprehensive guide, we will help you understand and manage your BAS effectively—and avoid common BAS reporting pitfalls. 

What is BAS? 

Business Activity Statement (BAS) is a form that businesses registered for GST (Goods and Services Tax) must lodge to report their tax obligations.  

BAS helps you report on: 

• Goods and Services Tax (GST) 

• Pay As You Go (PAYG) Withholding 

• PAYG Instalments 

• Fringe Benefits Tax (FBT) Instalments 

• Luxury Car Tax (LCT) 

• Wine Equalisation Tax (WET) 

When you register for GST, you’ll automatically need to start reporting BAS when it’s time to file. 

How Does BAS Work? 

BAS is a form used by businesses to report and pay a range of taxes to the Australian Taxation Office (ATO). BAS is typically submitted either monthly, quarterly or annually, depending on the size and turnover of the business.. It typically includes: 

• GST collected on sales 

• GST paid on purchases 

• PAYG withholding tax on wages 

• PAYG instalments 

To complete your BAS accurately, keep detailed records of all sales, expenses, wages, and other business costs. Only claim GST credits for the business portion of any purchases, excluding private expenses. 

Common Challenges with BAS and How to Overcome Them

1. Incorrect Record Keeping

Accurate record-keeping is crucial for completing your BAS without a hitch. However, many businesses struggle with maintaining precise and organised financial records, leading to errors in their BAS submissions. This can result in penalties, audits, and additional stress. 

Solution: 

• Implement a Robust System: Use reliable accounting software like Xero or MYOB to keep your records up to date. These tools can automate data entry, categorise expenses, and reconcile bank transactions. 

• Regular Reconciliation: Reconcile your accounts monthly to ensure that your records match your bank statements. This practice helps identify and correct discrepancies early. 
• Professional Assistance: Consider hiring a bookkeeper or accountant to manage your records. Their expertise can ensure that all financial transactions are accurately recorded and compliant with tax regulations.
   

2. Missing BAS Deadlines

Missing BAS lodgment and payment deadlines can result in penalties and interest charges. For small businesses, managing these deadlines alongside daily operations can be overwhelming. 

Solution: 

• Set Reminders: Use calendar alerts, reminder apps, or project management tools to keep track of BAS due dates. Scheduling reminders well in advance gives you ample time to prepare. 

• Automate Lodgment: If you use accounting software, enable automatic reminders for BAS deadlines. Some software can even lodge your BAS directly with the ATO. 

• Engage a registered tax agent: A registered tax agent can manage your BAS lodgments. They make sure deadlines are met and you avoid risk of penalties. They can also negotiate with the ATO on your behalf if you need an extension. 
  
  

3. Complex GST Calculations

Calculating GST correctly is often complex, especially if your business has diverse transactions, including mixed supplies, imports, or exports. Miscalculations can lead to incorrect BAS submissions and potential ATO scrutiny. 

Solution: 

• Understand GST Rules: Familiarise yourself with GST rules applicable to your business. The ATO website provides comprehensive guidelines and resources to help you understand GST obligations. 

• Use Accounting Software: Accounting software can automatically calculate GST on your transactions, reducing the risk of errors. Ensure your software settings are configured correctly for your business type. 

• Regular Training: Stay updated on GST regulations by attending ATO webinars, workshops, or training sessions. Continuous learning ensures that you are aware of any changes in tax laws that might affect your business. 

Key Tips for Lodging Your BAS 

• Lodge and pay on time: Your due date is indicated on your BAS. If it falls on a weekend or public holiday, you can lodge and pay on the next business day. 

• Use the correct Payment Reference Number (PRN): This ensures your payment is correctly allocated. 

• Keep accurate records: Simplify your BAS preparation with diligent record-keeping. This also helps manage cash flow and meet tax obligations. 

• Seek help if needed: Consult a registered tax agent if you’re unsure about any aspect of your BAS. 

Staying on top of your BAS obligations is crucial for smooth business operations. If you need assistance, don’t hesitate to contact a professional.  

 You can reach out to our experts at Retinue for a guidance. We’re here to help you navigate your tax obligations with confidence and ease. Call us today at 1800 861 566.