If you’re a business owner, chances are you’ve heard of BAS, otherwise known as Business Activity Statements. They’re a common (and frequent) reporting tool that keeps the Australian Taxation Office (ATO) up to date on the financial activity of your business, particularly GST and PAYG (Pay As You Go) Withholding.
They are also a mandatory requirement for Australian businesses who are registered for GST, and whether your reporting cycle is monthly, quarterly or annually – BAS time seems to come around all too fast.
Yet BAS reporting is a crucial part of keeping your business compliant and the ATO happy. But don’t stress – with the right records and some know-how, you can breeze through BAS and get back to doing what you do best – running your business.
A Business Activity Statement (BAS) is a form used by the ATO to gather information about the financial activities of a business. It is typically required to be lodged on a regular basis, usually either monthly, quarterly or annually. The BAS serves several key purposes:
GST Reporting
Small businesses that are registered for GST must report the GST they collect on their sales and claim credits for the GST they pay on their purchases.
PAYG Withholding
Businesses that have employees need to report and pay the Pay as You Go (PAYG) withholding tax, which includes the amount of tax withheld from employees’ wages and salaries.
Other Tax Obligations
Fuel Tax Credits, PAYG Instalments Some businesses might need to report other taxes or obligations, such as Wine Equalisation Tax (WET) or Luxury Car Tax (LCT), depending on their operations.
The frequency of lodging a BAS depends on the turnover of your business. The two most common lodgement timeframes are:
Monthly: Businesses with a turnover of $20 million or more.
Quarterly: Businesses with a turnover of less than $20 million.
It’s important to note that the frequency can change if your business’s turnover increases or decreases. Accurate record-keeping is crucial to determine the correct lodgement frequency.
BAS Lodgement dates in 2023-24 are:
Quarterly
Monthly
The 21st of each month following the end of the taxable period. For example, a July monthly BAS is due on 21 August.
Dates may vary if lodging online or using a registered tax agent.
A BAS typically includes the following key elements:
GST
PAYG Withholding
Other Taxes
Instalment Activity Statement (IAS)
Not all businesses are required to complete a BAS, but most businesses that are registered for GST and those with certain other tax obligations need to lodge a BAS.
Here are the key categories of businesses that typically need to complete a BAS:
GST-Registered Businesses
If your business has an annual GST turnover of $75,000 or more (or $150,000 for non-profit organisations), you are required to register for GST and complete a BAS. This includes most businesses in Australia.
Businesses with an Australian Business Number (ABN)
Even if your business does not meet the GST turnover threshold, you may still need to complete a BAS if you have an ABN. This is to report other tax obligations, such as pay as you go (PAYG) withholding for employees. Speak to a registered tax agent for guidance specific to your business.
Employers
Businesses that employ staff and have PAYG withholding obligations need to report and pay the withheld amounts through the BAS. This includes income tax withheld from employees’ wages.
Importers and Exporters
Businesses involved in international trade, including importing and exporting goods, may need to complete a BAS to report and pay relevant customs and excise duties.
Businesses with Wine Equalisation Tax (WET) and Luxury Car Tax (LCT) Obligations
If your business is involved in the wine or luxury car industries, you may have WET or LCT obligations, which should be reported through BAS.
Non-Profit Organisations
Some non-profit organisations may need to complete a BAS if they are registered for GST or have other tax obligations.
It’s essential to understand your business’s specific tax obligations and whether you need to complete a BAS.
Sole traders who meet the $75,000 threshold and registered for GST are generally required to lodge BAS.
If your sole trader business has an annual turnover of $75,000 or more, you are generally required to register for GST. Once registered for GST, you must regularly report and pay the GST you’ve collected on your sales and claim any GST credits on your purchases. This is typically done through lodging a BAS.
If you have employees or pay other individuals for services (such as contractors) and withhold tax from their payments, you’ll also need to report and pay your PAYG withholding amounts on the BAS.
Small businesses with a GST turnover of less than $10 million may be eligible to use a simplified BAS, which reduces the number of labels to be completed on the BAS form.
The penalties for missing lodgement deadlines can vary depending on the circumstances and the frequency of non-compliance. Penalties may include:
Late Lodgement Penalty
If you fail to lodge your BAS on time, the ATO may impose a late lodgement penalty. The penalty can range from $210 to $1,050, depending on how late the BAS is lodged. The longer you delay, the higher the penalty will be.
General Interest Charge (GIC)
If you have an outstanding debt to the ATO as a result of not paying the GST or other taxes owed when you lodge your BAS, you may be liable for the GIC. This is an interest charge that accrues on the unpaid amount until it is fully paid. The GIC rate is subject to change and is usually higher than the standard interest rates.
Suspension of Credits
If you consistently fail to lodge your BAS returns on time, the ATO may suspend your GST credits. This means you won’t be able to claim any GST credits until you’ve brought your lodgements up to date.
Prosecution
In extreme cases of non-compliance, particularly if there’s evidence of intentional fraud or evasion, you could face criminal prosecution, which could result in fines and even imprisonment.
Australia’s tax laws and regulations are notoriously complex, and BAS lodgements are no different. Using a registered BAS or Tax agent can make the process easier. Here’s why it might be worth leaving your lodgements to the experts:
Tap into expertise
BAS tax agents are professionals with expertise in tax regulations and reporting requirements. They are well-versed in the intricacies of the tax system and can help ensure your BAS is accurate and compliant with current tax laws.
Save time
Handling your BAS can be time-consuming, particularly if you’re not familiar with tax regulations. A tax agent can save you time and allow you to focus on running your business rather than dealing with complex tax forms.
Reduce Stress
Tax compliance can be stressful, especially if you’re unsure about the rules and regulations. A tax agent can provide peace of mind by taking care of your tax obligations and minimising the risk of errors.
Cost-Efficiency
While you may have to pay for the services of a tax agent, their expertise can often result in cost savings. They can identify eligible deductions and credits that you may not be aware of, potentially reducing your tax liability.
Timely Filing
Registered tax agents are familiar with tax deadlines and can ensure that your BAS is filed on time, preventing late filing penalties and interest charges.
Compliance assurance
BAS tax agents are up-to-date with changing tax laws and regulations, meaning your business is always compliant with the latest requirements. This reduces the risk of audits or penalties due to non-compliance.
Focus on your business
By outsourcing your BAS responsibilities to a tax agent, you can concentrate on growing your business and managing day-to-day operations.
Ready to make your BAS a breeze? Let Retinue Accounting be your trusted partner in navigating Australia’s tax maze. We’re here to simplify the process for small businesses, ensuring you meet your tax obligations hassle-free. Contact Us to find out more.
*Retinue’s payroll service includes the processing of hours and wages rates provided by you. We do not determine award rates for your employees or provide advice on the correct employment status of your employees. It is your responsibility to ensure that your employees are paid correctly and we recommend obtaining advice from specialised employment relations experts.
*Retinue’s (ABN 66 658 618 449) payroll service includes the processing of hours and wages rates provided by you. We do not determine award rates for your employees or provide advice on the correct employment status of your employees. It is your responsibility to ensure that your employees are paid correctly and we recommend obtaining advice from specialised employment relations experts.
Protection is only provided for ATO investigations notified to us during the period which you are a client and relating to any tax returns or lodgements prepared by us. Fines includes any penalties and interest that may result from any errors made by us but does not include any additional tax liability that may result from an amended lodgement.
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