- Businesses in Australia with an annual turnover of at least $75,000 need to lodge a business activity statement (BAS) for reporting and taxation purposes.
- Your BAS statement is to report and pay for GST, PAYG instalments, PAYG withholding tax, FBT and other taxes.
- BAS statements can be prepared by a bookkeeper, accountant or yourself and are due either monthly or quarterly.
- Use this guide on BAS statements for dummies to learn how to prepare, calculate and lodge BAS statements.
What is a business activity statement (BAS)?
A business activity statement (BAS) is a business tax reporting requirement issued by the Australian Taxation Office (ATO) on either a monthly or quarterly basis. BAS is used for the following purposes:
- reporting and paying goods and services tax (GST)
- pay as you go (PAYG) instalments
- PAYG withholding tax and other tax obligations such as FBT instalments
- Luxury Car Tax
- Wine Equalisation Tax and Fuel Tax Credits
Do I need to lodge a BAS statement?
If your business has an annual turnover of $75,000, you are required to register for GST and lodge a BAS statement. After registering for GST, the ATO will automatically send you a business activity statement when it’s time to lodge your BAS.
Common acronyms found in BAS statements
It's useful to know some of the common acronyms you'll find in your BAS statement:
- ATO = Australian Taxation Office
- BAS = Business Activity Statement
- GST = Goods and Services Tax
- PAYGW = Pay as you go Withholding
- FBT = Fringe Benefits Tax
- LCT = Luxury Car Tax
- WET = Wine Equalisation Tax
- FTC = Fuel Tax Credits
- GST Registration
As a business owner, you are responsible for ensuring you meet all your business’s GST obligations. A business is required to register for GST if it has an annual GST turnover of $75,000 or more a year, or if they think they will reach this annual threshold.
Once your business is registered for GST, you must include GST in the sale price of your goods. But there are some exceptions. Some goods are GST-free including most of the basic foods like bread and milk, some education courses, and some medical products and services. If your business falls into any of these categories, it’s best to speak to your accountant for a clear strategy on handling such items.
How to prepare your BAS
Preparing your BAS for the first time can be time-consuming. Follow these steps to ensure you prepare a BAS correctly.
All businesses registered for GST use the business activity statement to complete their GST returns. Your reporting and payment period is shown on your business activity statement and will be monthly, quarterly or annually.
2. Accrual vs Non-Accrual (cash)
When you register for GST you need to select whether you will report on an accruals basis or a cash basis. Accruals basis means that you will be reporting your GST when you prepare your sales invoice or receive your expense invoice, regardless of whether you have actually received, or made, a payment for the invoice.
Non-Accrual or cash basis means that you report your GST based on when cash is received or paid out, regardless of when the transaction occurred.
How is BAS calculated?
There are several ways you can calculate your BAS:
1. Calculate and report GST quarterly
Available to all quarterly businesses. Calculate and report all the GST labels in your business activity statement and pay your actual GST amounts quarterly.
2. Calculate GST quarterly and report annually
Available to all businesses with a turnover of less than $20 million. Calculate and pay your actual GST amounts quarterly but report only the GST collected and paid and total sales for each quarter.
3. Pay GST instalment amount and report annually
Available to all businesses with a turnover of $2 million or less, which allows you to pay an ATO determined GST instalment amount quarterly.
For GST reporting options 2 and 3, an annual GST reconciliation is required to be completed and lodged with the ATO.
4. Pay as you go (PAYG) income tax instalment
PAYG instalments require you to pay incremental amounts towards your expected end of year income tax liability. To make sure your income tax assessment takes into account the instalments you've paid through the year, you need to finalise your PAYG instalments before you lodge your income tax return.
Calculating and paying BAS instalments
Generally, you can choose between two options for calculating and paying your PAYG instalments, which will apply for the remainder of the income year:
Option 1: Installment amount
A pre-determined amount calculated by the ATO.
Option 2: Installment rate
Calculate your PAYG instalment amount based on your actual income multiplied by a rate that the ATO provides. Great for seasonal businesses where income can fluctuate.
If you aren’t registered for any of the other items on a business activity statement (such as GST or PAYGW), but you are required to pay a tax instalment, then the ATO will send you an instalment activity statement (IAS) rather than a business activity statement (BAS). If you don't want to vary the instalment amount shown on your instalment notice, you only need to pay the amount shown by the due date and you don't need to lodge the notice.
Pay as you go (PAYG) tax withheld
Under PAYG withholding, businesses must withhold tax from certain payments made to others, which is then paid to the ATO. These include:
- payments to employees, company directors and office holders
- payments to workers under a labour-hire agreements
- payments under voluntary agreements
- payments where an Australian business number (ABN) has not been quoted in relation to a supply
You must report any withheld amounts in the PAYG tax withheld section of your business activity statement (BAS).
Fringe benefits tax (FBT) instalment
Fringe benefits tax (FBT) is a tax that employers pay on certain benefits they provide to their employees. The benefits may be in addition to, or part of, their salary or wages package. FBT is separate from income tax. If you are required to pay FBT, then FBT instalments (a pre-determined amount calculated by the ATO) are payable as part of your business activity statement.
Luxury car tax (LCT)
Luxury car tax (LCT) applies to all supplies and importations of luxury cars where the value (including GST) exceeds the LCT threshold. The value generally also includes the price paid for accessories and modifications made to the car before delivery.
LTC threshold (as of June 2020) are as follows:
Wine equalisation tax (WET)
Wine equalisation tax (WET) only applies to wine manufacturers, wholesalers, and importers. Retailers do not have a WET liability unless they make wholesale sales or bottle their own wine.
WET is a tax based on the value of wine. WET applies at 29% of the value of the wine at the last wholesale sale (before adding GST).
Fuel tax credits (FTC)
Fuel tax credits provide businesses with a credit for the fuel tax (excise or customs duty) included in the price of fuel they use in machinery, plant equipment and heavy vehicles for business purposes. You must be registered with the ATO for GST and Fuel Tax Credits to make a claim.
How to lodge your BAS
If you are using the online services for individuals and are registered via the Business Portal you can access and complete your BAS online. If you are not registered, your business activity statement will be sent to you in the mail and you lodge it via post. You can also submit your business activity statement through a registered tax agent or BAS agent.
What are the BAS statement due dates?
Your BAS statement due date is displayed on your BAS statement. Your BAS statement is issued by the ATO approximately two weeks before the end of a business’s reporting period. Once you receive your business activity statement, fill it out, lodge it with the ATO and pay any money you owe by the due date. The due dates depend on whether you lodge your BAS monthly or quarterly.
The due date for your monthly business activity statement is usually on the 21st day of the following month. If the due date is on a weekend or public holiday, you can lodge your form and make any payment due on the next business day.
Due date - paper
Due date - online
|1 - July, August and September||28 October||11 November|
|2 - October, November and December||28 February||28 February|
|3 - January, February and March||28 April||12 May|
|4 - April, May and June||28 July||11 August|
Your Business Activity Statement can now be simpler under a new initiative called Simpler BAS, for businesses with a turnover less than $10 million.
Editor's Update 06/07/20:
Here are some other things you might be wondering...
Do I need to lodge a BAS if not registered for GST? You don't need to lodge a BAS if your business is not registered for GST, i.e. your annual turnover doesn't exceed $75,000 (or $150,000 for non profits).
Do I need to lodge a BAS if I have no income? You still need to lodge a BAS if you have no income to report. If you have nothing. If you're no longer in business, you should ask for your ABN and GST to be cancelled.
Do sole traders need to lodge BAS? Sole traders do not need to lodge a BAS, but they are required to report all income and expenses in their annual tax return. As a sole trader, it's important to track your income and expenses keep adequate records of all business activities.
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