Understanding your Business Activity Statement (BAS)

We get a lot of questions from new business owners about business activity statements. What are they? Do I need to complete them? How do I lodge them? Whilst we don’t give specific financial or tax advice, our team are well equipped to guide you in the right direction and refer you on to a tax professional, if required.

A Business Activity Statement (BAS) is a crucial document for businesses in Australia, issued by the Australian Taxation Office (ATO). It serves as a comprehensive tax reporting tool, enabling businesses to report and pay various tax obligations. Here’s a detailed look at the purpose and components of a BAS:

Purpose of a BAS

The primary purpose of a BAS is to streamline the tax reporting process for businesses. It consolidates multiple tax obligations into a single form, making it easier for businesses to manage their tax responsibilities. The key taxes reported through a BAS include:

• Goods and Services Tax (GST): This is a broad-based tax of 10% on most goods, services, and other items sold or consumed in Australia.
• Pay As You Go (PAYG) Instalments: These are regular payments made towards your businesses expected income tax liability. This typically won’t apply if it’s your first year of trading.
• PAYG Withholding: If you have employees, you need to withhold tax from their wages and report this through your BAS.
• Fringe Benefits Tax (FBT) Instalments: This tax is paid on certain benefits you provide to your employees or their associates.
• Luxury Car Tax (LCT): This is a tax on cars that have a GST-inclusive value above the LCT threshold.
• Wine Equalisation Tax (WET): This tax applies to wine manufacturers, wholesalers, and importers.

Who Needs to Lodge a BAS?

Any business registered for GST must lodge a BAS. Generally, businesses with an annual turnover of $75,000 or more are required to register for GST. Non-profit organizations have a higher threshold of $150,000. Once registered, the ATO will automatically send you a BAS when it is time to lodge (tip: make sure the ATO has your correct contact details). Businesses who hire employees will also need to lodge a BAS to report the PAYG withheld from wages. Businesses liable for any of the other taxes mentioned above are also required to lodge a BAS.

Lodgement and Payment

BAS can be lodged monthly, quarterly, or annually, depending on your business’s turnover and tax obligations. Most small businesses lodge their BAS quarterly. The due dates for quarterly lodgements are:

• Quarter 1 (July – September): Due by 28th October
• Quarter 2 (October – December): Due by 28th February
• Quarter 3 (January – March): Due by 28th April
• Quarter 4 (April – June): Due by 28th July

It’s essential to lodge (and pay!) your BAS on time to avoid penalties. If the due date falls on a weekend or public holiday, you can lodge and pay on the next business day.

You can lodge your BAS via the ATO’s portal for business owners, Online services for business. It’s also possible to link your accounting system to the ATO and lodge directly from there. Of course, a registered BAS or Tax Agent can assist with this process as well, and they are a great option if you are at all unsure about your obligations.

Preparing Your BAS

To prepare your BAS, you can use accounting software, a bookkeeper, or an accountant. Many businesses find that using accounting software simplifies the process, as it can automatically generate the necessary reports and even submit the BAS directly to the ATO.

When preparing your BAS, ensure that you:

1. Accurately report your GST: Include all sales and purchases, and ensure you claim any GST credits you’re entitled to.
2. Report PAYG withholding: Accurately report the tax withheld from employee wages.
3. Include PAYG instalments: Report any instalments you need to pay towards your income tax.
4. Check for other taxes: Ensure you report any other applicable taxes, such as FBT, LCT, or WET.

Common Mistakes to Avoid

• Lodging but not paying: Once you lodge your BAS, ensure you pay it as well.
• Incorrect GST reporting: Double-check your sales and purchase figures to ensure accuracy.
• Late lodgement: Mark your calendar with BAS due dates to avoid late lodgement penalties.
• Overlooking PAYG obligations: Ensure you report and pay the correct amounts for PAYG withholding and instalments.

Conclusion

The BAS is an essential tool for managing your business’s tax obligations in Australia. By understanding its purpose and ensuring accurate and timely lodgement, you can keep your business compliant and avoid unnecessary penalties. A BAS Agent or Tax Agent can assist you with the preparation and lodgement of your BAS.

Do you have any questions about Business Activity Statements? 

Contact us today to arrange an appointment with a business advisor.