Business Activity Statement(BAS) For Small Businesses Explained: A Full Guide

When starting a business, one of the first choices you'll need to make is whether or not to register for the Goods and Services Tax (GST). This choice will significantly affect how you handle the administrative side of your finances. If you decide to register for the Goods and Services Tax (GST), you must provide the Australian Taxation Office with a quarterly Business Activity Statement (BAS). This article will walk you through all you need to know about a Business Activity Statement (BAS), how to file one, and why doing so is required.

What is BAS?

The Business Activity Statement (BAS) is a form that, depending on the size of your company, must be submitted anywhere from one to twelve times per year. The ATO will determine your GST refund or bill based on the information provided on your BAS. In addition to that, it is utilised for employee income tax, fringe benefits tax, luxury automobile tax, wine equalisation tax, and gasoline tax credits (if you are in the pay-as-you-go system).

What is GST?

GST means Goods and Services Tax, a value-added tax levied on the vast majority of products and services sold in the domestic market. Consumers are responsible for paying the GST, while businesses that sell the products and services are responsible for remitting them to the government. In this sense, the Goods and Services Tax (GST) contributes to generating revenue for the government.

Types of taxes to be paid through BAS

There are different taxes you can pay through BAS. They are as follows:

• 1. GST

  
  The goods and services in most categories are subject to a value-added tax of ten percent. You can report, record, and pay the goods and services tax (GST) that your company has collected using your BAS. You can also use it to claim GST credits. After fulfilling the necessary standards, your company can submit a claim for GST credits at any point throughout the subsequent four years. In the Goods and Services Tax (GST) context, a 'tax period' refers to one month or three months. However, the BAS form is required for all tax payments, including PAYG and fringe benefits tax.
  
  

• 2. PAYG

  
  To qualify for PAYG instalments, you must make regular payments toward the income tax you anticipate owing at the end of the year. You can select either a certain instalment amount or a specific instalment rate. The ATO uses the information you provided in your most recent tax return to calculate an amount that will be owed as an instalment. The instalment rate is calculated by the company using the instalment rate provided by the ATO and based on the actual income as the company earns it. In most cases, the ATO will not send a BAS for a PAYG payment but rather a separate notice called an instalment notice.
  
  

• 3. FBT

  
  A tax distinct from income tax is the fringe benefits tax (FBT). This tax is levied on specific perks that firms provide to their workers, including the workers' families and any other associates of the workers. These benefits may include allowing employees to use their personal vehicles for work-related errands or paying for an employee's subscription to a local fitness centre. If a company was obliged to pay FBT of more than $3,000 in the previous fiscal year, they must report this information in their BAS and pay this amount quarterly.
  
  

• 4. Luxury Car Tax (LCT)

  
  The luxury car tax, often known as the LCT, applies to any sale or import of a luxury vehicle with a value greater than the LCT threshold and includes the value of any applicable goods and services tax. The ATO determines this level and is subject to change at any time. The LCT now stands at 33% and applies to the portion of the car's value above the threshold. It does not apply to the total value of the vehicle. If you meet the precise criteria set by the ATO, you may be allowed to postpone the payment of LCT in certain situations when it is applicable.
  
  

• 5. WET

  
  WET is a tax calculated based on the price of wine and levied only on wine producers, distributors, and importers. The WET now sits at 29% of the taxable value of wine. If you file your GST return and make your GST payment once per year, you are exempt from the requirement to report WET on a monthly or quarterly BAS. On the other hand, you are required to disclose WET on your annual return for GST.
  
  

• 6. FTC

  
  Fuel tax credits allow businesses to receive a credit for the fuel tax (also known as excise tax or customs duty) included in the fuel used in heavy vehicles, plant equipment, and machinery used for business purposes. The FTC rates are subject to change at varying intervals. When a company wants to submit a claim like this, it should always check with the ATO to see the current rates first because doing so is mandatory.
  
  

How does BAS work?

Sometimes, you don’t understand how BAS works, you just find a way to get it submitted periodically. We know a form must be submitted to the ATO to pay your business taxes, but how does the process work? The Business Activity Statement form is the one that your company will utilise to report on your taxable sales, taxable purchases, and other tax responsibilities, including GST and PAYG withholding. The ATO will then use this information to compute the amount of tax your company is required to pay, and the company is responsible for making any tax payments due by the specified date.

How does GST work?

At this time, the GST rate is 10%. This means that if the price of your goods or services is $100, the consumer will be charged $110 for them. The additional ten dollars represents the ATO value-added tax (GST). When you make purchases of supplies for your company, you will be required to pay a Goods and Services Tax (GST) of ten percent, which is then refundable in the form of a tax credit. After each GST period – often quarterly but occasionally monthly – you must account for the GST you have received on your sales minus any that you have paid (the credits) on your purchases.

The difference is the amount that needs to be paid (or maybe refunded if credits on purchases exceed debits on sales). You can accomplish this by submitting an activity statement for your firm and paying the net amount of GST to the ATO. Businesses with less than $75,000 annual revenue can register for the goods and services tax (GST). This is so that businesses can choose whether or not they want to be eligible to collect input tax credits on suppliers' purchases. This is especially true if the total amount of GST credits on purchases is more than the total amount charged to customers.

How often do you lodge a BAS?

Regarding lodging and paying your BAS, the due date for paper lodgements will be displayed on your form. This includes the date by which you must pay your BAS. If you use online services business methods, however, the due date for your BAS will be different. If the BAS due date falls on a weekend, public holiday, or Sunday, you will have until the first working day after the due date to register the BAS and make the payment.

• 1. Know your GST reporting and payment dates

  
  To complete their GST returns, all businesses registered for GST will use the business activity statement. Your business activity statement will specify whether your GST reporting and payment cycle is monthly, quarterly, or annually.
  
  

• 2. Choose either accrual or non-accrual

  
  When you sign up for the GST, you must choose whether to record your transactions on an accrual basis or a cash basis. If you choose to report your GST using the accruals basis, you must do so when you either generate your sales invoice or receive your expense invoice. This is the case regardless of whether or not you have received or made a payment for the invoice.
  
  When using a cash basis, also known as a non-accrual basis, you report your Goods and Services Tax (GST) based on when cash is received or paid out, regardless of when the transaction took place.
  
  

• 3. Reconcile and complete your BAS form

  
  You can determine the amount of GST you owe (or are owed) for the applicable reporting period by running an Activity Statement from your software or manually adding up all of the data. This will offer you guidance to your obligations and allow you or your accountant a starting point from which to verify your accounting file.
  
  

• 4. Lodge

  
  If you are okay with the data from your accounting system, you can send the completed form to the ATO by email or electronically through the ATO portal if you are using electronic filing. You can email the software file to your agent or accountant, who will double-check your data and submit your BAS. If you are using an agent or accountant, this allows you to save time. They might alter the numbers compared to the prior reporting period, fix any errors, and add any extra data that might be lacking. Be sure to make your payments on time or notify the ATO of the schedule you intend to use for payments.
  
  

How can you lodge your BAS?

When it comes to submitting their activity statements, business owners have different options to choose from. Most companies submit their own BAS online, giving them two weeks to submit and pay for it.

• 1. Online platform

  
  The MyGov platform allows sole proprietors and individuals to lodge, view, and change their activity statements. After logging in at www.my.gov.au, pick 'tax' and 'activity statements' from the drop-down menus that appear.
  
  

• 2. ATO portal

  
  If you are not an individual taxpayer or a sole proprietor, you can manage the tax responsibilities of your business through the ATO's Business Portal.
  
  

• 3. Software for online accounting

  
  If you use online accounting software like Xero or MYOB, you can submit your BAS return immediately through the software's accounting portal. To use it for BAS lodgement, your accounting software must have the Standard Business Reporting (SBR) feature enabled.