Tax has to be one of the most unpopular subjects for business owners. And we understand why. Trying to comprehend the ins and outs of tax can be a daunting task. But it doesn’t need to be. With some preparation and basic knowledge, you can make life a whole lot easier for yourself and avoid some nasty repercussions from failing to meet your obligations.
One of the most valuable and time-saving areas of tax preparation you can do is to get your head, and your accounting, around BAS tax.
What is a Business Activity Statement?
BAS is a business activity statement you lodge with the government to let them know how much GST you have collected on sales, and how much you have paid on purchases and expenses. The ATO uses your BAS information to calculate your GST bill or refund.
BAS is also used to determine your income tax if you’re using the pay-as-you-go (PAYG) system. It is also used to determine:
- Luxury car tax
- Fringe benefits tax
- Wine equalisation tax
- Fuel tax credits
- Employee income tax
Who needs to do it?
Any business registered for GST is required to submit a BAS. You should be registered for GST if you make or expect to make over $75,000 annually.
When do I need to lodge my BAS?
You’ll need to fill out your BAS form between one and 12 times a year, depending on how much you’re turning over.
Less than $75, 000
- Lodge BAS annually with your income tax
Under $20million
- Lodge BAS quarterly
- Deadlines:
- Quarter 1 (July-September) BAS is due on 28 October
- Quarter 2 (October-December) is due on 28 February
- Quarter 3 (January-March) is due on 28 April
- Quarter 4 (April-June) is due on 28 July
If your turnover is under $10 million you may be able to lodge your BAS annually, however, you still need to pay a quarterly instalment for the GST you owe.
Over $20million
- Lodge monthly and within 21 days of the month closing
What you need to do to prepare
- Invest in accounting software and create categories according to BAS
Using good accounting software can help make preparing for BAS much easier and helps to pull reports when it comes time to lodge your BAS and income tax.
Set up your accounting system according to the categories you’ll need to report on for BAS such as employee income tax, fringe benefits etc.
- Keep accurate records
When it comes to preparing to lodge your BAS, you’ll want to have thorough records of all your purchases and sales.
Establish a weekly accounting practice of recording all transaction the business has conducted.
Your records should include:
- Date
- Type of transaction
- Description
- GST (if applicable)
If you don’t have an accounts team or time to do your weekly accounting yourself invest in hiring a bookkeeper. Even if it’s a couple of hours a week or fortnight the time, money and stress you’ll save yourself when it comes to lodging your tax will be worth the money spent.
- Keep your receipts and tax invoices
While you don’t need to submit your receipts and tax invoices when you lodge your BAS, the ATO can and may request to see them later. Make sure you keep a reliable filing system and have all your documents on hand.
How to lodge your BAS
You can lodge your BAS multiple ways depending on the size of your business and what you are comfortable with.
- Through a registered tax and BAS account agent
- Via the ATO’s online business portal
- If you’re a sole trader, you can lodge using your myGov account
- Through accounting software
- By mail (if you have your BAS form sent to you)
What happens if you don’t lodge your BAS on time?
If you don’t meet your BAS lodgement obligations on time you may receive a Failure to Lodge fine. The FTL penalty unit (amount) is determined according to the size of your entity.
- For a small entity you’ll receive a penalty unit for every 28 days late your BAS lodgement is, to a maximum of five units
- For a medium entity (assessable income or current GST turnover of more than $1 million and less than $20 million) the penalty is multiplied by two
- For a large entity (assessable income or current GST turnover of $20 million or more) the penalty is multiplied by five)
You will be warned by the ATO prior to being penalised if it is an isolated case. If you are unable to pay your GST bill it is essential you still lodge your BAS then apply for a payment plan through the ATO.
Need finances to invest accounting software, services or to help cover your tax bill? Talk to our team to see if a flexible, short-term business loan can help. Call 1800 676 652 or fill out an enquiry form and our team will contact you shortly.
Prepared by OnDeck Capital Australia Pty Ltd ABN 28 603 753 215 (“OnDeck”) for general information purposes only. Content may belong or have originated from third parties and OnDeck takes no responsibility for the accuracy, validity, reliability or completeness of any information. Information current as at February 2020. You should not rely upon the material or information as a basis for making any business, financial or any other decisions. Loans issued in Australia are subject to the terms of a loan agreement issued by OnDeck. Loans are subject to lender approval. OnDeck® is a Registered Trademark. All rights reserved.
