Australian Taxation Office (ATO) issues two types of activity statements so that businesses can report and pay their tax liabilities. These two activities are Instalment Activity Statement (IAS) and a Business Activity Statement (BAS). The IAS is a pre-printed document issued by the ATO every month, which summaries the amounts of Pay As You Go (PAYG) instalments, PAYG withholding and ABN withholding, it is applicable for taxpayers who are not registered for Goods and Services Tax (GST). Talking about GST, it is important here to note that as your business’s annual turnover crosses the threshold of $75,000 you will need to register for GST and start lodging your BAS with the ATO.
Let Us Understand What Is Business Activity Statement –
Business Activity Statement is also known as BAS is another pre-printed document issued by the Australian Taxation Office (ATO). BAS can be filed voluntarily if your turnover is under $75,000 threshold and if you have GST Registration. This statement summarises the taxes that your business has paid all in one transaction. It has the summary of the following taxes –
- Goods and services tax (GST)
- Fringe benefits tax (FBT) instalment
- Pay as you go (PAYG) income tax instalments
- Pay as you go (PAYG) tax withheld
- Australian business number (ABN) withholding tax.
- Wine equalisation tax (WET)
- Luxury car tax (LCT)
- Fuel tax credits
Payment Cycle & Due Dates
If you are a GST Registered entity then you must lodge your BAS on a monthly, quarterly or yearly basis. Your BAS reporting cycle is dependent on your turnover.
You have to report your BAS on a monthly basis if your turnover is equal to or more than A$20 Million. In this case, you must make your payment by 21st day of every month for the period just gone.
You have to report your BAS on a Quarterly basis if your turnover is less than A$20 Million. You must make your payment on the following dates: –
July – September
October – December
|January – March||
|April – June||
You have to report your BAS on a yearly basis if your turnover is under A$75,000 threshold and you registered for GST voluntarily. In this case, you must make your payment on by either 28 February.
Payment Mode & Penalty
BAS can be lodged and paid through your accountant, by mail, at Australia Post, over the phone, or even online. One must lodge BAS even if there is no business activity, failure in doing so can lead to FTL (Failure To Lodge) penalty. The penalty might increase for frequent defaulters.
The penalty can start from A$110 and can go up to A$222 per penalty unit depending on when an infringement occurred. Apart from this, the penalty is calculated differently for a small, medium, large and global entity.
The penalty is also applicable for lodging of wrongful information. While a mistake could be a result of carelessness or consciously ignoring the law, ATO understands that it could be a genuine mistake and in such a case you are charged with a general interest on the underpaid tax or extra credit received further, most mistakes can be corrected on the next BAS. However, for carelessness or consciously ignoring the law, a penalty is charged based on a percentage of the shortfall amount.
Tips to make BAS easy for you
- Make it a habit to collect and record the receipts related to sales, expenses, wages, other business costs and taxes. This will help you keep track of all income & expenses, and serve as proof if the ATO needs to see them. In any case, it is mandatory by the ATO to record and store your receipts for five years.
- Make sure to cross-check whether any particular invoice has been recorded twice. At the same time, make sure you didn’t forget to enter any invoice or receipt. It is always better to check your figures and calculation a few times before submission, especially if you doing so manually.
- Understand that each BAS is personalised based on GST registration details, report only on the form that you receive from ATO.
- Only fill the fields that are applicable to you and if there is nothing to report just enter zero. You must enter the whole dollar amount and leave cents out, and you must not round up the cents to the next dollar.
BAS can become much easier according to the number of times of you have lodged and paid for it but the thing is, as a business owner it is impossible to constantly be on top of all the processes. Additionally, a lot of changes are made on a periodic basis and you have to be up to date with these changes. These reasons pose as a hindrance in a smooth operation of the taxation process and so hiring outsourced accounting services will not only help you with BAS but also with small business bookkeeping. Having an outsourced partner take care of your small business accounting and bookkeeping will make sure that all process is conducted inaccurate manner from day one further helping you to stay compliant to ATO.