As the rules and obligations around tax returns are everchanging, it’s crucial to remain updated and understand what’s required of you as a business owner each year.
Let’s look at some of the basics of preparing your BAS statement to ensure your next return is accurate, compliant and easily manageable.
And remember, you can always hire an experienced BAS agent if things get a little too complicated!
The Importance of Keeping Up to Date
Preparing your own BAS can be tedious, time consuming and just plain frustrating depending on how well-organised your records were throughout the year.
It’s imperative to update your records as you go, however there are a few things to consider reviewing:
· Ensure your financial records match your bank statements
· Creditor records and information are accurate
· All purchases and expenses are totalled correctly
· Assess outstanding funds
· Gather and organise all receipts and invoices
GST- Accrual or Non-Accrual (Cash)
Any business registered for GST is required to lodge a business activity statement to submit GST returns.
The reporting period will either be monthly, quarterly or annually and should be displayed on the BAS.
Being registered for GST means you need to decide whether to report on an accrual or non-accrual basis. Selecting accruals basis means your GST will be reported when generating or receiving invoices regardless of payments being made or received.
Non-accruals (Cash) basis means reporting once payment is made or received with the date of the transaction being irrelevant.
Calculation and Payment
There are four general methods of calculating and lodging a BAS. The nature of your business operations, industry and annual turnover will determine how you’ll need to calculate and pay GST.
Here’s a brief rundown on each calculation and payment method:
Quarterly – Calculate and Report
Quarterly businesses are eligible to calculate and report all GST through a quarterly BAS.
Monthly – Calculate and Report
Monthly businesses are eligible to calculate and report all GST through a monthly BAS.
Calculate Quarterly – Annually Report
Any business with an annual turnover of less than $20 million. Pay GST quarterly reporting GST collected or paid along with sales per quarter.
GST Instalment – Annually Report
Eligible businesses must have an annual turnover of less than $2 million. Pay a quarterly instalment predetermined by the tax office.
Pay As You Go
Make incremental payments towards your EOFY liability. This requires finalisation to ensure instalments already paid are accounted for prior to lodgement.
PAYGI and PAYGW
PAYGI is generally reported on a quarterly basis and is an ATO determination of your own income tax. PAYGW is where tax withheld from employees’ wages with the option to report either quarterly or monthly.
Fringe Benefits Tax
Fringe Benefits Tax must be calculated based upon the portion of privately used business expenses. For example, a portion of vehicle-related expenses and some other employee perks are claimable.
Fuel Tax Credits
Fuel and other vehicle-related expenses required to operate heavy vehicles, heavy machinery and vehicles travelling off-road or using private roads can be claimed as a rebate on your next business activity statement.
Portions of fuels you can claim depend on several factors such as:
· When the fuel is purchased
· The type of fuel used
· The type of activities the fuel was used for
However, not all fuels and vehicles are eligible for Fuel Tax Credits including fuels used in vehicles 4.5 tonnes or less in GVM (gross vehicle mass) utilised on public roads.
Please see the ATO government website for further information on Fuel Tax Credits and other government rebates.
Depending on the reporting frequency you’ve selected for your business the associated due dates are as follows: Monthly Reporting
Due for submission by the 21st of each month.
Due for submission by the 28th of each month after the corresponding quarter end date.
Appointing a professional BAS Agent to manage and lodge your activity statements can benefit you and your business as they receive an extension of eligible time for submission of up to a further four weeks.
How to Lodge
If you’re looking at lodging your next business activity statement yourself, you’ll be required to set up a MyGovID.
It’s important to know that this differs from a regular MyGov account and is used to lodge your BAS via the online business portal. However, hiring a BAS Agent is significantly simpler with the added convenience of allowing them to lodge business statements via their own ATO portals.
Whether it’s your first time taking on a BAS or you’re an experienced business owner, there’s always room for improvements and education on how to more effectively and conveniently prepare for your BAS returns!