What is a BAS?
A Business Activity Statement (BAS) is an essential form used by Australian businesses to report their tax obligations to the Australian Taxation Office (ATO). Here’s a detailed breakdown:
- Definition: BAS is a form that consolidates various tax obligations into one document, allowing businesses to report and pay multiple taxes, including Goods and Services Tax (GST), Pay As You Go (PAYG) withholding, PAYG instalments, and other tax liabilities.
- Purpose: The main purpose of BAS is to simplify tax reporting for businesses by consolidating different tax-related requirements into a single filing. Instead of lodging multiple reports, businesses can submit one form to handle their obligations.
- Filing Frequency: The frequency with which a business lodges its BAS depends on its size and structure. Typically, businesses lodge their BAS either monthly, quarterly, or annually:
- Monthly BAS: For businesses with GST turnover over AUD 20 million.
- Quarterly BAS: Most small businesses with turnover below AUD 20 million.
- Annual BAS: For certain small businesses, particularly those with infrequent tax obligations.
- Who Needs to Lodge BAS?
- Businesses registered for GST: Any business with a turnover exceeding AUD 75,000 (or AUD 150,000 for not-for-profits) must register for GST and lodge a BAS.
- Entities with PAYG withholding obligations: If your business has employees, you’re required to withhold tax from wages and report it via BAS.
- Businesses eligible for fuel tax credits: Small businesses that claim fuel tax credits also report this through their BAS.
- Key Fact: The Australian Government collects over AUD 70 billion annually through BAS submissions, reflecting the critical role this system plays in the national tax revenue structure.
Lodging BAS accurately and on time is crucial to avoiding penalties, so understanding the process is vital for all Australian businesses.
Types of Obligations Reported on BAS
When reporting on your Business Activity Statement (BAS), you need to account for various tax obligations based on your business activities. Below is a summary of the most common obligations reported on BAS:
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Goods and Services Tax (GST):
- Description: GST is a 10% tax on most goods and services sold in Australia. When you charge GST on your sales (called output tax), you must report it, and when you pay GST on purchases (called input tax), you claim credits.
- Applicable Businesses: All businesses registered for GST.
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PAYG Withholding:
- Description: This is the tax withheld from employee wages and remitted to the ATO. It ensures that employees’ tax obligations are met progressively through the year.
- Applicable Businesses: Any business that has employees.
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PAYG Instalments:
- Description: These are prepayments of your income tax based on your business’s income. The ATO determines the amount based on your previous year’s tax return or estimated income.
- Applicable Businesses: Businesses that earn a certain level of income and are required to make income tax prepayments.
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Fuel Tax Credits:
- Description: This is a refund provided to businesses for fuel used in business activities such as machinery, plant, and equipment. It reduces the overall fuel costs for eligible activities.
- Applicable Businesses: Eligible businesses involved in activities such as agriculture, construction, or mining.
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Other Taxes:
- Fringe Benefits Tax (FBT): This tax applies if you provide benefits to your employees beyond wages, like company cars.
- Luxury Car Tax (LCT): A tax on cars above a certain value.
- Wine Equalization Tax (WET): Applies to wine producers, based on the wholesale value of wine.
Here is a table summarizing these obligations:
| Tax Obligation | Description | Applicable Businesses |
| GST | Tax on sales and purchases | All GST-registered businesses |
| PAYG Withholding | Tax withheld from employee wages | Businesses with employees |
| PAYG Instalments | Prepayments of income tax | Businesses with annual income tax |
| Fuel Tax Credits | Refunds for fuel used in business activities | Eligible businesses in certain industries |
| Fringe Benefits Tax | Tax on non-wage employee benefits | Businesses providing benefits to employees |
| Luxury Car Tax | Tax on luxury cars above a threshold | Businesses involved in selling luxury cars |
| Wine Equalization Tax | Tax on wholesale sales of wine | Wine producers and wholesalers |
This table outlines the major taxes and credits businesses typically report through BAS, ensuring compliance with Australian tax obligations while optimizing cash flow through available credits.
How to Prepare BAS
Preparing a Business Activity Statement (BAS) can seem overwhelming, but with the right approach, it becomes a straightforward process. Here’s a breakdown to help you handle it efficiently.
Record-Keeping: The Foundation of BAS Preparation
Accurate record-keeping is crucial for smooth BAS preparation. Keeping detailed records of your sales, purchases, wages, and other taxable events helps ensure you report the right information and avoid errors. Good record-keeping makes it easier to calculate GST, PAYG (Pay As You Go) withholding, and other obligations.
Why is it important?
- Audit Compliance: The ATO may audit your business, and having precise records means you’re prepared.
- Accurate BAS Reporting: Good records help you report accurate figures, reducing the risk of errors or overpaying tax.
- Financial Insight: It gives you a clear picture of your business’s financial health, helping with future planning.
Software Solutions: Simplifying BAS
The right tools can make preparing BAS a lot easier. Software like Xero, MYOB, and QuickBooks is popular in Australia for small businesses, helping with automated GST tracking, invoice generation, and payroll management. In fact, around 95% of Australian small businesses use accounting software to lodge their BAS, which not only simplifies the process but ensures that calculations and record-keeping are accurate​.
Checklist for BAS Preparation
Here’s a simple checklist to help ensure everything is in order:
- Ensure all sales, purchases, and expenses are recorded: Make sure all financial transactions are up to date.
- Calculate GST payable and receivable: Check the GST you’ve collected from sales and compare it to the GST you’ve paid on business expenses.
- Calculate PAYG withholding for employees: If you employ staff, calculate how much tax you need to withhold and remit to the ATO.
- Review other applicable tax obligations: Depending on your business, you might need to include things like fuel tax credits or wine equalisation tax.
Key Considerations
- Review Regularly: Don’t wait until the last minute. Stay on top of your records to avoid mistakes.
- Use Software: Manual errors can occur if you rely solely on spreadsheets or paper records. Accounting software reduces these risks.
- Seek Professional Advice: If you’re unsure, it’s always worth consulting with an accountant to avoid costly mistakes. BAS can be a lot more complex for businesses that handle imports, exports, or have multiple tax obligations.
By maintaining good records, using accounting software, and regularly reviewing your financials, you’ll find preparing your BAS much more manageable.
When it comes to Business Activity Statement (BAS) lodgment and payment deadlines, it’s crucial to stick to the due dates based on your business’s reporting frequency. Let’s break it down in simple terms:
BAS Lodgment Deadlines
- Monthly Reporting: If your business reports monthly, you need to lodge your BAS by the 21st of the following month.
- Quarterly Reporting: For businesses reporting quarterly, the deadline is the 28th day after the end of the quarter.
- Annual Reporting: Small businesses that report annually must lodge their BAS by the end of the financial year.
Example BAS Lodgment Table
| Reporting Frequency | Deadline for Lodgment | Late Fees (Per Month) |
| Monthly | 21st of the following month | AUD 220 (approx.) |
| Quarterly | 28th of the following month | AUD 220 per month late |
| Annual (Small Business) | End of the financial year | AUD 220 per month late |
Penalties for Late Lodgment
- If you lodge your BAS late, the ATO may apply general interest charges and late lodgment penalties.
- The standard late lodgment penalty is AUD 220 per month, up to a maximum of 5 months.
- Extensions can be requested in advance, especially if you’re experiencing difficulties, but they aren’t guaranteed. Make sure to request any extension before the due date to avoid penalties.
Tips for Avoiding Penalties:
- Set Reminders: Use digital calendars or apps to remind you of BAS deadlines.
- Early Lodgment: Submit your BAS early if possible, especially if you foresee any issues with payments.
- Contact the ATO: If you’re struggling, it’s better to communicate with the ATO for possible extensions or payment plans.
Lodging your BAS on time not only keeps your business compliant but also helps avoid unnecessary stress and costs.
