Feeling unsure on how to do a BAS statement?
If you’re a GST registered business, it’s that time of year again where you (or your accountant) need to prepare and submit a business activity statement to calculate your GST obligations or the GST refund you’re entitled to from the Australian Tax Office (ATO).
We don’t want you to be having sleepless nights over lodging your business’s BAS statement, so we’ve created this ultimate guide to show you how to do a BAS statement and how to lodge it correctly and on time.
The GST-registered business must pay that GST to the ATO along with a report known as a BAS statement.
- 1 Does Your Business Need to Register for GST?
- 2 What Is a Business Activity Statement (BAS)?
- 3 Lodgement Deadlines
- 4 PAYG Withholding on Your BAS Statement
- 5 Pay As You Go Instalments
- 6 Step By Step Guide on How To Do a BAS Statement
- 7 Do Sole Traders Need To Know How To Do a BAS Statement?
- 8 Key Takeaways
Does Your Business Need to Register for GST?
Small businesses will need to register for GST if they reach the thresholds prescribed by the ATO.
In general, if your business turns over more than $75,000 per year, you’ll need to register for GST. However, if you operate a non-profit organisation, the turnover threshold is $150,000.
The threshold doesn’t apply to a business providing taxi service or ride-share services such as Uber. As an Uber driver, you’ll be required to register for GST no matter how much money you turnover each year.
What Is a Business Activity Statement (BAS)?
Once you’ve registered your business for GST, you’ll need to add GST to everything you sell ( unless the item is classified as tax-free, such as milk or education services).
To keep a record of the amount of GST your business has collected, you’ll need to prepare a business activity statement.
The BAS statement also contains a report on your business’s other tax obligations such as:
- PAYG Withholding
- Pay As You Go Instalments
- Fringe Benefits Tax
- Luxury Car Tax
- Wine Equalisation Tax (only applicable to wine manufacturers, wholesalers and importers()
- Fuel Tax Credits
Most small businesses must lodge their BAS statement every quarter. The ATO has strict lodgement deadlines:
|Quarter||Reporting Period||Lodgement Due Date|
|First-quarter||July – September||28 October|
|Second-quarter||October – December||28 January|
|Third-quarter||January – March||28 April|
|Fourth-quarter||April – June||28 July|
PAYG Withholding on Your BAS Statement
PAYG withholding is a system of withholding tax from certain payments to employees and contractors.
The reason for the system is so that the business pays employees net wages to the employees’ bank account and the tax is paid directly to the ATO on behalf of the employee or contractor. This allows the ATO to collect the tax for the employees throughout the year. It is important that you do this correctly or the employee will not be able to lodge their income tax returns at the end of the financial year.
According to the ATO, you must withhold PAYG on the following payments:
- payments to employees, company directors and officeholders;
- payments to workers under labour-hire agreements;
- payments under voluntary agreements; and
- payments where an Australian business number (ABN) has not been quoted in relation to a supply.
You must report these withheld amounts in the PAYG tax withheld section of your BAS and pay all withheld amounts to the ATO.
Pay As You Go Instalments
To keep your business cash flow strong, you may wish to make regular tax payments (i.e. instalments) toward your annual income tax bill, so that you are not left to pay one huge bill after submitting your return.
In order to offset your instalment amounts from any tax that you owe for the year, you must reflect the payments on your BAS statement.
According to the ATO, you must lodge your activity statements and pay all your PAYG instalments before lodging your tax return to ensure that the instalments are taken into account in your tax assessment.
If you made a profit and paid income tax last year for the business, the ATO will automatically register you for PAYG instalments this year. The ATO will ask you to pay PAYG instalments similar to the amount you paid in income tax last year plus inflation on top. Note, in your first and/or second year in trading you wouldn’t need to deal with PAYG instalments as you wouldn’t have generated a profit yet.
Step By Step Guide on How To Do a BAS Statement
The ATO has simplified how to do a BAS statement to make it as painless as possible.
Step 1: Organise All Your Business Activity Information
Preparing your BAS statement can be daunting if you don’t keep up to date with your business’s income and expenses. So, keep track of all your documentation because that is the key to keeping this process as simple and pain-free as possible.
In step one, you’ll have to make sure that your financial records match the information on your BAS statement.
You’ll need to keep track of how much GST your business is collecting on sales and how much it spent on purchases.
Note, however, you can only claim GST credits on your business-related purchases. So, you can claim a GST credit for the loan repayments on your work vehicle, but not on the loan repayments on your daughter’s car.
While it’s not necessary to submit any of your tax invoices, it’s good to keep them organised and on hand, should the ATO require to see them at a later stage.
It would be helpful to utilise accounting software to keep your records organised. You can access all this information through Xero, Quickbooks, MYOB or any other accounting software.
If you don’t have accounting software, you can simply track the information on a spreadsheet to keep it organised and accessible.
Step 2: Prepare Your BAS
Your BAS statement is a simple form that summarises the GST and other taxes you’ve withheld during the relevant quarter.
For most small businesses, your BAS statement form will contain the following information:
- the amount of GST you owe to and/or claiming from the ATO;
- the amount of PAYG tax you’ve withheld from employee wages;
- the amount of PAYG instalments you’ve made throughout the year and
- any adjusted figures or variations from the past quarter due to an error on your previous BAS submission.
If your business is also reporting on Luxury Car Tax, Fringe Benefits Tax, Wine Equalisation Tax or Fuel Tax credits, this will have to be included in your BAS statement as well.
Step 3: Lodge Your BAS
You can either lodge your BAS statement:
- using your business’s online accounting software such as Xero or Quickbooks;
- through your myGov account;
- via the ATO’s online business portal; or
- by having a registered tax agent complete and lodge it for you.
Do Sole Traders Need To Know How To Do a BAS Statement?
As a sole trader, if your turnover is less than $75,000 you are not required to lodge a BAS statement to the ATO. However, you will need to report on your income and expenses in your annual tax return – so it’s worth also keeping track of all your documentation and records.
If, however, you turnover more than $75,000, you will be required to submit a BAS statement.
Note, however, Uber drivers and other ride share companies must submit a BAS statement regardless of whether they earn below $75,000.
Lodging a BAS statement is relatively simple and pain-free – especially if you’ve kept all your documents and records organised and in order.
You just need to remember the key submission dates for each quarter and submit your BAS statement via your preferred method.
While you may be able to do a BAS statement on your own, it can be an immense help to bring in a registered tax agent or small business accountant to help you.
If you’re not feeling sure about how to do a BAS statement or whether you’re reporting your tax obligations, you can reach out to us at Box Advisory Services.
There are many benefits to having one of our small business BAS agents do lodge your business activity statement, including:
- accessing expert advice to help with the savings on taxes;
- never missing a BAS deadline;
- accurate reconciliation of all your business activity; and
- time savings – so that you can focus on your business.
Simply book a FREE consultation with us or give us a call to discuss how to do your BAS statement.