The Ultimate Guide on How To Do a BAS Statement

Feeling unsure of how to do a BAS statement? 

If you’re a goods and services tax registered business (GST), it’s that time of year again when 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 Taxation Office (ATO). 

As a business owner, we don’t want you to have sleepless nights over lodging your tax liabilities, so we’ve created this ultimate guide to show you how to prepare business activity statements (BAS) and lodge them correctly and on time.

The GST-registered business must pay that GST to the ATO along with a report known as a BAS statement. 

Does Your Business Need to Register for GST?

Small businesses must register for GST if they reach the thresholds prescribed by the ATO. 

Generally, if your business exceeds $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 or ride-share services like Uber. However, as an Uber driver, you must register for GST regardless of your annual income.

 

What Is a Business Activity Statement (BAS)?

Once you’ve registered your business for GST, you must add GST to everything you sell ( unless the item is classified as tax-free, such as milk or education services). 

You’ll need to prepare a business activity statement (BAS) to record the amount of GST your business has collected. 

The BAS 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

 

Lodgement Deadlines

Most small businesses must lodge their BAS statement within the reporting period every quarter. The tax office 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 Business Activity Statements

The system of PAYG withholding tax is where tax is witheld from certain payments to employees and contractors. 

The reason for the system is so that the business pays employees net wages to the employee’s nominated 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. You must 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 about a supply.

You must report these withheld amounts in your business activity statements’ PAYG tax withheld section 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.  

To offset your instalment amounts from any tax 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 considered 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 installments similar to the amount you paid in income tax last year, plus inflation. Note, in your first and/or second year in trading, you wouldn’t need to deal with PAYG installments as you haven’t generated a profit yet. 

 

Step By Step Guide on How To Do a BAS Statement

The ATO has simplified how to do a business activity 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 must ensure that your financial records match the information on your BAS reporting statement. 

You’ll need to keep track of the GST your business collects on sales and the GST it spends on purchases. 

Note, however, that 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 unnecessary to submit any of your tax invoices, it’s good to keep them organised and on hand should the ATO require seeing them later.

It would be helpful to use 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 Statement

Your business activity statement is a simple form summarising 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: 

1. the amount of GST you owe to and/or claiming from the ATO; 
2. the amount of PAYG tax you’ve withheld from employee wages; 
3. the amount of PAYG instalments you’ve made throughout the year and 
4. any adjusted figures or variations from the past quarter due to an error in your previous BAS submission. 

If your business also reports on Luxury Car Tax, Fringe Benefits Tax, Wine Equalisation Tax, or Fuel Tax credits, this will also have to be included in your BAS.

 

Step 3: Lodge Your BAS Statement

You can either lodge your BAS:

• 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?

As a sole trader, if your turnover is less than $75,000  you are not required to lodge BAS to the ATO. However, you will need to report your income and expenses in your annual tax return – so it’s worth keeping track of all your documentation and records. 

If you turnover more than $75,000, you will be required to submit a BAS. 

Note, however, Uber drivers and other ride share companies must submit a BAS regardless of whether they earn below $75,000.

 

Key Takeaways

• Lodging BAS statements is relatively simple and pain-free – especially if you’ve kept all your documents and records organised and in order. 
• You should remember the key submission dates for each quarter and submit your statement via your preferred method. 
• While you can complete your BAS figures on your own, it can be immensely helpful to hire a registered tax agent or small business accountant to help you complete your statement. 
• If you’re not feeling sure about how to make 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 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 financial activity; and 
• time savings – so that you can focus on your business.

Simply book a FREE consultation with a BAS agent or give us a call to discuss how to do your BAS statement.