Taxes are one of the few certainties in life, and working as a small business owner or as a sole trader means getting acquainted with the Australian Taxation Office’s Business Activity Statement (BAS). Here is a quick guide to your obligations and importantly, how to avoid any potential penalties.
What is a BAS?
The BAS summarises the amount of goods and services tax (GST) and other tax obligations over a certain period, usually quarterly. The other tax obligations you can report through your BAS are:
- Pay as you go (PAYG) income tax instalment
- Pay as you go (PAYG) tax withheld
- Fringe Benefit Tax (FBT) instalment
- Luxury Car Tax (LCT)
- Wine Equalisation Tax (WET)
- Fuel Tax Credits
Each businesses’ BAS form will look different, depending on which tax obligations are covered. The form will ask you to tally up the amount owing and owed for each tax obligation. If your overall obligation is positive, you need to pay the amount owing to the ATO, if negative then you will receive a refund from the ATO, or the amount can contribute to offsetting any tax debts.
Who has to submit a BAS?
If your business is registered for GST, which is mandatory for sole traders and companies with an annual revenue above $75,000, then you have to submit a BAS. You may register your business for GST if your annual revenue is below the threshold, however it is optional.
If you are not registered for GST and are not required to be, you may alternatively submit an Instalment Activity Statement (IAS), which is a similar form, however does not include GST obligations.
When to submit your BAS
Provided that you are registered for GST, and have an ABN, the ATO will mail you your BAS when it is time to lodge, either on a monthly or quarterly basis. Alternatively, you can lodge your BAS online via the ATO’s Business Portal or other methods, including by having a myGov account linked to the ATO (see more here).
You are required to report your GST monthly if annual turnover exceeds $20 million, the annual tax year does not end on 30 June, or if you have elected to report monthly. You are also required to report your PAYG withholding if it exceeds $25,000.
However, other than these exceptions, most small businesses are required to report quarterly. The due date for lodgement and payment is displayed on the BAS form, with the quarterly deadlines as follows:
- Q1 (July, August, September): 28 October
- Q2 (October, November, December): 28 February
- Q3 (January, February, March): 28 April
- Q4 (April, May, June): 28 July
If you elect to report monthly, the deadline is usually the 21st day of the next month. Amounts owing to the ATO can be paid via credit card, BPAY, online, via mail or in person at an Australia Post store. There is also an ATO app which can help remind you of the due dates, to avoid any potential penalties.
Avoiding BAS penalties
If you are late in lodging your BAS you are liable for fines starting at $110 for each 28-day period overdue. If you submit a BAS containing mistakes, even if they were genuine, fines are imposed depending on the shortfall amount. You are required to submit a BAS even if your business has not earned any income or paid any expenses in the period.
Many businesses choose to pay a bookkeeper, which in the event of late lodgement or payment, lessens or removes the liability of the business owner for any penalties and fines. Bookkeepers typically charge between $100 and $160 for BAS lodgement, depending on the size of the business.
Managing your BAS is part of business life – but by getting organised and using the right tools it need not become an overly troublesome experience.
Need more financial help? Talk to Prospa about business finance by calling 1300 882 867 or check out how Prospa can help here.