Taxes are a certainty in life, and working as a small business owner means getting acquainted with business activity statements (BAS). Here’s a quick guide to your obligations and, most importantly, how to avoid penalties.
What’s a BAS?
A BAS summarises the amount of goods and services tax (GST) and other tax obligations over a certain period, usually quarterly. 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 benefits tax (FBT) instalment.
- Luxury car tax (LCT).
- Wine equalisation tax (WET).
- Fuel tax credits.
Every business’s BAS will look different, depending on which tax obligations are covered. The statement 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, you’ll 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 turnover of $75,000 or more, then you must submit a BAS. You can register for GST if your turnover is below the threshold, but it’s optional.
If you’re not registered for GST and are under the threshold, you can submit an instalment activity statement (IAS). It’s a similar form that doesn’t include GST obligations.
When to submit your BAS
Provided you’re registered for GST, and have an ABN, the ATO will mail your BAS when it’s time to lodge, either monthly or quarterly. Alternatively, you can lodge your BAS online via the ATO’s Business Portal. Other methods include using your myGov account linked to the ATO.
You’re required to report your GST monthly if:
- Annual turnover exceeds $20 million.
- The annual tax year doesn’t end on 30 June.
- If you’ve elected to report monthly.
You are also required to report your PAYG withholding if it exceeds $25,000.
Other than these exceptions, most small businesses are required to report quarterly. The due date for lodgment 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’s also an ATO app that can remind you about due dates to avoid any penalties.
Avoiding BAS penalties
If you’re late in lodging your BAS, fines start 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’re required to submit a BAS even if your business hasn’t earned any income or paid any expenses in the period.
Many businesses choose to pay a bookkeeper, which lessens or removes the liability of the business owner for penalties and fines. Bookkeepers typically charge between $100 and $160 for BAS lodgment, depending on the size of your business.
Managing your BAS is part of business life. But getting organised and using the right tools will make it an enjoyable experience, not a troublesome one.