YOUR BAS OBLIGATIONS
What is BAS? What does it mean to your business?
Reporting & Paying
If your business is registered for GST, then you are obligated by Australian tax law to submit a Business Activity Statement (BAS) to report and pay your GST return. Your bookkeeper will need to prepare your books so your accountant can prepare and lodge your BAS or, if your bookkeeper is actually a qualified BAS Agent also, as we are at Positive Traction Bookkeeping, they can prepare and lodge the BAS themselves on your behalf.
BAS reporting and GST return payment will be at one of these set schedules during the year:
- Monthly – If your annual GST turnover is $20 million or more.
- Quarterly – If your annual GST turnover is over $75,000 ($150,000 if a non-profit organisation) but less than $20 million, AND the Australian Tax Office (ATO) has not informed you otherwise.
- Annually – If you have voluntarily registered for GST AND your annual GST turnover is less than $75,000 ($150,000 if a non-profit organisation).
You will see the due date for lodging and paying your GST return at the top right-hand corner of your business activity statement. In the event of a natural disaster, your due date may be deferred by the ATO.
If you are reporting and paying your GST return quarterly you have a few extra options. Which you choose will depend on your own business bookkeeping systems.
- Report and pay GST return quarterly.
- Pay GST return quarterly and report annually.
- Pay a GST return instalment amount quarterly and report annually.
Monthly Payment Schedule
If you report and pay your GST return monthly, your due date will be on the 21st day of the following month. If the due date happens to coincide with a weekend or public holiday, your due date defers to the next business day.
Quarterly Payment Schedule
When you are on a quarterly BAS schedule it is most often the following:
- 1st Quarter – July, August and September (Due 28 October)
- 2nd Quarter – October, November and December (Due 28 February)
- 3rd Quarter – January, February and March (Due 28 April)
- 4th Quarter – April, May and June (Due 28 July)
Annual Payment Schedule
The due date to lodge and pay your annual GST return is 31 October. If you aren’t required to lodge a tax return then the due date is 28 February following the annual tax period. If you use an accountant or BAS agent, different dates may apply.
Cash Or Accruals – How You Can Account For GST
Your accountant and BAS Agent will help you to decide what basis you will use to account for your GST. There are two options; Cash Basis or Accruals Basis. A common rule of thumb is if your business has a gross annual turnover of less than 10 million then choose Cash, or obviously Accruals if over 10 million. However, your accountant and BAS Agent will take many things into account when helping you make the decision.
What Is The Difference Between Cash And Accruals?
Essentially the difference lies in when you report and claim GST in relation to when you receive payments or pay for bills, services or products.
Cash Basis – You cannot report or claim any GST until a sales invoice payment has been made to you and in case of expenditures, not before you’ve purchased goods and services incurring GST or paid a bill with GST attached. In other words, all reports and claims of GST must be for GST in the past. This method gives you a way to ensure your business doesn’t inadvertently incur too much GST debt.
Accruals Basis – You can report and claim GST and GST credits that are upcoming from sales invoices your business has issued to debtors or for upcoming payments that your business has incurred such as goods and services on an account with a supplier to your business. This method helps a business that handles large payments to access funds to make those payments.
Pay as you go (PAYG) is included in your BAS. If your business has employees (including yourself if you are the business owner and pay yourself) or utilises contractors or other workers that your business has a working agreement with, then your business must be registered for withholding. This means, as an employer, your business is obligated to collect PAYG withholding amounts from the people you employ or those on contract agreements. You must also collect PAYG withholding amounts from any businesses you engage for work that don’t quote their Australian business number (ABN).
How Is PAYG Withholding Calculated?
PAYG withholding is calculated in accordance with the ATO’s tax scales and therefore depends on the information supplied to you in the employee or contractor’s Tax File Number Declaration. The payment schedule (i.e. Quarterly, Monthly or Weekly) is dependent upon the size of your PAYG withholding for a year. You can request a more regular payment schedule if you wish.
- You must register for PAYG withholding before you are first required to make a payment that is subject to withholding. This is required even if you don’t withhold an amount from a payment made.
- If you cease to be an employer you should cancel your PAYG withholding registration.
- Before you enter into a work agreement or contract, you need to check that the worker is legally allowed to work in Australia.
- PAYG withholding is different to payroll tax, which is a state tax.
Positive Traction Bookkeeping And Your BAS
As registered BAS Agent(s), Positive Traction Bookkeeping can assist you with the following:
- Help you to understand your options when registering for BAS and PAYG.
- Prepare and lodge your BAS for you.
- Prepare and lodge your PAYG for you.
- Help you to set up your software to help you prepare your BAS and PAYG.