27th January, 2020
The mere mention of the term ‘Business Activity Statement’ (BAS) is enough to make many business owners break out in a sweat. Even more stressful than that is having to come up with the cash to pay it if you haven’t been putting the money aside.
All businesses registered for GST need to lodge a BAS. Any anxiety associated with BAS time can be more easily managed when you fully understand what activity statements are, when and if they need to be lodged and when they need to be paid by.
If you have a system in place that prepares you for BAS time, the “red tape” process can actually be positive for you and your business.
Activity statements are issued by the ATO so that businesses can report and pay a number of tax liabilities on the one form at the one time.
There are two types of activity statements – an instalment activity statement (IAS) and a business activity statement (BAS).
The IAS is the simpler of the two forms and is only issued quarterly.
On the IAS, the ATO tells you what your GST instalment amount is and where applicable what your PAYG instalment amount is.
There is no need to print any reports from your MYOB software or make any calculations. However, there certainly are benefits if you can accurately calculate your liability which I will explain in more detail shortly.
If the ATO considers you to be eligible for the IAS system, you will have the option to take advantage of this easier method on your September BAS – the first BAS of the financial year. If you elect this option, for each of the next three quarters you will simply be sent an amount that needs to be paid to the ATO.
Instalment activity statement (IAS)
A form similar to the BAS but without GST
and some other taxes. Businesses that are not
registered for GST, and individuals who
are required to pay PAYG instalments or
PAYG withholding (such as self-funded retirees),
use this form to pay PAYG.
As defined by the ATO
If you feel the instalments advised are too much or not enough to cover your liabilities, you may be able to vary the amounts. Alternatively, you may be in a position to wait until the end of the year and pay in one lump. In these situations, any adjustments for GST will be calculated when your annual GST return is lodged and any adjustments on PAYG will result in an amount payable or refundable when your income tax return is lodged.
It’s highly recommended you seek advice from a certified tax professional before changing the amount or timing of any payments to the ATO.
If you’re paying the amount shown on the form, you do not need to physically lodge anything with the ATO. However, if you wish to vary the amount shown, you will need to lodge the form by the due date.
The instalment amounts will be payable as follows:
|July – September||28 October|
|October – December||28 February|
|January – March||28 April|
|April – June||28 July|
A BAS involves a bit more detail. They can include some or all of the following payments.
*Only those marked by an asterisk are included on the IAS.
BAS are issued by the ATO either monthly or quarterly. A form needs to be lodged with the ATO and payment made to the ATO by the due dates as follows.
The ATO helpfully provides a sample of a quarterly BAS form that you can look at on its website.
IASs and BASs can help you keep an eye on your business finances.
Since you need to track your income and expenses to be able to calculate your GST and other liabilities on your BAS, it makes sense to stay on top of it and track it consistently.
Waiting until the end of the quarter turns it into a much bigger job than it needs to be. It also means that you only allow yourself four occasions yearly to make observations or small adjustments – such as setting aside the correct amount of money for the payment – that might be useful.
Each and every day you are collecting money for the ATO, so daily tracking helps you understand what your likely liability will be. Wouldn’t it be great if there were no surprises at BAS time?
Make sure that your MYOB accounting software is up to date and all bank feeds are imported, allocated and bank reconciliations done.
At the end of the week or month, print off the MYOB reports to prepare your BAS. Now you have an estimate of what you would have to pay should your BAS be due right now. Ideally, you should have enough money in your business bank account to cover it. (This account could also be used to set aside employee obligations such as superannuation guarantee.)
After you have printed the BAS reports, also print a Profit and Loss Statement. This will show you how much money you have made in the week or the month to date.
UPDATE: You can now lodge your BAS right from MYOB Essentials. If you’re using this product, you can see the exact process to get your BAS done in a flash, here.
Here is where the magic starts. By being organised, capturing information regularly, and setting aside money by generating weekly and monthly reports, you will start to focus more on your numbers. You will gain more confidence in this area of your business and you will be more prepared when it comes to meeting your obligations – including those relating to the ATO.
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You can lodge your BAS monthly, quarterly or annually. How frequently you lodge will usually depend on the rate of your cash flow.
Avoid drama with the tax office by keeping on top of when your BAS is due. If you feel like you might not make the BAS lodgement date, contact the ATO before the date to avoid any repercussions.
You can lodge your BAS online through MyGov or through a registered tax agent. If you have an accountant or bookkeeper, this is a task that they can take care of for you.
It has been 21 years since GST was introduced. While it may seem that businesses have assumed an onerous tax-collecting role, the advancement of technology means that small business now has the ability to capture financial data about their business and produce reports in real time. The upshot of this is that businesses gain greater financial control of their business.
My tip for the new financial year is to embrace technology, use your accounting software for your own benefit (daily, weekly and monthly) and then use it to produce your BAS for the ATO.