You must have heard that businesses need to lodge BAS, but what is BAS? Well, to begin with, BAS stands for Business Activity Statement. It contains details of GST that the business collected at the time of sales, and that the business will eventually pay or forward to the ATO. If your business is registered for GST, you will have to lodge the BAS to the ATO on a periodical basis. The Business Activity Statement comprises details about Goods and Services Tax (GST), Pay as you Go (PAYG) instalments, PAYG withholding tax, and other taxes as well.
Tax components as reported in BAS and lodging criteria for businesses registered for GST
1.Goods and Services Tax (GST)
GST is 10% of the sales amount that is added to the total sales figure in your sales invoices. This amount needs to be paid to the ATO and doesn’t form income for a business. While paying the GST, a business is allowed to deduct the GST that the business paid on its purchases and other expenses.
2.Pay As You Go withholding (PAYG Withholding)
The business activity statement also tells us about the withholding taxes deducted from wages i.e., detailed employee’s wages and tax withheld thereupon. The PAYGW tax is calculated using a sliding scale of tax and a little complex process. You can take the help of a bookkeeper or ATO website for calculating it.
3.Pay as you Go Instalment (PAYG Instalment)
It is nothing but the instalment of tax payment that is calculated on your estimated taxable income of the current year. It helps you in planning and budgeting the payment of income tax and helps you maintain a regular cash flow. The paid instalment will be auto-populated on BAS when it becomes available; you can vary this instalment amount in the BAS. And when you lodge your BAS to the ATO, it will reflect in ATO report as instalment tax paid for the year.
4. Other taxes
Other taxes might include Fringe benefits tax, Luxury car tax (LCT), Wine equalization tax (WET), Fuel tax credit, and so on.
Lodging criteria for Business registered for GST (unless advised otherwise by the ATO)
- You need to lodge quarterly if GST turnover is less than $20 M and the ATO has not asked you to report monthly.
- If your GST turnover is more than $20 M, you need to lodge BAS monthly.
- If you have voluntarily registered for GST and the GST turnover annually is less than $75,000, then you can lodge it annually.
To wrap it all, a Business Activity Statement (BAS) is an important piece of document, as it details the GST that your business owes to the ATO. It helps you in planning tax payments on due dates and it also helps in keeping track of all your business activity in one place. You can lodge your business activity statement online or take help from the tax agent if you do not want to do it yourself. Also, you can opt to lodge by email. Hope you have got a good idea regarding the business activity statement, lodging criteria, and ways to lodge it to ATO!