If you run a business in Australia, you are required to submit business activity statement (BAS) to the ATO. It’s essential to understand your BAS to ensure you comply with tax obligations and avoid any costly fines and interest being applied by the ATO.
What is a BAS Statement?
A Business Activity Statement (BAS) is a document that most Australian businesses must complete and lodge with the Australian Taxation Office (ATO) on a regular basis. It is used to report and pay several tax obligations, including Goods and Services Tax (GST), Pay As You Go (PAYG) withholding, PAYG instalments, and Fringe Benefits Tax (FBT). While BAS is commonly submitted quarterly, some businesses may be required to lodge it monthly or annually, depending on their specific reporting obligations.
The BAS serves as a crucial compliance tool for the ATO, helping to ensure businesses meet their tax responsibilities. It works alongside other reporting requirements such as Single Touch Payroll (STP) and annual income tax returns.
Frequently Asked Questions on BAS and GST
When Should You Claim GST Credits?
- When you buy something for business purposes, you are allowed claim GST credits.
- Be sure to use discounted prices when you claim GST credits for discounted purchases.
- Under the hire purchase agreement, you are allowed to claim GST credits upfront for purchases.
- When you claim invoices in a foreign currency, you will be able to claim GST credits on the Australian dollar value.
- If your business ceases or changes, you may have to repay some GST credits for business assets you are required to keep.
To learn when you are allowed to claim GST credits, you can reach out to a trusted accounting firm where tax agents can help you claim GST credits.
When You Shouldn’t Claim GST Credits?
Avoid claiming GST credits on the following:
- Purchases that don’t include GST, such as:
- Bank fees, charges, and stamp duty
- GST-free items, like basic food products
- Imported goods, unless you are the importer and the goods are brought in wholly or partly for business purposes.
- Transactions between entities within the same GST group (note: GST credits can be claimed for transactions between GST branches)
How to complete BAS?
Before you complete your BAS, ensure you know about BAS due dates 2025. When completing your BAS:
- Enter the right and whole dollar amount and avoid writing the estimated amount.
- Enter each invoice only once.
- If you use cash basis methof for GST, your sales and expenses must lie within the period you received or made a payment.
- Only fill in fields that apply to you. If you don’t have anything to report, you can put zero.
- If you are doing this manually, make sure to double-check your calculations and figures.
What are BAS Mistakes and Adjustments?
It’s important to understand the difference between correcting a mistake and making an adjustment on your BAS:
- A mistake or error occurs when the amount was incorrect at the time the BAS was originally lodged.
- An adjustment applies when the original BAS was correct, but a subsequent event, such as a change to a sale or purchase, alters the amount of GST that should have been reported.
When Should You Correct BAS Mistakes?
Examples of errors that might have occurred in a previously submitted BAS include:
- Clerical or data entry errors
- Incorrectly treating a GST-free sale or purchase as taxable
- Incorrectly treating a taxable sale or purchase as GST-free
- Recording some purchases more than once
To avoid making BAS mistakes, you can reach out to the Melbourne bookkeeper to reduce the chance of errors.
When Should You Make a BAS Adjustment?
When you think you need to make a BAS adjustment, you need to report it in the activity statement for your current reporting time period. Here are the following reasons to make a BAS adjustment:
- sale or purchase price changes
- goods are returned, and the sale is cancelled
Conclusion
Through this detailed blog post, now, you are aware of BAS and GST. If you are unfamiliar with BAS and GST, you can consult reliable bookkeepers and get reliable bookkeeping services to ensure accurate records to prepare and lodge BAS.