The Australian Taxation Office (ATO) provides two types of activity statements to help businesses report and pay their tax liabilities. These activities are known as the Instalment Activity Statement (IAS) and the Business Activity Statement (BAS). The IAS is a pre-printed document issued by the ATO every month that summarises the amounts of Pay As You Go (PAYG) instalments, PAYG withholding, and ABN withholding. It applies to taxpayers who are not registered for Goods and Services Tax (GST). It’s important to note that once your business’s annual turnover crosses the $75,000 threshold, you will need to register for GST and start lodging your BAS with the ATO.
Understanding Business Activity Statement
Australian Taxation Office issues BAS which is another pre-printed document. Business Activity Statement summarises the taxes that you have paid all in one transaction. It consists of the following taxes:
• Goods and services tax (GST)
• Pay-as-you-go (PAYG) income tax instalments
• Fringe benefits tax (FBT) instalment
• Pay-as-you-go (PAYG) tax withheld
• Australian Business Number withholding tax
• Luxury car tax (LCT)
• Wine equalisation tax (WET)
• Fuel tax credits
BAS Taxes Owed by Australian Businesses
• Retail Business
If you sell a t-shirt for $50, then $5 of that would be GST. Your customer will pay $55 in total and you will have to report that $5 in your BAS.
• Consulting Services
As a business consultant, if you charge $100/hour, then $10 will be counted as GST. Your client will pay $110 and you will report $10 in your BAS.
• Online Sales
If you have an e-commerce website, and you sell an item for $200, then $20 will go to GST and you have to mention that $20 in your BAS.
• Sole Trader
As a freelancer, you charge $300 for a project, then you need to add $30 in GST and you need to declare $30 in BAS.
You will need to pay 10% GST on business expenses, such as:
• Inventory
• Office Supplies
• Services (like cleaning or accounting)
• Warehouse rent or office space
• Company vehicle expenses
If you don’t know about how to prepare BAS statements, you can reach BAS Agents or bookkeepers of Melbourne who usually deal with GST and BAS.
Key Factors Associated with Your BAS
• Goods and Services Tax (GST)
The first thing is GST, a tax that everyone knows about. GST is a 10% tax that you need to pay on most goods and services that you sell or provide. If you are a sole trader or a business with an annual turnover of $750,000 or more, then you must register for GST. It simply means you need to collect this tax from your clients and report it through your BAS. You can get BAS lodgment services under Melbourne Bookkeeping Services from a reliable provider.
• Pay-As-You-Go (PAYG) Withholding
Pay-as-you-go withholding is the money that you withhold from payments made to employees and some contractors. Basically, you pay from PAYG withholding to the ATO as pre-payment of income tax and report these amounts in your BAS for each quarter, reconcile them at the end of the financial year. The amount you need to withhold varies based on the income level of your employees, whether they access the tax-free threshold and additional financial commitments. Additionally, the ATO offers tax tables and calculators to help you check the exact amount to withhold for each employee. You can get small business bookkeeping services where a bookkeeper or BAS agent can ensure that you are withholding the right amount.
• PAYG Instalments
PAYG Instalments lets you pay your expected annual income tax in smaller chunks. As a business owner, if your business makes money over a certain threshold, you need to make PAYG instalments. You can consult small business accountants to know more about PAYG instalments.
Conclusion
Now that you know the basics of BAS tax along with key factors associated with BAS. You can reach a Reliable Bookkeeping Services provider so that you can focus on your business and let bookkeepers or BAS agents deal with BAS taxes.