What is the Point of a Business Activity Statement (BAS)?
A Business Activity Statement (BAS) is a form issued by the Australian Tax Office (ATO) on a monthly or quarterly basis.
This pre-printed form is filled out by all business owners who are registered for GST. It allows you to report and pay for all of your tax obligations for a specific reporting period in one easy transaction.
Applying for a BAS
When you first register for an Australian Business Number (ABN) and GST, you will automatically receive a BAS at least 2 weeks prior to your first lodgement date. This will give you enough time to properly fill out the form and ensure it complies with ATO regulations.
If desired, you can give the ATO permission to pre-fill basic details about your business in the BAS, thus saving you time and hassle.
Types of Taxes
The BAS is broken down into sections, called ‘labels,’ which makes it easy to fill out the areas of tax that are relevant to your business. Regardless of the size and type of business, all business owners are required to report and pay the following taxes:
- Goods and Services tax (GST)
- Pay As Your Go (PAYG) income tax instalment, and
- PAYG withholding tax
Of course, some businesses have other taxes that are only relevant to their industry. Some of the most common specialty taxes include the Fringe Benefits Tax (FBT), Luxury Car Tax (LCT), Wine Equalisation Tax (WET), and fuel tax credits, to name a few.
Criteria for Monthly and Quarterly Statements
Depending on your circumstances you may be eligible to submit your BAS on a monthly or quarterly basis.
If your business has an annual turnover of less than $20 million, and an annual PAYG withholding of less than $25,000, you are eligible to lodge a BAS every quarter. If your business has an annual turnover of more than $20 million then you are required to lodge a BAS every month.
Of course, you can volunteer to report on a monthly basis if you wish. Some business owners even prefer this delivery method, as it helps them keep on top of their business income and expenses on a more frequent basis.
Benefits of Preparing Your BAS
Preparing and submitting your BAS on a regular basis can do more than just keep the tax department happy.
For starters, by frequently keeping track of your business income and expenses, you will be able to monitor the financial performance of your business and carry out safe risk management. This way, you can easily determine if you are on track to meet your financial goals, and if not, you can adjust your strategy where needed to maintain a healthy cash flow.
Another good reason to complete a monthly or quarterly BAS is so you know exactly how much tax you need to pay ahead of time. This way you can set aside enough money in your account to cover your tax obligations now. Thus, you avoid being struck with a surprise payment later on.
Perhaps one of the best advantages of being tax compliant is the sense of fulfilment you achieve as a business owner. Being familiar with your numbers can help you learn a lot about your business and address potential shortfalls that may be holding you back.
With this wealth of valuable insight, you will feel more confident as a business owner and overall this will help you make better financial decisions.