The Requirements to Lodge a BAS
NOT EVERY BUSINESS needs to be registered for GST (Goods and Services Tax). However, if your business earns more than $75,000 in turnover per year you are legally required to register for GST.
The amount that must be earned for charities differs and is offered as a guide, so speak to your accountant to be sure.
If you are registered for GST the purpose of the BAS (Business Activity Statement) is to ensure that the money you collect for the Australian Government is paid to the Federal government on a regular basis.
Upon registration for GST you are collecting (consumption) taxes for the Australian Taxation Office (ATO) and those taxes are not yours to keep but need to be paid to the Australian government.
When you invoice a customer for $100 you will need to pay 10% of that to the ATO but if you pay $100 in expenses you can claim that 10% back – in this scenario you make no money and that’s not your goal so if you are making a profit you’ll be paying more to the ATO. Let’s just go through some basics before we get onto what’s in a BAS, the first step is you need to be a registered business and for most people that means you need an ABN.
What is an ABN (Australian Business Number)?
An Australian Business Number (ABN) is a unique 11 digit number that identifies your business or organisation to the government as well as customers and suppliers. If you are running a business you will need an ABN and registration for one is free. When you successfully apply for an ABN your organisations details are registered with the ABR (Australian Business Register) and you can check on that organisation by visiting www.abr.gov.au.
How does an ABN relate to GST?
When you register for an ABN you can:
- register for GST (ATO) and a business name (Business.gov.au) at the same time
- get an AUSkey (ATO) to transact online with government agencies
- be endorsed as a deductible gift recipient or an income tax exempt charity
What is a Business Activity Statement (BAS)
When you register for an Australian business number (ABN) and GST, the Australian Taxation Office will automatically send you a BAS when it is time to lodge. You don’t need to register for the GST component if you earn (or expect to earn) less than $75,000 pa but without being registered for GST you won’t be able to claim the GST you pay for expenses as a deduction from your taxable income. You may also find that your ABN serves as one form of identification of your business (for registering things like domain names for websites).
The ATO called the BAS “a tax reporting requirement for businesses issued by us on either a monthly or quarterly basis. It’s used for reporting and paying goods and services tax (GST), pay as you go (PAYG) instalments, PAYG withholding tax and other tax obligations”. It’s also important to know that all businesses registered for GST are required to lodge a BAS (AND pay outstanding taxes) by the due date.
What is a BAS Service
A BAS service is the lodgement of your financial information to the ATO for BAS reporting purposes. It can only legally be done by a Registered BAS Agent which can also be your Tax Accountant. These professionals are registered with the Tax Practitioners Board (www.tpb.gov.au) to perform these services and they have been trained, had experience and have insurance for this task. It’s important that the BAS Service is delivered by a Registered BAS Agent because there are obligations to get the information correct and punishment for submitting wrong information.
Advertising BAS Services
Performing tax or BAS services is governed by the Tax Agent Services Act 2009 and Section 50 of that act defines who is able to promote or advertise BAS or TAX agent services. As a result our pre qualification process has been refined to ensure that our website adheres to this requirement.
It is important to note that even if you have provided some of the tasks which relate to a BAS service you now need to identify your Registered BAS Agent number or that of the Supervising BAS agent or the organisation (who must be a registered BAS or TAX agent). Anyone who advertises that they can provide the services covered under the BAS agents act can be fined with civil penalties.
Data entry is the first step
Office administration staff, accounts staff and any number of workers are tasked with the data entry of financial information. It could be a trades-person who is quoting and invoicing for work to be completed or by someone in accounts payable for purchases and most accounting programs require this information to be “coded” to an account in your chart of accounts.
For example, if you’re a plumbing business and you need to order products for a customer that Purchase Order includes products or product categories with a tax code which is often GST (is taxable for GST purposes). The tricky part of GST is when you buy or sell products that don’t have a set rate (currently 10%) and it’s your BAS agents responsibility to make sure that this “coded” information is correct.
Reconciliation is where GST checking begins
A bank reconciliation is the manual process where many people use a bookkeeper to ensure that the information in their accounting software matches the information presented by the bank in bank statements, ie. the real world. GST reconciliation is the process where GST information is reconciled based on the information in several reports.