Tag Archives: BAS

How to complete a BAS statement

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If you are reading this guide, you may have learned that you must do a BAS statement, and this guide will help you prepare and lodge your statement.

The business activity statement BAS is a form submitted to the Australian Taxation Office ATO by registered business entities to report their tax obligations, including GST, pay as you go withholding, pay as you go instalments, fringe benefits tax, wine equalisation tax and luxury car tax.
(Source Wikipedia)

WHY do I need to do a BAS statement?

If you are a small business that exceeds $75,000 turnover or provides taxi or ride-sharing services, you must register and charge for GST. You need to lodge a business activity statement.

Your Business Activity Statement will help you report and pay your:

  • goods and services tax (GST) – See our essential guide on GST.
  • pay as you go (PAYG) instalments – is a withholding tax that requires you to pay incremental amounts of your business income to the ATO. These payments accumulate towards your expected end of year income tax liability.
  • PAYG withholding tax – You withhold this tax on behalf of your employees. They will get credit at the end of the financial year as part of their personal income tax return.
  • other taxes including wine equalisation tax, fuel tax credits, and luxury car tax.

WHAT do I need to Complete a BAS statement?

The fields you need to complete in your BAS will depend on your business structure and whether you’re completing a quarterly or monthly report or a monthly BAS if turnover is above $20 million.

The ATO will automatically send you a Business Activity Statement when it is time for you to lodge.

When completing your BAS statement, the ATO states:

  • Enter whole dollar amounts – leave cents out and don’t round up to the next dollar
  • Enter each invoice once only
  • If you account for GST on a cash basis your expenses and sales must fall within the period you made or received payment
  • Only complete the fields that apply to you – if you have nothing to report, enter zero
  • If you’re doing your BAS manually, double-check your figures and calculations
  • You can always correct a mistake made on an earlier BAS

The ATO runs webinars on completing your activity statement, and bookings can be made here.

Visit the ATO website for help completing other fields in your BAS:

HOW do I lodge?

The due date for lodging and paying is displayed on your BAS. Lodge and pay on time to avoid any penalties.

BAS due by QuarterDue date
1. July, August, and September28 October
2. October, November, and December28 February
3. January, February, and March28 April
4. April, May, and June28 July

You can lodge:

You may pay your BAS with BPAY, credit, or debit card, and you will need to quote your Payment Reference Number (PRN) if doing online. If you are concerned about managing your business’s available cash, you can pay ahead, which will be credited against your next Quarterly BAS liability.

HINTS

  • Reconcile the BAS figures with your records
  • Check your purchases and sales are reported in the correct period
  • Only complete the sections that apply to you
  • Keep good records as part of your normal accounting practices
  • Ensure your sales reconcile with your bank statements (if reporting on a cash basis)
  • Keep all your tax invoices and GST records for 5 years
  • All claims must be in Australian dollars
  • You cannot make credit claims for invoices that do not include GST
  • Further GST and BAS tips can be found on the ATO website https://www.ato.gov.au/Business/Business-activity-statements-(BAS)/BAS-and-GST-tips/

SUMMARY – BAS is your report on tax to the ATO

Lodging a Business Activity Statement is required if you turnover more than $75,000. Your reporting method is to the Australian Tax office for GST collection, PAYG income tax collection, and business income tax instalments. If you use an Australian designed accounting package, your administration will be greatly reduced. Ensure you accrue and do not spend the money you owe quarterly to the tax office.

ATO turns on Online services for business

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The Australian Taxation Office (ATO) has flicked the switch on for its new service Online services for business, replacing its existing Business Portal.

The change makes Online services for business the ATO’s default service for businesses that interact directly with the ATO online. 

ATO Deputy Commissioner Deborah Jenkins said, “The Business Portal has served us well over the last 17 years, but it’s time to replace it with a much more contemporary service that’s been developed with business, so we know they’ll enjoy using it.”

“We’ve done extensive testing with clients. In the spirit of designing with the end-user in mind, many businesses have been involved in developing the service from the very beginning. We are grateful for the valuable feedback we’ve received. We’ve made many tweaks and improvements to the service as a result and continue to work through how we can further improve the experience for all businesses as they transition to our online platform.”

The new service makes it easier for businesses to interact with the ATO online and provides a secure channel to manage their tax and super obligations. It can be accessed on multiple devices, including on devices like your smartphones or tablets.

In addition to providing the services available in the Business Portal, Online services for business allows users to access new services including:

•               view and print tax returns and income tax history
•               create payment plans
•               switch between your businesses with a single login
•               customise your homepage
•               access new secure mail subjects.

“The new time-saving features include the ‘switch ABN’ function, which allows clients to easily move between the businesses they manage without having to log out and back in again. Businesses have also told us they love being able to organise a payment plan with us online using the service rather than calling us, which saves them precious time,” Ms Jenkins said.

“We’ve seen a great increase in participation from small business owners making the switch to the new service. Businesses in the professional, scientific and technical services and construction sectors have been quick to jump on board. We’d like to see more of manufacturing, retail trade, health care and social assistance businesses also start using the service”.

Businesses can start using Online services for business by logging in with their myGovID as they did for the Business Portal. Those new to our online services, will need to set up a myGovID and be linked to their organisation through Relationship Authorisation Manager.

“We understand this year has, and continues to be, challenging for many clients. We know businesses have a lot on their plate. So we will maintain the electronic superannuation tool (eSAT) and Business Portal for a transition period over the coming months to help users adjust to the new service. We are here to support businesses through this transition and whilst the new service will ensure an improved experience across a range of services. It is important to note that it is not a replacement for the professional advisory services provided by tax professionals,” Ms Jenkins said.

For information about Online services for business, including how-to guides, visit www.ato.gov.au/OSB.

Small Business Answers guide to tax returns can be found here.

How to Invoice

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As a small business owner, you need to keep track of how much money is coming in and how much money is going out. The collection and creation of invoices is a key way to achieve this. Thus you need to know how to invoice.

In this guide, we will look at why, in most cases, legally, you must provide invoices to your customers and how you go about creating one. We will also look at when and how you want to get paid.

An invoice is a time-imprinted business document that itemises and records a transaction between a seller and a buyer. If the goods or services were purchased on credit, the invoice usually specifies the terms of the deal and provides information on the available methods of payment.

WHY should I invoice my customers?

If your business turnover exceeds $75,000, you must register for and pay GST. See our guide on GST. When you make a sale of $82.50 or more, including GST, you must issue an invoice.

If your business has a turnover of less than $75,000, your customers may demand an invoice, and even if they don’t, it is simply good business practice.  We have written a comprehensive guide on Record Keeping.

Legally you must keep a copy of your invoices for 5 years.  This can be a paper copy or electronic.  These copies will help you fill out your BAS.

If a customer requests an invoice, you must provide it in under 28 days.

WHAT terms should I offer my customers?

Before we look at the invoice itself, a very important decision needs to be made about whether you will offer your customers any credit.  This is when you expect to get paid for the goods or services that you are providing.  Options include:

  • Deposit – You require a percentage of the total upfront to start work
  • Cash on delivery – full payment is made at the time of delivery of the product
  • Payment on completion of work – full payment is made at the time of completing a service
  • Progress payments – a schedule of payments normally with milestones are set through the project
  • Credit terms – the customer is given a set number of days to pay
  • Discount for early payment – You offer an incentive or discount to pay an invoice early, like a 5% discount if they pay within 7 days

Ideally, you get paid early or at the time of delivery, however, many businesses will not accept that if you want to do business with them.  Unfortunately, some companies have conditions whereby you have to accept terms of up to 120 days if you want their business.  This is robbery, and the norm would be 30 days. The longer a business takes to pay you helps their balance sheet, the quicker you get paid helps your balance sheet.

You will also need to decide what payment methods you will accept.  A bank transfer will be the most attractive as it will not attract fees, you don’t have to handle cash, and the money should move to your account within 24 hours. Cash will require you to visit the bank.  If you decide to accept a credit card or Buy Now Pay Later (BNPL – for example PayPal), you will get the money straight away, but you will have to pay a merchant fee in the form of a percentage of the transaction.  This payment form is convenient for the customer and will get the money to you fast. 

Whatever form of payment or payment terms you decide to use, you will need to consider when building your cost model.

HOW to invoice

By far, the easiest way to produce an invoice is through an accounting package.  If you create one manually, this can easily be done using a spreadsheet or word processing application. You will find many templates available in those applications, as well as downloadable templates from the internet.

In Australia, an invoice must include:

  • the heading “tax invoice”
  • Your business or trading name
  • your Australian business number (ABN)
  • date of the invoice
  • a description of the items sold, including the units (hours or goods) and price
  • the GST amount– this can be shown separately or, if the GST amount is exactly one-eleventh of the total price, a statement which states ‘Total price includes GST’ (only applies if you are liable for GST)
  • If the invoice is over $1,000, including GST, you must also include the buyers’ identity or ABN
Example

Tax Invoice

Freds Shop                                                                             17 Fake St
ABN: 32 123 456 789                                                           Your Town State Postcode

Date:  25 March 2021

To:         Valuable customer
              56 Down Rd
              Town State Postcode

Description                                                   Quantity             Total
Widgets                                                          1                           $40.00
Labour                                                            2hrs                     $80.00

Total Price including GST                                                       $132
GST                                                                                              $12.00

HINTS

Now you have created your invoice, you need to send it to your customer, with the most common form these days being via email.  Ensure you have the right contact, and it is also worth copying it to a company’s accounts payable team. You can, of course, hand-deliver or post.

If your customers do not pay your invoices, read more about your options in our guide on bad debts.

The tax office provides guides on requirements for tax invoices here.

SUMMARY – How to Invoice

Accurate invoicing will help you keep your business in check and the ATO happy.  An invoice can be easily created. You can use an accounting package to help with the greater task of managing to invoice and your accounts.  If your turnover exceeds $75,000, you must provide invoices that specify GST.  Invoices are not required for amounts less than $82.50, including GST.

Temporary full expensing

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Following the COVID support instant asset write off available for small business in 2020, the Australian Government announced in October 2020 Temporary Full Expensing which allows a business to temporarily write off business assets in full.

The Australian Government has announced a temporary measure to allow businesses to claim an immediate deduction for the full cost of eligible capital assets.

WHY should I care?

This means you can write an eligible asset off in one year versus over the useful life as deemed by the Australian Tax Office. For example, a bar refrigerator in a restaurant normally would need to be written off over 10 years, under this measure the fridge’s cost can be written off against your business assets in one financial year.

WHAT do I need to know about temporary full expensing?

The eligible period is for the 2020-2021 and 2021-2022 taxation years and is for assets first held between 6 October 2020 and 30 June 2022. Thus, it is currently scheduled to end June 30th 2022. Your business must have an aggregated turnover of less than $5 billion, and you cannot make any other claim under other depreciation rules.

You may deduct the business portion of the cost of eligible new depreciating assets and the cost of improvements to existing assets. This measure also is available for 2nd hand assets if your turnover is below $50 million.

Suppose your business makes a loss for the financial year after claiming a full expensing deduction. In that case, you can carry your loss forward to use in future taxation years.

If you wish to depreciate a vehicle, you have a limit for a car of $59,136 in the 2021 financial year. Commercial vehicles with either the ability to seat 9 people or more or have a load capacity of 1000kg or more have no limit.

HOW do I fully expense a capital item

You will be able to fully expense an asset within your 2021 tax return via forms that will be available from July 1st 2021.

From our earlier example, if the new bar fridge bought in March 2021 cost $3,000 and was used 100% for business, the $3,000 cost could be included in the 2021 tax return as an expense versus only $300 if temporary full expensing was not available.

Small businesses that elected to apply simplified depreciation rules have been given an amnesty allowing them to take advantage of temporary full expensing.

HINTS

More information is available from the tax office here.

Your accountant can assist with the process.

More information can be found about completing a tax return in our guide on a small business tax return.

SUMMARY – Temporary full expensing

This is a great initiative by the Australian Government, which not only benefits your expense deductions but may also have a flow-on effect of increasing your sales if you sell items likely to be depreciated by other businesses. This temporary measure allows your small business to expense a capital item in the current financial year rather than over several years. You can claim this simply through your end of a financial year tax return.