A Business Activity Statement or BAS is a form of a tax report that the business entities in Australia submit to the Australian Taxation Office (ATO). It is used for financial accounting and reporting or a registered business in Australia. This registered business will create a report explaining their various tax obligations on a monthly or a quarterly basis. Financial accounting and reporting may include:
- GST, Fringe Benefits Tax(FBT)
- Pay-As-You-Go Withholding(PAYGW)
- Pay-As-You-Go Installments (PAYGI)
- Luxury Car Tax(LCT)
- Wine Equalization Tax(WET).
All business owners are responsible for ensuring that their business meets its GST obligations. It is crucial to keep financial accounting and reporting of various business transactions in mind. As soon as a business registers for an Australian Business Number (ABN) and GST, the Australian Taxation Office (ATO) automatically sends a business activity statement form when it is the right time to file it.
Things About BAS Worth Paying Attention to:
Here are a few crucial things about Business Activity Statements (BAS):
#1 Choosing the right form
There are various options for you to choose from when it comes to picking a BAS form. The ATO has a set number of approved forms you can choose from. These forms are based on the type of business you own and on your tax liabilities. The most common type of BAS forms are those that are issued every quarter. However, it varies from business to business, depending on the structure and the total income of the business. This is calculated by financial accounting and reporting of the income for the given year. A few tax liabilities or roles can be filed annually, such as the net GST of a business. A setlist of these approved forms is available on the official website of the Australian Taxation Office, www.ato.gov.au.
#2 How to prepare your business activity statement
A business activity report is prepared by taking all tax liabilities that apply to your business into consideration. As a business owner, it is important for you to have well maintained financial accounting and reporting of your business endeavours. All business records should be sustained for a given period of time to track the company’s growth. It is also required to simplify the process of filing BASs. A few tax liabilities or roles to be kept in mind are:
As a registered business, you can use BAS as an effective way to complete your GST returns. Your financial accounting and reporting will be seen on your BAS. It can either be reported monthly, quarterly or annually. If you have been registered for GST, you must choose whether you want it to be calculated on the basis of accruals or cash. The GST on accruals basis is reported when you receive your sales invoice or when you receive your expense invoice. Also, according to the cash basis, your GST will be reported when cash is credited or debited from the company. This is irrespective of the when the transaction of the cash takes place.
Among various options, a few ways to file your GST returns are:
- Calculating and reporting GST quarterly
- Calculating the GST quarterly and then reporting it annually
- Paying your GST instalment amount first and then reporting it annually
- Pay As You Go (PAYG) income tax instalment
These are the payments made by the business to the taxation office. These payments are made at the end of each quarter of the year in instalments. They make it easier for you to meet your tax obligations and liabilities. The financial accounting and reporting of your business transactions are of utmost importance.
The payments made for instalment are taken into consideration and should be prefixed before you lodge your income tax return. There are two options for you to choose from when it comes to calculating and paying your PAYG. One, instalment amount, which is a pre-determined amount, is calculated by the ATO in one option. Two, calculating by instalment rate where your PAYG instalment amount is based on your actual income multiplied by a rate that the ATO provides.
- Fringe Benefits Tax (FBT) instalment
FBT is the tax that business owners pay on a certain amount of benefits that they provide to their employees. Individual financial accounting and reporting is a useful technique to calculate this tax on the various benefits provided to the employees.
The advantages might be a part of or included in their daily wages or salary package. FBT is not a part of a business’ income tax. In case you are asked to pay FBT, then FBT instalments (the amount that is calculated by the ATO) are to be paid as part of your BAS.
- Luxury Car Tax (LCT)
LCT is a tax levied on the import of any luxury car whose value exceeds the given set amount of GST. This value generally includes the accessories’ price. It also comprises of the modifications which were made to the car before it was delivered.
- Wine Equalization Tax (WET)
This tax is relatively subjective as Wine Equalization Tax (WET) only applies to wholesalers of wine, wine manufacturers as well as wine importers. The financial accounting and reporting of sales for people who own businesses as wine retailers are not considered. They are immune to this tax. Hence, they are not liable for WET unless they sell their own wine at wholesale rates.
WET depends on the price and quality of the wine. It is set at 29 per cent of the total value of the wine at its wholesale rate (before GST is added).
- Fuel Tax Credits (FTC)
Fuel tax credits are given to businesses which are liable to pay the fuel tax. They may be excise or customs duty. The price of fuel is inclusive of these credits that a business uses in plant equipment, machinery, and heavy vehicles solely for business purposes. As a business, you must be registered with the ATO for GST and Fuel Tax Credits. Without this registration, you are not eligible to make a claim from activity statement.
Many businesses prepare their BASs taking the aforementioned tax liabilities into consideration. A sound system for financial accounting and recording of business transactions is a must to have a fairly easy filing process. A few business owners prefer filing business activity reports independently and manually. But there are many who take help from the following to make this process easier:
Multiple agencies help businesses file their BASs one of them is My CFO. They help you organize your financial accounting and reporting. They help you throughout the process of handling your tax returns. Also, they are a great help when you are filing for a business activity statement.