What is BAS? Business Activity Statements (BAS) explained

Why did the business owner cross the road?

To get to the other side of their Business Activity Statement (BAS) and calculate their Goods and Services Tax (GST) obligations!

OK, not so funny!

If you need help crossing the road do your BAS, we’re here to help explain what BAS is and how you can make it an easy part of your business life (yes, seriously!)

Let’s start from the top.

Overview:

What is a business activity statement (BAS)?

A BAS is a form that is used by the Australian Tax Office (ATO) to collect information about a business’s tax obligations. It includes GST, pay-as-you-go (PAYG) withholding, plus other taxes. Businesses, like yours, will need an Australian business number to submit a monthly or quarterly BAS to report their taxable sales and purchases and to calculate and pay any taxes owed to the ATO.

 

How Does a BAS Work?

So, we know it’s a form to remit your business taxes to the ATO, but how does it work?Your business will use the Business Activity Statement form to report on your taxable sales, taxable purchases, and other tax obligations such as GST and PAYG withholding. 

This information is then used by the ATO to calculate the amount of tax that your business owes, and the business must pay any taxes owed by the due date.

 

How does BAS relate to GST?

We’ve mentioned a lot about GST, haven’t we?

Well, the BAS has a lot to do with GST because it is used to report and pay this tax. 

Let’s quickly look at what GST is –

GST is a value-added tax that is applied to the sale of goods and services in Australia, and businesses are required to register for GST if their annual turnover is over a certain amount.

If you need more help with GST – click here to read our blog ‘What is GST?’

When your business is registered for GST, it must charge GST on its taxable sales and claim credits for the GST paid in its taxable purchases. 

The amount of GST charged on sales minus the amount of GST claimed on purchases is the net GST amount, which your business must report on its BAS. 

If the net GST amount is positive, your business must pay the amount owed to the ATO. If the net GST amount is negative, your business may be entitled to a refund.

So, back to BAS.

The BAS statement is the form used to report your GST and lodge your BAS to the ATO.

 

How Is BAS Calculated?

Now you know you have to complete a BAS statement but how do you get the figures to use in the form?

Great question!

The Business Activity Statement (BAS) is calculated based on a business’s taxable sales and purchases. 

The following steps outline the process for calculating BAS:

1. Determine taxable sales

Determine the total value of all your business sales that are subject to GST. This will include all sales of goods and services that are not exempt or outside the scope of GST.

2. Determine taxable purchases

Determine the total value of all your business purchases that are subject to GST and for which a credit can be claimed. 

This will include all purchases of goods and services used in the course of conducting business, such as telephone, rent of commercial space, and cost of goods, excluding those that are exempt or outside the scope of GST.

3. Calculate GST on sales

Next, calculate the GST owed on taxable sales by multiplying the taxable sales by 10% (this is the current GST rate in Australia).

For example, if your total business sales were $315,000, multiply this by 10% to get $31,500. This becomes your GST collected.

4. Calculate GST credits on purchases

Now calculate the GST credits on taxable purchases by multiplying the taxable purchases by 10%.

For example, if your total business purchases were $54,500, multiply this by 10% to get $5,450. This becomes your GST credit.

5. Calculate the net GST amount

The net GST amount is calculated by subtracting the GST credits from the GST owed on taxable sales. 

If the net GST amount is positive, the business owes this amount to the ATO. If the net GST amount is negative, the business may be entitled to a refund.

In our example above, subtract $31,500 from $5,450, you will record $26,050 as the net GST amount payable.

6. Complete the BAS form

Record this net GST amount on your BAS along with any other tax obligations, such as instalments PAYG withholding tax, luxury car tax or fuel tax credits. You’re ready to lodge BAS – submit your completed BAS online to the ATO by the due date.

7. Pay any taxes owed 

If the net GST amount is positive, your business must pay your tax liabilities to the ATO by the due dates.

Not sure if you need to lodge your BAS statement? Read our blog: Do you have to lodge a BAS to find out!

 

How to prepare your BAS?

You’ve got the BAS form in front of you. 

How do you start preparing your Business Activity Statement (BAS)?

The 5A section on your BAS is used to report and calculate GST obligations. 

We’ll go through each section so you can follow what information to put where – 

Total sales

Report the total value of all taxable sales your business made during the reporting period at G1.

GST on sales 

Enter the total GST owed on taxable sales at 1A.Remember from above, this is calculated by multiplying the total taxable sales by 10% (the current GST rate in Australia).

Total purchases

Calculate the total value of all taxable purchases your business paid for during the reporting period.

GST on purchases

Enter the total GST credits on taxable purchases at 1B. 

Quick recap – multiply the total taxable purchases by 10% to get this figure.

GST payable (or refundable)

Calculate the net GST amount by subtracting the GST credits from the GST owed on taxable sales. 

You will need to pay the ATO if the net GST amount is positive.

You may be entitled to a refund from the ATO if the net GST amount is negative. 

It’s important to ensure that all information reported in the GST section is accurate and up to date before you lodge your BAS. 

If you are unsure about any aspect of calculating your GST obligations or your BAS figures, it’s a good idea to seek professional advice.

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What’s the Sleek Scoop on BAS?

This may sound like a lot of work, but it’s not if you follow some of our practices for good record-keeping. 

Here are some tips we give our clients to help them stay on top of their BAS:

Keep accurate records 

Make sure to keep accurate records of every taxable sale and purchase, including invoices and receipts. 

This information is necessary to calculate the amount of GST owed and file by the due dates.

Use accounting software 

Using accounting software makes it easier to keep track of your taxable sales and purchases, as well as calculate your BAS. It can be as simple as one report if done properly!

Stay organised 

Keep all records related to your taxable sales and purchases organised and easily accessible. This will make it easier to calculate your BAS and ensure that all information is accurate.

Plan ahead 

Plan ahead for your BAS lodgement dates by setting reminders (Google calendar is perfect for this, or better still enlist a Sleek accountant!) and ensure you have all necessary information and your business finances in place.

Seek professional advice 

If you are unsure about any aspect of your BAS or tax obligations, seek professional advice from a registered tax agent. 

An accountant can help you understand your obligations and ensure that you are staying compliant with tax laws.

Good business practice is ensuring your BAS is accurate, submitted on time, and that you are paying the correct amount of tax owed to the ATO. If you think this is something your business is going to struggle with (and you’re not alone!) get on the line with a Sleek accountant to help you with your BAS! Call +61 2 9100 0480 or book an appointment to get started straight away. 

FAQs

The purpose of a BAS is to report and pay GST obligations to the Australian Taxation Office (ATO). 

The BAS form is used to calculate the amount of GST owed on taxable sales and the amount of GST credits claimed on taxable purchases. The net GST amount is then reported on the BAS form and any taxes owed are paid to the ATO. 

No, BAS is not just GST, however, GST is a significant component of the form. 

BAS also includes other taxes, such as Pay As You Go (PAYG) withholding, which are used to report and pay employee withholding tax obligations to the ATO. 

Yes, a sole trader is required to complete a BAS if they are registered for GST with ATO. 

Sole traders with a GST turnover of $75,000 or more are required to be registered for GST and must submit a BAS form on a quarterly basis. 

If a sole trader's GST turnover is less than $75,000, they may choose to register for GST voluntarily. 

In either case, the sole trader will be required to complete a BAS form if they are registered for GST.

To qualify for BAS, a business must be registered for Goods and Services Tax (GST) with the ATO. 

In Australia, businesses with a GST turnover of $75,000 or more are required to register for GST. 

Businesses with a GST turnover of less than $75,000 may choose to register for GST voluntarily. 

Once a business is registered for GST, they are required to submit a BAS form on a quarterly basis to report and pay their GST obligations to the ATO.

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