General BAS Questions
What is a BAS Return?
A BAS return is a return that GST registrants need to lodge (usually quarterly for small business) to account for:
- The difference between GST Collected (for customers) and GST Paid (to suppliers)
- PAYG withheld from employees
- Where required, an advance on your income tax (called PAYG income tax)
When Are My BAS Returns Due In?
For quarterly payers who are not using a professional to lodge their return, BAS payment due dates are as follows:
- 1st Quarter – July, August, September due 28th October
- 2nd Quarter – October, November, December due 28th February
- 3rd Quarter – January, February, March due 28th April
- 4th Quarter – April, May, June due 28th July
Extensions apply if you are using a BAS agent or tax agent.
I have just registered for GST, what should I do next?
Here are our recommended 5 simple and quick steps:
- Business Bank Account. If you don’t already have it, set up a separate bank account for your business. Run all income and expenses through that account.
- Bookkeeping System. Decide what Bookkeeping System you want to use. Your choices are a spreadsheet or bookkeeping software like Xero or MYOB.
- Providing your information. Some BAS or Tax Agents insist on the financial information being in a certain format (eg “must be a spreadsheet or MYOB”). If you decide now that you want to get help at BAS time, then you can know what that provider requires.
- Put All Income and Eligible Expenses Through the Account. Get clear on all the expenses that you are incurring in running your business and take them out of the business bank account. If these expenses include GST – and most do – then you will reduce your GST payable by the amount of the GST included in the purchases. (If you have incurred the expense personally – eg out of another account or on credit card – just reimburse the business portion of the expense out of the business account).
- Save For BAS Time. Assuming your revenue exceeds your expenses, you will need to pay money at BAS time. To make sure that you have the money, put a little aside each week. A second or reserve business bank account is a good idea for this purpose.
How can I calculate the amount of GST that I need to pay or that will be refunded to me?
There are 3 main components to a BAS return:
- PAYG on employees
- PAYG for your own income tax (ie paying your income tax upfront)
If you are a new business without employees, you only need to worry about the GST component. In that case, your payment (or refund) is calculated as follows:
- Sales that include GST
- GST included in above Sales (take 1/11th of the total)
- Purchases that include GST
- GST included in above Purchases (take 1/11th of the total)
- Subtract 2 minus 4
If the above figure is positive, then you owe that amount to the Tax Office. If it is negative, then you are entitled to a refund of that amount.
Do all purchases have GST included in them?
Most do. The most common exceptions are:
- Non prepared food (eg milk and instant coffee but not take away coffee or biscuits)
- Some government charges, such as ASIC fee, MV registration fee
- Residential rent
If I don’t make any sales or purchases in a quarter, do I still need to lodge a BAS return?
Yes. You need to lodge what’s called a NIL return.
Lodging Your First BAS Return
Where do I get the first blank BAS return from?
Unless a BAS or Tax Agent has you on their portal, the blank BAS return will come to you in the post. Alternatively, you can register your business on the business portal and lodge your first BAS online.
After lodging my BAS return, do I need to pay money?
If the amount you owe exceeds the amount owed to you, then you need to pay.
What if I owe BAS but don’t have the money to pay?
Obviously the ideal is to put aside the money each week so that you have it. But if you find yourself in a position where you don’t have the money, you should call the Tax Office and ask for a payment plan. If you call the Tax Office up front, then any fines will usually be lower.
What is bookkeeping and how does it fit in with BAS?
Bookkeeping generally refers to the process of entering your transactions into a bookkeeping system (such as Xero or MYOB or even a simple spreadsheet). If you have employees, it can also include running the payroll. If the bookkeeping is done correctly, then the figures for the BAS come directly from the System without you needing to do any calculations.
What is Xero?
Xero is a cloud based bookkeeping system. It delivers benefits in the form of:
- Less bookkeeping costs – due to auto transfer of information from your bank account and rules
- 24/7 access to your accounts – with internet access
What other services BAS agents can provide?
Registered BAS agents can also lodge:
- Single Touch Payroll (digital way of reporting salary and wage, tax withheld and super)
- A super guarantee charge (SGC) statement – quarterly form
- A taxable payments annual report
- Payment summaries, employee termination payments, gross wages, allowances, PAYG withholding and other taxable and non-taxable payroll items
- A tax file number declaration on behalf of a client
- An application to the Registrar for an Australian business number on behalf of a client.
What are the penalties if I’m late or make a mistake in my BAS?
The penalty for late lodgement can be $180 for every 28 days late. The penalty for understating your BAS payment depends on the understatement but can be significant.