Reading and understanding your Business Activity Statement (BAS) in Australia is crucial for managing your business’s tax obligations effectively. Here’s a breakdown of the key elements of a BAS and tips for managing it:
Business and Contact Information
The BAS includes your business name, ABN, and contact details. Ensure these are accurate to avoid delays or penalties. It also states the “GST Accounting method” used, either cash or accruals, which affects how GST is reported and paid.
GST Information
This section shows the amount of GST collected on sales and the amount paid on purchases. You’ll need to calculate the net amount of GST payable or refundable based on these figures.
Tax Period
The BAS covers a specific tax period, usually a quarter. Make sure the period is correct and submit the statement by the due date.
PAYG Withholding Information
If you withhold tax from employees’ wages, this section shows the total tax withheld and paid to the ATO. The PAYGW section usually covers a month, with an Instalment Activity Statement (IAS) required for the other months in the quarter.
Other Taxes and Obligations
Depending on your business, the BAS may include sections for other taxes like FBT or luxury car tax.
Fuel Tax Credits
If eligible, you can claim credits for fuel tax included in the price of fuel used in your business operations.
Total Amount Payable or Refundable
At the end of the BAS, calculate the total tax amount you owe or are entitled to receive as a refund. Pay any owed amounts by the due date to avoid penalties.
Reporting Periods and Deadlines
Depending on your GST turnover, you may need to report monthly, quarterly, or annually. Understand the specific deadlines for your reporting period to ensure timely submission.
Record Keeping
Keep accurate records of all financial transactions, including sales, purchases, and payments. This is crucial for substantiating claims in the event of an ATO review.
Using Accounting Software
Modern cloud-based accounting systems can simplify BAS preparation, allowing for accurate reporting whether you use cash or accruals accounting.
Remember, the BAS is a critical document for your business’s financial management. Ensure its accuracy and compliance with tax regulations to maintain your business’s financial health. If you’re unsure about any aspect of your BAS give us a call and we will assist you understand what your BAS is telling your business.
