Taxes are just one of those things that are an unavoidable part of doing business. So, if you’re a sole trader or own a small business, it means you need to be familiar with the Australian Taxation Office’s Business Activity Statements (BAS). Below is a quick guideline to your obligations and how to avoid getting penalized.
What is a Business Activity Statement?
What BAS essentially aims to do is summarize the amount of goods and services tax (GST), as well as other tax obligations for businesses over a certain period of time, usually every quarter.
Here are some tax obligations that can be reported via BAS:
- Fuel Tax Credits
- Pay as you go (PAYG) tax withheld
- Pay as you go (PAYG) income tax instalment
- Wine Equalisation Tax (WET)
- Luxury Car Tax (LCT)
- Fringe Benefit Tax (FBT) instalment
The form of every businesses’ BAS will look different from each other. This is because businesses have different tax obligations. The BAS form will ask businesses to sum up the amount they are owed and owning for each tax obligation. Depending on whether the tax obligation is positive or negative, you’ll pay the balance or get a refund from the ATO.
Who has to submit a BAS?
If you’re a sole trader with a reasonable turnover, then there is a good chance you are registered for GST, which means you have to submit a regular BAS. Also companies with annual turnover of more than $75,000 will need to submit a BAS too.
When do you submit your BAS?
The ATO will send you a reminder when it’s time to lodge. This can be on a monthly or quarterly basis. However, you can still submit your BAS online through the ATO’s Business portal or other provided methods. Note that if your annual turnover exceeds $20 million that you’ll be required to report your GST every month. In addition, you’re also expected to report your PAYG withholding if it’s beyond $25,000.
Nevertheless, most owners of small businesses are required to report quarterly. The due date for the lodgement and payment is usually displayed on the BAS form with the following quarterly deadlines:
- Q1 (July, August, September): 28 October
- Q2 (October, November, December): 28 February
- Q3 (January, February, March): 28 April
- Q4 (April, May, June): 28 July
How to avoid BAS penalties
You’ll be liable for a fine of $110 for each 28th day overdue if you don’t lodge your BAS. More still if you’re BAS submission contains mistakes, regardless of whether they are genuine or not, you’re going to be fined. Even if your business has not paid any expenses in the period or earned any income, you’ll still be required to submit your BAS.
You may want to contract a bookmaker to handle all your payments for you. This way, you can lessen the burden for late payment, as well as remove your liabilities for any fines and penalties.
Managing your BAS effectively is part of everyday business life. However, by using the right tools and getting organized, it shouldn’t be much trouble.
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