A Beginner’s Guide to GST and BAS Reporting

Small businesses in Australia must navigate the complexities of the Goods and Services Tax (GST) and Business Activity Statements (BAS). 

This guide provides an up-to-date overview, helping you understand your obligations and streamline your accounting processes.

Let's Get Straight to the Point

For small businesses in Australia:

• GST Registration: Mandatory if your annual turnover exceeds $75,000; optional below this threshold.
• BAS Lodgement: Quarterly reporting is standard, with due dates on October 28th, February, April, and July.
• Key Components: Report GST collected, GST paid on purchases and other tax obligations like PAYG withholding.
• Lodgement Methods: Options include online via the ATO Business Portal, through registered tax or BAS agents, or by mail.
• Penalties: Late lodgement can result in financial penalties; timely submission is important.

What is GST?

The Goods and Services Tax (GST) is a 10% tax on most goods, services, and other items sold or consumed in Australia. 

Introduced in 2000, GST is collected by businesses at the point of sale and remitted to the Australian Taxation Office (ATO). Its purpose is to provide revenue for the Australian government while ensuring that businesses contribute fairly to the tax system.

GST applies to most goods and services, but basic food items, medical services, and educational courses are exempt. Businesses must determine whether their goods and services are taxable, GST-free, or input-taxed.

Who Needs to Register for GST?

Businesses and organisations must register for GST if:

• Their annual turnover reaches or exceeds $75,000.
• They operate as a not-for-profit organisation with a turnover of $150,000 or more.
• They provide taxi or ride-sharing services (regardless of turnover).

Failure to register when required can result in penalties and may lead to backdated tax obligations. Businesses below the threshold can claim GST credits on purchases through voluntary registration.

How to Register for GST

Businesses can register for GST:

• Online via the ATO Business Portal or MyGov.
• Through a registered tax or BAS agent.
• Over the phone with the ATO.

Once registered, businesses receive an Australian Business Number (ABN) and must include GST in their pricing, issue tax invoices, and report GST in their BAS.

What is a BAS?

A Business Activity Statement (BAS) is a government form businesses submit to report GST and other tax obligations. The BAS system streamlines tax compliance and helps businesses manage their obligations efficiently. A BAS must be lodged at regular intervals to report and pay:

• Goods and Services Tax (GST)
• Pay As You Go (PAYG) withholding tax
• PAYG instalments
• Fringe Benefits Tax (FBT) instalments
• Luxury Car Tax (LCT)
• Wine Equalisation Tax (WET)
• Fuel Tax Credits

The complexity of a BAS varies depending on the business’s size and activities. Accounting software such as Xero, MYOB, or QuickBooks can simplify BAS preparation and ensure compliance.

BAS Lodgement Frequency

The frequency of BAS lodgement depends on the business’s GST turnover:

• Quarterly: Businesses with a GST turnover under $20 million generally lodge BAS quarterly unless directed otherwise by the ATO.
• Monthly: Businesses with a GST turnover of $20 million or more must lodge BAS monthly.
• Annually: Small businesses that voluntarily register for GST and have a turnover below $75,000 ($150,000 for not-for-profits) can choose annual reporting.

Businesses should ensure timely lodgement to avoid penalties and interest charges for late submissions. Keep your business compliant with Australian tax regulations with our comprehensive tax services, including BAS and GST. 

Completing Your BAS

1. Key Components to Report

When completing your BAS, businesses must accurately report:

• GST on Sales (1A): Total GST collected from sales.
• GST on Purchases (1B): GST paid on business purchases, which may be claimed as credits.
• Total Sales (G1): Gross sales amount before GST.
• Other Tax Liabilities: PAYG withholding, PAYG instalments, and other applicable tax components.

Accurate reporting is essential for avoiding discrepancies that could trigger ATO audits or penalties.

2. Lodgement Methods

BAS can be lodged through multiple methods:

• Online: The ATO Business Portal or MyGov platform allows businesses to lodge electronically.
• Tax or BAS Agents: Registered professionals can lodge BAS and offer advisory services.
• Paper Forms: Some businesses still submit BAS via mail, but digital lodgement is encouraged.

Automating BAS reporting through cloud accounting software improves accuracy and efficiency.

BAS Lodgement Due Dates

1. Quarterly Reporting Deadlines

Businesses lodging BAS quarterly must adhere to the following deadlines:

1. July – September: Due 28 October
2. October – December: Due 28 February
3. January – March: Due 28 April
4. April – June: Due 28 July

Businesses that lodge online may qualify for extended due dates in some cases.

2. Monthly Reporting Deadlines

Businesses that lodge BAS monthly must submit by the 21st of the following month. If the due date falls on a weekend or public holiday, lodgement is required by the next business day.

Tips for Accurate BAS Reporting

• Keep Detailed Records: Maintain organised financial records of sales, purchases, and expenses.
• Use Cloud Accounting Software: Xero, MYOB, and QuickBooks to simplify bookkeeping and improve accuracy.
• Reconcile Bank Transactions: Regular reconciliation prevents discrepancies.
• Consult an Accountant: Professional bookkeeping and accounting services help ensure compliance.
• Allocate GST Funds Separately: Setting aside GST prevents cash flow issues.

Common Pitfalls and How to Avoid Them

1. Poor Record-Keeping

Failure to maintain records leads to errors and compliance issues. Implement a structured bookkeeping system or hire professional bookkeeping services to stay compliant.

2. Late Lodgement

Missing deadlines results in penalties. Use reminders and automated accounting software, or engage tax professionals to ensure on-time lodgement.

3. Incorrect GST Calculations

Errors in GST reporting can trigger audits and financial penalties. Automating tax calculations with cloud accounting software ensures accuracy.

4. Cash Flow Issues

Not allocating funds for GST payments can cause financial strain. Establish a separate bank account for tax obligations.

How Professional Services Can Help

The Role of Accounting Services

• BAS Lodgement Assistance: Ensures accurate and timely submissions.
• GST Compliance: Maintains proper records and prevents penalties.
• Payroll Services: Manages PAYG withholding and superannuation.
• Bank Reconciliation: Matches financial statements with bank records.
• Tax Planning and Business Advisory: Optimises tax strategies.
• Cloud Accounting Solutions: Provides access to real-time financial data.

Conclusion

Understanding GST and BAS reporting is fundamental for small businesses in Australia. By keeping accurate records, leveraging cloud-based accounting solutions such as Xero, MYOB, and QuickBooks, and seeking professional bookkeeping services, businesses can ensure ATO compliance while focusing on growth and sustainability.