BAS and GST for Australian businesses: what you need to know

The Business Activity Statement (BAS) is the form most Australian businesses come back to again and again. It is how you report GST and several other obligations to the Australian Taxation Office (ATO). Get the rhythm right and it is routine. Get it wrong and the penalties and stress build fast.

When you must register for GST

You need to register for GST with the ATO once your annual turnover reaches $75,000, or $150,000 if you are a not-for-profit. Turnover is your gross income from sales, not your profit. Taxi, ride-share and similar drivers must register regardless of turnover.

You can register voluntarily below the threshold. That lets you claim GST credits on your purchases, but it also commits you to lodging activity statements, so only do it if the benefit is real for your business.

The standard rate

GST is charged at 10% on most goods and services. Some items are GST-free, such as most basic food, many health and education services, and exports. Others are input-taxed, such as residential rent and many financial supplies. GST-free and input-taxed are treated differently, and confusing the two is a frequent cause of errors on the BAS.

What the BAS actually reports

The BAS brings several obligations together on one form. Depending on your business it can include:

• GST you collected on sales and GST credits on purchases
• PAYG withholding, the tax you hold back from employees’ wages
• PAYG instalments, prepayments toward your own income tax
• Other items such as fuel tax credits where they apply

You pay the net amount, or receive a refund if your GST credits are higher than the GST you collected.

How often you lodge

Most small businesses lodge quarterly. The standard quarterly due dates are 28 October, 28 February, 28 April and 28 July. Larger businesses report monthly, and some very small businesses report annually. Lodging through a registered BAS or tax agent often gives you extra time, which is one quiet advantage of having an agent in your corner.

Keep clean records

You need valid tax invoices to claim GST credits. For purchases over $82.50 including GST, hold a tax invoice that shows the supplier’s ABN, the date, a description and the GST amount. Keep your records for five years. Clean, reconciled books are what turn BAS time from a scramble into a quick review.

Common mistakes to avoid

• Claiming GST credits without a valid tax invoice
• Treating GST-free or input-taxed sales as standard, or the reverse
• Missing a quarterly due date, which leads to a failure-to-lodge penalty and interest
• Spending the GST you collected, then being short when the BAS payment falls due

Set the GST aside

The GST you collect belongs to the ATO, not to you. Move it into a separate account as sales come in so the BAS payment is already covered. Businesses that do this rarely get caught out.

How we help

We handle GST registration, set up your accounts so the BAS labels fill themselves from clean data, and lodge your activity statements with the ATO on time. We support businesses across Australia and New Zealand, and our team are hands-on experts in Xero and MYOB, so your bookkeeping and your BAS stay in step all year, not just at quarter end.

This article is general information, not tax advice. Talk to us about your specific situation.