How to Do a Business Activity Statement (BAS)

A Business Activity Statement (BAS) is a mandatory form for businesses in Australia to report and pay various tax obligations to the Australian Taxation Office (ATO). Its purpose is to streamline the reporting of multiple taxes into a single submission. Businesses registered for Goods and Services Tax (GST), typically those with an annual GST turnover of $75,000 or more, or $150,000 for non-profit organizations, are generally required to lodge a BAS.

Gathering Information for BAS

Preparing a Business Activity Statement begins with collecting all relevant financial data. This phase is foundational to ensuring accurate tax reporting. Businesses need to gather records of their sales, purchases, and payroll activities for the reporting period.

Sales information includes all revenue generated, such as taxable sales where GST was applied, GST-free sales, and input-taxed sales. For purchases, categorize them based on whether they included GST, were GST-free, or were input-taxed. Payroll data involves records of wages paid to employees and contractors, along with any Pay As You Go (PAYG) withholding amounts deducted.

Other financial activities might require reporting on the BAS. These can include fringe benefits, sales of wine that incur Wine Equalisation Tax (WET), or sales of luxury cars subject to Luxury Car Tax (LCT). Each requires detailed records.

Accounting software packages, such as Xero, MYOB, or QuickBooks, are typical sources for this information. These systems track and categorize financial transactions, generating reports that summarize sales, purchases, and payroll data. Bank statements also verify transactions and ensure all income and expenditure are captured.

Point-of-sale systems provide detailed records of customer transactions. For payroll, dedicated records and software track wages, superannuation contributions, and PAYG withholding. Supplier and customer invoices also provide details about transactions and the GST component.

Accuracy and completeness are important at this stage. Reconcile bank accounts with accounting records regularly to identify and correct discrepancies. Review the general ledger to ensure all transactions have been properly recorded and categorized according to their tax implications, such as whether GST applies.

Proper categorization of transactions within accounting software is important. This involves correctly coding each transaction, ensuring sales are identified by their GST status and purchases are recorded with the appropriate GST treatment. This facilitates accurate calculation of input tax credits. Maintaining organized records throughout the reporting period streamlines the BAS preparation process.

Calculating Your BAS Obligations

Once all financial information has been gathered, the next step involves calculating each component of your Business Activity Statement. These calculations translate your financial data into the specific figures required by the ATO.

Goods and Services Tax (GST) is a component of the BAS. To calculate GST collected (reported at G1 on the BAS), sum the total value of all taxable sales made during the reporting period, including the GST component. For example, if a taxable sale is for $110, the GST collected is $10. Conversely, GST paid (reported at G10) represents the total GST included in your business purchases. Businesses can claim input tax credits for GST paid on most goods and services acquired for business use.

The net GST payable or refundable is determined by subtracting total GST paid from total GST collected. If GST collected exceeds GST paid, the difference (reported at 1A) is payable to the ATO. If GST paid is greater than GST collected, the difference (reported at 1B) is a refund due to the business. Businesses can account for GST on either a cash basis (reported when payments are made or received) or an accrual basis (reported when invoices are issued or received).

Pay As You Go (PAYG) withholding involves amounts deducted from payments made to employees, contractors under voluntary agreements, and other payees. Businesses calculate PAYG withholding (reported at W1 for gross wages and W2 for total PAYG withheld) based on ATO tax tables, which provide rates for different income thresholds and payment frequencies.

PAYG income tax instalments (reported at T1, T2, T3, T4) are prepayments of a business’s annual income tax liability. The ATO pre-fills these instalment amounts on the BAS based on previous year’s income tax assessment. Businesses can pay the pre-filled amount or vary it if they expect their current year’s income to be significantly different.

Fringe Benefits Tax (FBT) instalments (reported at F1) are prepayments towards a business’s FBT liability. FBT is a tax on certain benefits provided to employees or their associates because of their employment, such as company cars or discounted loans. These instalments are generally pre-filled by the ATO for businesses with an existing FBT liability.

Wine Equalisation Tax (WET) (reported at W1) is a tax levied on the wholesale value of wine, typically at a rate of 29%. Businesses that produce or import wine, or sell wine wholesale, are generally liable for WET. The calculation involves applying the 29% rate to the WET taxable value of the wine sold or removed from bond.

Luxury Car Tax (LCT) (reported at L1) applies to the sale or importation of luxury cars above a certain threshold. For the 2024-25 financial year, the LCT threshold for fuel-efficient vehicles is $89,332, and for other vehicles, it is $79,695. LCT is calculated at a rate of 33% on the amount exceeding the relevant threshold. These calculations require precise application of current tax rates and rules for accurate reporting on the BAS.

Submitting Your BAS

After all calculations for your tax obligations have been completed, the next step is to lodge your Business Activity Statement with the Australian Taxation Office. Several methods are available for submission.

The most common method for lodging a BAS is online, through the ATO Business Portal or myGovID. The ATO Business Portal provides an online environment where businesses can access their tax accounts and lodge various forms, including the BAS. MyGovID offers another digital channel for interacting with government services, including BAS lodgment.

To lodge online, a business logs into their chosen portal using myGovID credentials. They navigate to the BAS section, where they find the current reporting period’s statement. The portal often pre-fills certain information, such as PAYG income tax instalments or FBT instalments. The user then inputs the calculated figures for GST collected, GST paid, PAYG withholding, and any other relevant tax components.

After entering all figures, review the entire statement for accuracy before making a final declaration. This review ensures all data has been entered correctly and aligns with the business’s financial records. Once satisfied, the business electronically submits the BAS, receiving immediate confirmation of lodgment.

Businesses can also engage a registered tax agent or BAS agent to prepare and lodge their BAS. This method is preferred by businesses seeking professional expertise or those with complex tax affairs. Tax agents typically have extended due dates for lodgment.

While less common, it is possible to lodge a BAS by mail using a paper form. This method generally has shorter due dates compared to online or agent-assisted lodgment and can be slower. Electronic methods are generally advised for efficiency and immediate confirmation.

BAS due dates vary depending on a business’s GST turnover and reporting cycle. Most businesses with a GST turnover under $20 million lodge quarterly, with due dates typically the 28th day of the month following the end of the quarter (e.g., October 28 for the July-September quarter). Businesses with higher turnovers may lodge monthly, usually by the 21st day of the following month. Annual lodgment is available for some very small businesses.

Payment options for any tax liability reported on the BAS are varied. Businesses can pay via BPAY, direct debit, credit or debit card, or at Australia Post using a barcode provided by the ATO. Ensure payment is made by the due date to avoid penalties.

Maintaining Records and Reviewing Submissions

After lodging a Business Activity Statement, the responsibility shifts to maintaining accurate records and reviewing past submissions. This post-lodgment phase is important for compliance, financial management, and identifying potential errors. Record-keeping practices support reported tax information.

The Australian Taxation Office generally requires businesses to keep records for five years. This timeframe starts from the date the document was prepared or obtained, or the date the transaction was completed, whichever is later. This applies to all financial documents, including invoices, receipts, bank statements, payroll records, and copies of lodged BAS forms. Records can be maintained in digital or physical formats, provided they are accessible and verifiable.

Regular review of financial data and past BAS submissions offers benefits. It allows businesses to verify the accuracy of reported figures against their accounting records and bank statements. This reconciliation process helps identify discrepancies or omissions that might have occurred, ensuring financial information remains consistent.

Review also helps identify potential errors early, before they escalate. By comparing current financial performance with previous BAS periods, businesses can spot anomalies or trends that might indicate an accounting error or a misapplication of tax rules. This continuous monitoring strengthens financial controls.

Should an error be discovered after a BAS has been lodged, address it promptly. For minor errors, it may be possible to make an adjustment in a subsequent BAS. For instance, if a small input tax credit was missed, it can often be claimed in the next period. For more significant errors, or those affecting previous reporting periods substantially, a revised BAS may need to be lodged to amend the original submission.

Maintaining organized records also simplifies any potential audits or reviews by the ATO. When records are readily available and support the figures reported on the BAS, it demonstrates diligence. This approach to record management and review is part of ongoing tax compliance for any business.