For most soloists, business activity statements (BASs) are a fact of life. Here’s what you need to know about them.
The business activity statement (BAS) is a pre-printed document issued by the Australian Taxation Office (ATO) on either a monthly or quarterly basis. It’s used to summarise the amounts of GST payable and receivable by you for a certain period, as well as a range of other taxes including pay as you go (PAYG) withholding tax and Australian business number (ABN) withholding tax. Its aim is to allow a business to report and pay a number of tax obligations in one transaction.
Your BAS may include some or all of the following:
- PAYG income tax instalment (which will include the flood levy where applicable)
- PAYG tax withheld
- Fringe benefits tax (FBT) instalment
- Luxury car tax
- Wine equalisation tax
- Fuel tax credits
- Instalment notices for GST and/or PAYG instalments
All business owners who are registered for GST must lodge a BAS for each period, whether monthly or quarterly. The following are important dates you need to know in relation to the lodgement and payment of your BAS:
- Monthly: The 21st day of every month for the period just gone.
- Quarterly: The 28th of October, February, April, and July. (In the case of a lodgement/payment falling due on a weekend or public holiday, it is due by the next business day).
- Annually (pertaining to GST return): Is sent out after the fourth quarter BAS, and needs to be lodged by either 28 February, or before your yearly income tax return is due, whichever comes first.
Lodging and paying your business activity statements has now been made easier with the option to pay via credit card. Your BAS can be lodged online, through your accountant, by mail, over the phone, or at Australia Post.
Even if your business hasn’t traded (received income or incurred expenses), it’s still vital that you complete the form and lodge it with the ATO.
If you don’t submit your business activity statements on time you may fall subject to a failure to lodge (FTL) penalty. The fines can be higher if you’re often late in lodging your BAS. For every 28-day period (or part thereof) that you’re late in lodging, you can be charged $110; however, you cannot incur charges of more than $550. (Note: the penalty is doubled if your business turns over more than $1 million but less than $20 million, and is five times higher if your turnover is more than $20 million).
If you submit a BAS containing information that isn’t correct, the least you will be charged – in the case of a genuine mistake – is general interest on the underpaid tax or extra credit received. If however, the mistake was attributable to carelessness or purposefully ignoring the law, you’ll be charged a penalty based on a percentage of the shortfall amount (the exact percentage charged will be dependent on the reason for the incorrect amount).
After the ATO has processed your income tax return or activity statement, you’ll either owe money (a tax debt) or be entitled to a refund. If you don’t receive your refund or the refund you receive is less than expected don’t be alarmed. Some reasons for this might include:
- Part or all of the refund has been retained by the ATO in a process known as offsetting, in which the retained capital is used to pay back an existing tax debt.
- You haven’t nominated a bank account for the ATO to pay your refund into, or the bank account details you provided are incorrect or incomplete.
- You forgot to lodge one or more of your activity statements.
- The details shown on your return or BAS need checking or verification.
I cannot stress enough how important it is to lodge your BAS on time. The ATO is zoning in on tax fraud at the moment and it is getting harder and harder to get away with being non-compliant. They are using new risk filters and models to detect incorrect or fraudulent refund claims, or claims for credits on activity statements, so we recommend having a plan in place for making sure that these submissions are happening correctly and punctually.
Got any burning questions about tax reporting or business activity statements? Please feel free to ask them below.