Are you the owner of a business venture in Australia? Is your business eligible for a periodical Business Activity Statement (BAS)? At the end of the required period, you are required to properly present your finances and pay the required taxes to the Australian Taxation Office or ATO? What are taxes or liabilities that you can mention under the BAS? If you have these questions and are looking for information and suggestions, then continue reading this article.
What is BAS?
According to the ATO website, a Business Activity Statement is defined as the single form the institutions cleared for the use of Goods and Services Tax (GST) use to report their business tax entitlements and obligations. Apart from GST, other specific taxes and obligations also fall under BAS. This one-for-many-job form can provide a business with the chance of compensating the tax payable against the tax credits to arrive at a calculated tax amount during the course of BAS Tax Return. However, not all businesses are required to provide a BAS.
What is a Tax Obligation?
Although the term is finance-related, the meaning carries the same impact. A tax obligation in Australian financial law relates to taxes a registered business did not pay even after they were legally required to that, or fell within the parameters that need BAS from them. There are several conditions that generate a tax obligation towards the ATO, concerning the business to file a BAS return online, some of which are given below:
- Providing employment to people in Australia.
- Making payments, including interest, dividend, and royalties, to someone not related to Australian descent.
- Capital gain accrued on the disposal of taxable Australian property by a foreign national.
- The broad 10% GST applicable to the products and services provided by Australian companies.
Any queries and explanations can be best cleared from and explained by an experienced and professional tax accountant Perth.
The Payments Included in BAS
The BAS is issued by the ATO to the applicable business concern in a quarterly or monthly fashion. A form needs to be deposited by the concern to the ATO and the charges must be paid within 21 days of the end of the month on the form for the monthly BAS, and within 28th of the next month of the fiscal quarter for quarterly BTS. The following payments, some of which are already mentioned before, fall under the BAS and must be addressed as such;
- (FBT) or Fringe benefits tax installment
- Luxury car tax (LCT)
- Goods and services tax (GST)
- Income tax installment for Pay as you go (PAYG)
- Pay as you go (PAYG) tax withheld
- Fuel tax credits
- (WET) or Wine equalization tax
The Main Criteria
The principal criteria of eligibility for receiving a BAS are pretty upfront; your business should be GST registered. If you are, then you have to pay the BAS; if your business is not registered for GST, you do not need to lodge a BAS. The form essentially allows you to clear your GST and other tax-related obligations. The ceiling of income for normal businesses is $75000 or more or offer taxi travel. For non-profit businesses, the amount is doubled to $150000 or more.
The frequency of lodging a BAS also depends upon a single factor, the amount of GST turnover. The breakdown of the periods can be listed as follows;
- Quarterly – GST turnover is less than $20 million and the ATO has not stated any other instruction.
- Monthly – GST turnover is $20 million or more qualifies for monthly payment.
- Annually – The company registered for GST of their own accord, and their GST gross revenue is less than $75,000 or $150,000 for non-profits.
Businesses with a GST turnover of $20 million or more must submit and pay their taxes online.
The ATO usually sends a BAS form to the registered business (a professional concern with an Australian business number or ABN) when the time of the payment of GST or other tax approaches. This gives the business a timely reminder and helps them to prepare themselves better.
Avoiding Hefty Penalties
The time period of lodging is crucial as failure to do so will attract heavy penalties. It is essential to lodge a BAS even if you did not do any business and have nothing to declare. Usually, the BAS does not place penalties for lodging late for isolated cases; however, the rule of penalty calculation is given as follows;
- For small businesses, one penalty unit for every 28 days (or part thereof) in which the return or statement is not paid with a maximum of 5 penalty units.
- For medium trades, the penalty is doubled.
- For large business concerns, the penalty is multiplied by 5.
As it is evident, that the medium and large businesses are at a greater risk of financial loss. Therefore, hiring a qualified professional Tax Agents Perth for the Tax Return Perth of your business shall be a worthwhile step for the organization.