GST/BAS: Best Guide For Australian Small Business in 2023

GST/BAS: Best Guide For Australian Small Business in 2023

Running a small business in Australia has many responsibilities; managing your tax obligations is paramount. Goods and Service Tax (GST) and Business Activity Statements (BAS) are essential components of the Australian taxation system, and understanding them is crucial for small business owners.

The 10% Goods and Services Tax (GST) is applied to most of the products and services purchased in Australia. It is a primary source of revenue for the Australian government, and it is a significant business compliance burden.

Understanding GST (Goods and Service Tax)

Australia imposes a consumption tax known as GST on the provision of goods and services. It is designed to be a broad-based tax, ensuring that most businesses contribute a share of their earnings to the government’s revenue pool. Small business owners must be well-versed in the intricacies of GST to remain compliant and avoid penalties.

Understanding BAS (Business Activity Standards)

BAS is the document to report and pay your business’s GST and other taxes and obligations to the ATO. It is typically filed every quarter, but some companies may be eligible to report annually. Your BAS provides a comprehensive snapshot of your financial transactions and tax liabilities.

Registering for GST 

Before you can begin collecting GST from your customers, you need to register for GST. The online registration process for GST has been streamlined to make it more accessible for small business owners. The Australian Taxation Office’s (ATO) website allows for this.  

GST Registration requires you to provide essential information about your business, including your Australian Business Number (ABN) and financial details. Once registered, you will be issued a GST registration number on your tax invoices.

If your business has an annual turnover of $75000 or more (or $150,000 for non-profit organisations), you must register for GST. Registration is a straightforward process that can be completed online. Here’s a brief overview of the online registration of GST:

  • Eligibility Check: Determine if your business meets the turnover threshold for GST registration.
  • ABN Requirement: Ensure you have an Australian Business Number (ABN) before applying for GST registration.
  • Online Portal: Visit the Australian Taxation Office (ATO) website and navigate to the Business Portal to initiate registration.
  • Provide Information: Fill out the necessary information about your business, including your ABN, business structure, and contact details.
  • GST Start Date: Specify the date you want your GST Registration to commence.
  • Wait for Approval: Once you’ve submitted your application, the ATO will review it, and if everything is in order, they will approve your GST registration.
  • Record Keeping: Keep records of your GST transactions, as you’ll need to report them on your BAS.

How GST Works?

GST operates on a value-added tax system. As a business owner, you are responsible for adding GST to the price of your goods and services when you sell them to your customers. This additional cost is then collected by you and paid to the ATO.

On the other hand, you may typically claim a credit for the GST contained in the purchase price when you buy goods and services for your business. This means that the GST you paid can be offset against the GST you collected, resulting in a net payment to the ATO.

Key Components of BAS

  • GST Collected: This section includes the total GST collected from your customers during the reporting period. Ensuring this figure is accurate is crucial, as underreporting can lead to penalties.
  • GST Paid: Here, you report your GST on your business purchases. This amount can be used to offset the GST collected. 
  • Other Taxes: In addition to GST, BAS may also include reporting for additional taxes, such as Pay as You Go (PAYG) withholding and Payroll Tax. Ensure that you fulfil all your tax obligations accurately.
  • Fuel Tax Credits: If your business uses fuel for eligible purposes, you may qualify for fuel tax credits. This may lower your overall tax obligation.

BAS Reporting Deadlines

Meeting your BAS reporting deadlines is crucial to avoid penalties and interest charges. Your reporting frequency (quarterly, monthly, or annually) usually dictates the deadline for lodging and paying your BAS. Remember that lodging your BAS late can result in financial penalties, so it’s wise to mark these dates in your calendar.

How to register for GST online?

You can register for GST online through the ATO’s website. The registration process is straightforward.

To register for GST online, you will need to have the following information:

  • Your Business Name
  • Your ABN
  • Your business address
  • Your contact details
  • Your estimated GST turnover

You will receive a GST registration number once you have registered for GST.You must quote this number on your GST invoices and BAS returns.

How to Calculate GST?

To calculate GST, you need to know the GST-exclusive price of the goods or services you are supplying. The GST-exclusive is the price before GST is added.

To calculate the GST, multiply the GST-exclusive price by the GST rate. For example, if the GST-exclusive price of a product is $100, the GST is $10 ($100 x 10%).

How do I lodge my BAS?

Depending on your GST turnover, you must lodge your BAS with the ATO annually, monthly or quarterly. The due date for lodging your BAS is the 21st day of the month following the end of the reporting period.

You can use ATO’s online BAS lodgement service to lodge your BAS. You can also install your BAS by mail or by telephone.

Common GST mistakes to avoid

There are several common GST mistakes that businesses make. Some of the most common mistakes include:

  • Not registering for GST when required
  • Understanding your GST liability
  • Failing to keep accurate GST records
  • Making errors in your BAS returns 

It’s crucial to comprehend the GST regulations and take action to follow them to avoid making these errors.

GST Credits

Businesses can use the GST Credit method to obtain a credit for the GST they have already paid on business purchases. This credit can offset the GST they collected on their business sales.

The business must be GST-registered, and the purchases must be made for use in the sector to qualify for a GST credit. The investments must also be in goods and services subject to GST.

The amount of GST credit a business can claim is calculated by multiplying the GST-exclusive purchase price by the GST rate. For example, if the GST-exclusive price of a product is $100, the GST credit is $10 ($100 x 10%).

GST credit can be claimed on many different types of business purchases, including:

  • Equipment
  • Supplies
  • Services
  • Capital works

GST credit can also be claimed on the purchase of motor vehicles, but some special rules apply.

Businesses must claim GST credit on their BAS returns. The due date for lodging a BAS return is the 21st day of the month following the end of the reporting period.

GST credit can be carried forward to offset future GST liabilities. This can be useful for businesses that have a fluctuating GST turnover.

GST Credit / Input Tax Credit

GST Credit is also known as an input tax credit (ITC). The terms are used interchangeably in the Australian tax system.

GST credit is a valuable tool to help businesses reduce their liability. Companies can save money on taxes by understanding the rules and claiming GST credit on all eligible purchases.

Here are some additional things to keep in mind about GST credit:

  • You cannot claim GST credit on purchases that are for private use.
  • You must keep accurate records of your GST purchases and sales.
  • You must lodge your BAS returns on time.
  • You may have to pay penalties if you make a mistake on your BAS return.

Consult with an accountant or tax professional to clear any of your queries concerning the GST credit. For any GST-related queries, mail your concerns to [email protected], and our experts at JAKS will help you with your GST and BAS registration and filing requirements.

The Importance of Accurate Record-Keeping 

Maintaining meticulous records is fundamental to ensuring the accuracy of your BAS and GST reports. In the event of an audit or review by the ATO, having detailed records on GST and other financial transactions will be your best defence.

Effective record keeping involves:

  • Keeping copies of all tax invoices and receipts
  • Maintaining a comprehensive ledger of income and expenses
  • Ensuring that you correctly classify your goods and services for GST purposes.
  • Regularly reconciling your financial records with your BAS.

Wrapping Up: GST & BAS Filing service by JAKS.

 

In 2023, Australia GST and Australia BAS will be essential to running a small business. Understanding the details of GST, including online registration of GST, and staying on top of your BAS reporting is crucial for financial compliance.

Remember, maintaining accurate records, avoiding common mistakes, and seeking professional advice when needed are your allies in GST and BAS. By mastering these elements, you can confidently navigate the complex tax landscape and keep your small business on a path to financial success.

Experience seamless GST and BAS filing with JAKS! Let us at JAKS handle your tax compliance needs with expertise and precision. Contact us today to streamline your financial obligations and focus on growing your business. 
Partner with us now! Contact +61 40255 4052 or mail us at [email protected] to book an online consultation session. Partner with us now and transform your tax filing process more efficiently and effectively.

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