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BAS now all the rage

NOW the GST has arrived, businesses will have to come to terms with a new three letter acronym – BAS.

The Business Activity Statement is the single statement under which registered businesses will report all taxation transactions for a period.

The BAS replaces separate statements for fringe benefits tax, group tax, GST and income tax.

CPA Australia taxation consultant Garry Addison said that, while the number of forms to be completed had been reduced, the BAS – or the Instalment Activity Statement for those not registered for GST – would need to be completed with monotonous regularity.

The BAS is a single two-page tax form which summarises the periodic tax obligations of a business.

This form is required to be completed by businesses that have tax obligations or entitlements in respect of taxes such as GST, income tax instalments, income tax withheld and FBT

instalments.

Businesses will then be required to make one net tax payment (or receive a refund) based on these taxes.

Most businesses will become frequent filers under the BAS system. For example, if a business is registered for GST and has an annual turnover of $20m or more, they will need to lodge a BAS 12 times a year, while businesses with a lower turnover will have to lodge four times a year.

The ATO is encouraging businesses and tax agents to lodge their BAS forms electronically.

Non-business taxpayers with investment income will be required to lodge an IAS and pay tax either annually or quarterly on much the same basis as they currently pay provisional tax, although annual payers will be required to pay earlier from July 1, 2000.

Under the current tax instalment system, company instalments are based on the previous year’s tax liability.

However, under the BAS system, tax payments will be based on the actual tax liability for each month or quarter.

For most businesses, this will result in the acceleration of tax liabilities.

An idea of the impact can be gleaned from the Government’s estimates of the additional revenue it expects to get from the change – almost $5 billion over the next four years.

The ATO will send personal activity statements to monthly reporters in early July and they will be required to lodge the completed BAS by August 21, with subsequent activity statements to be lodged with the ATO by the 21st of each month.

While the ATO hopes that businesses will eventually be able to complete and lodge their own activity statements without external assistance, it is concerned that this may be difficult in the short-term due to a possible shortage of tax agents and lawyers available to provide assistance.

To overcome this problem, the Government is seeking to amend the tax law to widen the class of persons who are legally able to complete activity statements for a fee to include members of recognised professional associations, such as the leading accounting bodies.

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