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No escaping the little brown form

IT’S BAS time again. The dreaded little brown form has arrived in the post and is sitting on the desks of businesses across the country, waiting to be tackled.

This is the first quarterly BAS for new financial year and it is due on October 28. Being the first BAS this financial year, small businesses have the opportunity to choose how they want to report GST during 2002-2003.

There are three options and it is important to choose carefully, be-cause the option you choose this quarter will generally be used for the rest of the financial year. If you don’t make a choice, the Australian Tax Office will choose for you, and it will choose the first option.

The first option involves calculating, reporting and paying GST quarterly. With this method you need to report on all the GST labels on your activity statement. This is the most time consuming method, but saves you from completing an extra annual form.

The second option involves reporting less information on the quarterly BAS, but still calculating and paying the actual GST amounts quarterly. Information not included on the quarterly BAS, such as export sales, other GST-free sales and purchases is then reported annually in the GST information report, which is due at the same time as your next income tax return.

A third option is available to businesses with a turnover of $2 million or less.

With this option, the ATO does the calculations for you. You will receive a quarterly BAS with an amount already printed on it. The amount is based on your previous year’s GST and adjusted in line with GDP. You can vary the amount if necessary. You will also need to complete an annual GST return, and send it to the ATO at the same time as your income tax return.

There are a few things to watch out for when completing this BAS. The first is hire purchase or lease contracts. If you are accounting for GST using the cash basis, and have entered into a hire purchase or lease contract since July 1, you can only claim input tax credits when repayments are made. Don’t be tempted to claim credits for the whole contract in this BAS. The tax office has warned businesses it is watching out for this.

If you have sold your business or a business asset since July 1, the ATO has warned the sale price must include GST and you will need to report this in the GST section of this BAS. You need to report the sale at both G1 and 1A on the form.

Some things that shouldn’t go in the GST section of the BAS are wages and superannuation contributions. Wages need to be reported at W1 and amounts withheld from wages at W2. There is no need to report super contributions on the BAS.

When you have completed your activity statement, you need to keep a copy of it, and the records you used to complete it. The tax office says you need to hold onto this information for five years.

Don’t forget to lodge your BAS by the 28th of this month, because the ATO has now got an automatic penalty system up and running. Even if you have nothing to report, you still need to lodge your BAS, otherwise you will be up for failure to lodge penalties.

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