Small businesses have long complained that lodging their BAS (Business Activity Statement) is overly complicated. Can I claim GST on that? How much am I going to owe and when’s the due date?
The ATO has listened to this feedback and introduced Simpler BAS, a new system designed to streamline GST reporting by reducing the number of fields that need to be completed when lodging your BAS. As of 1 July 2017, any business with an GST turnover below $10 million will be automatically transitioned to the new Simpler BAS format and this will become your default reporting method. If your annual GST turnover is $10 million or more, your business is required to report by the full reporting method.
Changes to GST reporting
Your BAS is made up of the following tax obligations:
- Goods and services tax (GST)
- Pay as you go withholding (PAYGW)
- Pay as you go (PAYG) instalments
- Wine equalisation tax
- Fuel tax credits
- Luxury car tax
The new Simpler BAS model has reduced the amount of tax codes and the reporting requirements required to lodge the GST component of your BAS. Small business owners will now only need to report GST on:
- Total sales (G1)
- Sales (1A)
- Purchases (1B)
Reporting on the following has been removed altogether:
- Export Sales (G2)
- Other GST Free Sales (G3)
- Capital Purchases (G10)
- Non-Capital Purchases (G11)
The other components of your BAS lodgement such as PAYG withholding and PAYG instalments, wine equalisation tax, FBT, fuel tax credits, and luxury car tax are not affected by the Simpler BAS changes.
Under Simpler BAS (Business Activity Statement) there will be fewer classification codes, and your bookkeeping will become a simple question of “GST” or “No GST” when classifying GST on sales and expenses (there are currently 8 GST classification codes).
While Simpler BAS will become the default GST reporting method for small business, moving to the Simpler BAS bookkeeping settings is optional. If your business benefits from detailed GST classifications, you may wish to keep using your accounting software in its current format. This is a decision for you and your tax professional.
How is Reckon supporting Simpler BAS?
At Reckon, we’ll be providing software updates for Reckon Accounts, Accounts Hosted and Reckon One that will allow you to start taking advantage of the Simpler BAS reporting prior to 1 July 2017.
As changing to Simpler BAS bookkeeping settings is optional, and many businesses rely on this detailed classification process, we won’t be making changes to automatically move people to the new bookkeeping settings.
To help with the classification of sales and purchases for GST, and to help clarify the most common and confusing GST transactions you can read the ATO’s Simpler BAS bookkeeping guide for more information.
How will Simpler BAS impact your business?
Simpler BAS will reduce the complexity of GST bookkeeping and reporting, and in doing so will reduce compliance costs, however it’s worth noting that the underlying GST law is not changing. The process to attain the figures for your BAS is the same and you still need to keep records such as invoices, as proof of any claims you make in your BAS.
Beyond these changes, the best way to reduce the burden of BAS time is to embrace technology and use your accounting software to get organised. Generating weekly and monthly reports will help you understand how your business is tracking and be more prepared when it comes to meeting your obligations – including those relating to your BAS.