GST-and-BAS

GST & BAS Summary 2024

GST Basics

• GST (Goods and Services Tax): A broad-based tax of 10% on most goods and services sold or consumed in Australia.
• Businesses Required to Register:
  • Annual turnover of $75,000 or more (for non-profits: $150,000 or more).
  • Taxi or ride-sourcing services, regardless of turnover.
  • Businesses claiming fuel tax credits.

How GST Works

• Businesses charge GST on sales and claim GST credits for the GST paid on their business purchases.
• Example: A timber merchant sells to a furniture maker, who sells to a retailer, and ultimately the consumer bears the GST cost, with each party in the chain remitting the GST on sales to the ATO.

Claiming GST Credits

• Businesses can claim GST credits for purchases used in their taxable sales.
• Example: If you sell printing services and your expenses include GST, you can offset the GST paid on purchases from the GST collected on sales.

Registration for GST

• Must register if annual turnover exceeds the threshold or if required by other criteria (e.g., ride-sourcing).
• One registration per entity is required, even if operating multiple businesses.

Sales and GST Categories

• Taxable Sales: GST is included, and GST credits can be claimed on related purchases.
• GST-free Sales: No GST is charged, but GST credits can still be claimed on purchases used to make these sales (e.g., basic food, education, medical services).
• Input-Taxed Sales: No GST is charged, and GST credits cannot be claimed for related purchases (e.g., financial supplies, residential rent).

Invoices and Receipts

• Tax Invoices: Required for purchases over $82.50 to claim GST credits.
• Electronic Invoices: Allowed, provided they meet the standard invoice requirements.

Reporting GST on BAS

• Business Activity Statements (BAS) are used to report GST amounts:
  • Full Reporting Method: For businesses with turnover of $10 million or more.
  • Simpler BAS Reporting: For businesses with turnover less than $10 million.
  • GST Instalments Method: Available for businesses with lower turnover, where quarterly instalments are paid, and GST is reported annually.

Accounting Methods

• Cash Basis: GST is accounted for when payments are received or made.
• Non-Cash (Accrual) Basis: GST is accounted for when invoices are issued or received, regardless of payment timing.
• Simplified methods are available for food retailers and small businesses.

Claiming Adjustments

• Adjustments may be needed for price changes, cancellations, or changes in use for private purposes.
• Adjustment Notes: Required for any increase in price.

Lodgment and Payment

• Businesses must lodge BAS either quarterly or annually, and payments can be made electronically or via traditional methods (e.g., post office, cheque).
• Lodgment Deadlines:
  • September quarter: 28 October
  • December quarter: 28 February
  • March quarter: 28 April
  • June quarter: 28 July

Special Rules for Certain Sales

• Financial Supplies: Lending, borrowing, and selling financial products are input-taxed. Some exceptions allow for claiming partial GST credits.
• Residential Property Rentals: Input-taxed, meaning GST credits can’t be claimed on expenses related to residential rent.

Simpler BAS Workbook (Summary)

Introduction to Simpler BAS

• Simpler BAS: From 1 July 2017, small businesses with a GST turnover of less than $10 million report less GST information.
• Required to report only:
  • G1 Total sales
  • 1A GST on sales
  • 1B GST on purchases
• No need to report:
  • G2 Export sales
  • G3 GST-free sales
  • G10 Capital purchases
  • G11 Non-capital purchases

Eligibility for Simpler BAS

• Automatically applied for businesses with a GST turnover of less than $10 million.
• GST reporting cycle (monthly, quarterly, or annual) is not affected.
• No effect on reporting of other taxes (e.g., PAYG income tax instalments, PAYG withheld).

GST Reporting Methods

• Simpler BAS Reporting: For businesses with a turnover under $10 million.
• Full Reporting: For businesses with a turnover of $10 million or more, reporting on a broader range of items including export and capital purchases.

GST Reporting and Payment Methods

• Simpler BAS simplifies the lodgment process but still requires businesses to maintain records such as tax invoices.
• Businesses that qualify for GST instalments can pay quarterly and report annually.

Changes in GST Turnover

• If GST turnover exceeds $10 million, businesses must switch to full reporting from the start of the next financial year.
• If turnover falls below $10 million, businesses may move to Simpler BAS from the next tax period.

GST Bookkeeping Guide

• Businesses must report taxable sales at G1, GST on sales at 1A, and GST on purchases at 1B.
• GST-free, input-taxed sales, and non-GST reportable purchases do not need to be included in the BAS.
• Accurate bookkeeping practices are encouraged to track taxable and non-taxable transactions correctly.

Special Reporting Rules

• Businesses using accounting software should ensure it supports Simpler BAS.
• Simplified reporting applies to GST instalment payers and newly registered small businesses.

Common GST Mistakes to Avoid

• Misreporting mixed purchases that include both taxable and GST-free components.
• Forgetting to adjust for private use of business assets or services.

Lodgment Deadlines

• Simpler BAS does not change the GST lodgment deadlines, which remain:
  • Quarterly for small businesses, or
  • Annually for businesses using the instalment method.