Australia GST and BAS Reporting Guide

Australia GST and BAS Reporting Guide

Vivien
Vivien
Table of Contents
Table of Contents

If you own a business or are about to kickstart your business in Australia, or you want to understand more about how Australia's GST and BAS reporting and compliance work, this article is for you.

Australia is the world's 6th largest country, with a population of nearly 26 million and it's ranked as the world's 12th largest economy. The major cities are Sydney, Melbourne, Brisbane, Perth, and Adelaide.

Data Source: IBISWorld

This guide will give you a complete rundown on how the GST and BAS works in Australia, the tax report you need to submit to the ATO, tax filing dues, and the penalty for failing to lodge or pay your tax obligations.

What is GST in Australia?

The GST (Goods and Service Tax Rate) in Australia is at 10% on most goods, services, or other items sold, consumed, or imported to Australia.

As a business owner, you will have to collect the additional 1/11th of the sales price from your customers if they purchase goods and services from you.

If you have just started using Deskera Books in Australia, you can refer to the article below to guide you.

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What products are GST-free sales in Australia?

Not all products are subject to GST in Australia.

GST-free products are products that are exempted from Goods and Services Tax (GST).

Hence, it means that there is no tax collection if you purchase these GST-free goods and services.

Fruits are GST-free in Australia | Photo by Jakub Kapusnak on Unsplash

Stated below are some of the products that are GST-free in Australia:

  • Basic food such as bread, bread rolls, cooking ingredients, milk, cream, cheese, spices, and sauces
  • Some educations courses, course materials, or related field trips
  • Some medical, health, and care services such as services from a medical practitioner or pathologist and hospital treatment
  • Some menstrual products such as tampons, sanitary pads, and panty liner
  • Some medical aids and appliances
  • Some medicine such as aspirin and paracetamol as per the GST-free Supply ( Drugs and Medicinal Preparations) Determination 2000 (No.2)
  • Some childcare services, religious activities, and charitable activities
  • Exported goods from Australia within 60 days of one of the following conditions; the vendor receives any payment for the goods or sends an invoice for the goods.
  • Other exports other than supply of goods for consultation outside of Australia such as services, various rights, or professional services
  • Any sale of a business as a going concern basis

What are input-taxed sales?

Any sales of goods and services which don't include GST in the price are known as input-taxed sales.

Input-taxed sales are financial supplies( lending money, providing credit for a fee, buying or selling securities ) and selling or renting out residential premises.

However, please note that if your residential premise is considered 'New", then taxable sale and GST are applicable.

If there is no GST on the price, it means that you cannot can't GST credit for the price of your inputs.

** For exceptional cases, you may be entitled to a GST credit for a purchase relating to making financial supplies.

Deskera Books allow you to create different types of goods. Read more here.

What is GST credit?

GST credits (input tax credit) are the credits that business owners can claim for their business purchases.

Also, this means that you cannot claim GST credits for personal expenses such as food, entertainment, and items for private use.

Know what you can claim and what you can't under GST credit rule | Photo by Nick Morrison on Unsplash

You will need to satisfy all of the following conditions mentioned below to apply for GST credit successfully:

  • You have registered for a GST account
  • Purchases for business use and the purchase exclude items for making input-taxed supplies
  • The purchase price is inclusive of GST
  • You have a record of the payment for the items purchases
  • You can provide a tax invoice from your suppliers for purchases exceeding AUD 82.50 (inclusive GST)

What are the items excluded from the GST credit claim?

Although you may think that you can claim a GST credit for items purchased for business use, that's not always true.

Here are some of the exemptions:

  • Any purchases of real property under the margin scheme
  • Any purchases that cannot claim as income tax deductions, such as entertainment expenses
  • Purchase price of a car that has exceeded the car limit amount for the relevant financial year
  • Waged that you paid your employees (there is no GST on wages)
  • Any purchases that do not have GST in the price, such as GST free goods, imputed-tax, and suppliers not registered for GST

When do you need to charge GST?

A sale is considered as taxable if:

  • You are registered for GST
  • Merchants selling low-value goods sold to a customer
  • An electronic distributor platform operator such as an online marketplace through which merchants sell goods
  • A re-deliverer that helps bring goods to Australia
  • The goods sold aren't GST-free
  • The exception rule for multiple goods over $1,000 doesn't apply

Do you know that you can customize your tax rate using Deskera Books? If wish to find out more, check on the link below.

How do I create a new type of tax under Deskera Books?
Deskera Books software has a ubiquitous functionality that everyone can use, asdifferent countries have different tax regulations. Using the Deskera Books system, users have the flexibility to add a new type oftax applicable to their own country. Follow the steps mentioned below to create a new…

What are the requirements to register for a GST account in Australia?

It’s your obligation to check whether you have reached the maximum threshold to register for GST.

Track your GST turnover threshold | Photo by Frank Busch on Unsplash

As a business owner, you must register for GST if you have fulfilled one of the following conditions within 21 days after your GST turnover exceeding the stated threshold:

  • You have hit a GST turnover of $75,000 or more, or if your non-profit organization has a GST turnover of $150,000 and more.
  • You provide taxi, limousine, ride-sourcing services such as Uber, GoCatch, Didi, etc. This applies to both driver owners and also, those that lease or rent a car.
  • If you want to claim the fuel tax credit for your business

For non-resident business, a special rule may apply to you. Otherwise, the GST registration is optional if you didn’t fulfill any of the conditions mentioned above.

GST turnover computation

One reminder that when computing the GST turnover is that you are using your gross business income as the parameter and not your profit.

Your gross income is calculated using the total business income deduct from the following categories:

  • GST in sales
  • Sales that aren’t for payment and aren’t taxable
  • Sales not related to your enterprise
  • Input-taxed sales
  • Sales not connected with Australia

What is the GST number in Australia?

The GST number is your tax identification number, which establishes your relationship with the Australian tax system.

Your GST number is crucial for your business as it tracks your business tax dealings, such as the tax you pay, the tax you have collected from your customers, and your tax credit application.

How can you register for a GST account?

You need to have an Australian Business Number (ABN) before registering for a GST account. When you register for your business name, you will be given the Australian Business Number (ABN).

Once you have your ABN ready, you can register for GST once you exceed the GST threshold.

You can make a call to ATO to register for GST account | Photo by Romain V on Unsplash

There are a few methods you can register for a GST account:

  • Using online services
  • Make a call to 13 28 66
  • Apply via your registered tax agent BAS agent
  • Complete the NAT 2954 form. Order a form using the online publication ordering service

The Australian Tax Officer (ATO) will reach out to you in writing once they have received your GST registration details.

What is Australian Business Number (ABN)?

The ABN is a special 11 digit number issued by the Australian Business Register, the ATO.

The special number is issued to all entities registered in Australia, that helps identify your business from other entities.

Not everyone needs an ABN. To get one, you need to have your business up and running in Australia.

Generally, you can use the ABN to:

  • Distinguish your business to others when ordering or invoicing
  • Avoid pay as you go (PAYG) tax on payment you receive
  • Claim GST credits
  • Claim energy grant credits
  • Register an Australian domain name

If you already have your Australian Business Number (ABN), you can look-up your existing ABN here, which is also available to the rest of the public.

Reporting your GST Return to the ATO

Your GST Return Report is also known as the Business Activity Statement in Australia.

Once you have registered for GTS, you have the obligation to issue tax invoices to your customers, collect GST and send the GST collection to the Australia Tax Officer with your business activity statement.

In the BAS, you will have to include the pay as you go withholding tax, pay as you go instalments, fringe benefits tax, wine equalisation tax and luxury car tax in this report.

Example of Business Activity Statement

Below is an example of the business activity statement in Australia.

The first page

The second page

There are a few sections in the Business Activity Statement that you need to complete.

We will explain in great detail the different parts and sections in the Business Activity Statement (BAS) so that you can complete the form with accurate information.

A) Goods and Service Tax (GST)

The first section in the BAS is the Goods and Service Tax section.

There are five boxes here. Enter the amount in each box, if relevant.

Screenshot from Deskera accounting software - BAS Report GST section

Box

Explanation

G1

Total sales

The sum of total sales for the reporting period inclusive GST


G2

Export sales:

The total export sales for the reporting period inclusive GST


G3

Other GST-free sales:

Total of GST-free sales such as basic foods, some medicines, etc. inclusive GST 


G10

Capital Purchases:

The total capital purchases during the reporting period such as purchases of machinery, cash registers, land, building, etc. (part of Property, Plant and Equipment)


G11

Non-capital Purchases:

The total amount of non-capital purchases, other than those reported at box G10



B) Pay as You Go (PAYG) Withheld

Screenshot from Deskera accounting software - BAS Report PAYG tax withheld section

Box

Explanation

W1

Total salary, wages, and other payments:

The total salary, wages, allowances, and leave paid to employees, including directors fees, employment termination payments, superannuation income stream, etc.



W2

Amount withheld from payments shown at W1:

The total amount you withheld from salary, wages, and other payments is shown at W1. Leave this blank if you didn’t withhold any amounts.


W4

Amount withheld where no ABN is quoted (no ABN withholding):

The total amount you withheld payments from suppliers who did not quote their ABN to you.


If you make payment to suppliers who do not quote their ABN to you, you must withhold 47% of the invoice amount and remit this amount to ATO.


W3

Other amounts withheld (Excluding any amount shown at W2 W4):

This includes different types of withholding, excluding the amount in W2 and W3. 


Some examples are interest, dividends, or royalty payments made to foreign residents, any departing Australian superannuation payments you made, etc. 


W5

Total amounts withheld (W2 + W4 + W3) :

The summation of W2, W4, and W3. Do not include W1 in this section.



C) i. PAYG income tax instalment (option 1)

Screenshot from Deskera accounting software - BAS Report PAYG income tax installment (option 1) section

Box

Explanation

T7

Installment:

Enter the installment amount here


T8

Estimated tax for the year:

Enter the tax that you expect to pay for your business or investment income for the year


T9

The varied amount payable for the quarter:

Enter the varied amount here


T4

Reason code for variation:

Choose one of the codes that describe why you varied your PAYG installment amount:

  • 21: Change in investments

  • 22: Current business structure not continuing

  • 23: Significant change in trading condition

  • 24: Internal business structure 

  • 25: Change in the legislation of product mix

  • 26: Financial market changes

  • 27: Use of income tax losses

  • 33: Consolidations 


C) ii. PAYG income tax instalment (option 2)

Box

Explanation

T1

PAYG Instalment income:

Enter your instalment income here. Instalment income are all the ordinary income you earned from business and investing activities for the quarter, excluding GST


T2

Rate:

The rate here is either determined by ATO or your most recent rate. 


If you have a varied rate in the last quarter in the same income year, you can use the same rate.


T3

New varied rate:

Enter the new varied rate if you want to vary your instalment rate. You can refer to the link here to calculate your variation.


T11

T1 x T2 (or x T3):

Enter your instalment amount by multiplying T1 with T2 (or T3).


T4

Reason code for variation:

Choose a reason code from the list below that describe why you varied your PAYG instalment amount;

  • 21: Change in investments

  • 22: Current business structure not continuing

  • 23: Significant change in trading condition

  • 24: Internal business structure 

  • 25: Change in legislation of product mix

  • 26: Financial market changes

  • 27: Use of income tax losses

  • 33: Consolidations 


D) Fringe benefits tax (FBT) installment

Screenshot from Deskera accounting software - BAS Report PAYG fringe benefits tax (FBT) installment section

Box

Explanation

F1

FBT Instalment amount:

If you pay FBT quarterly, a predetermined amount will be shown here. This is calculated based on your FBT payable.


F2

Estimated tax for the year:

If you wish to vary the amount in F1, you will have to complete F2, F3, and F4. 


Enter your estimate of the total FBT liability for the FBT year ending 31 March.


F3

The varied amount payable for the quarter:

Enter your amount of the varied FBT installment for the quarter using the formula below:

 

[F2 X relevant percentage] - [previous installment liabilities - previous credit claimed]

 

The relevant percentage is determined by the FBT quarter ending in which you are varying the amount. You can refer to the applicable rate below:

-30 June: 25%

-30 September: 50%

-31 December: 75%

-31 March: 100%

If this is a negative amount, enter “0”. You can claim credit at 6B in the Summary section if this is a negative amount. Note: Do not enter minus sign at 6B

F4

Reason code for variation:

Choose a reason for the variation:


-21: Current business structure not continuing

-30: Change in fringe benefits for employees

-31: Change in employees with fringe benefits

-32: Fringe benefits rebate now claimed


E) Amounts you owe to ATO

Screenshot from Deskera accounting software - BAS Report Summary section 

Box

Explanation

1A

GST on sales:

Enter the total amount of GST on sales, plus any relevant adjustments here

1C

Wine equalisation tax:

Enter the amount of WET to be paid here

1E

Luxury car tax:

Enter the amount of taxable supply of luxury car, if this field is applicable to you

4

PAYG tax withheld:

Enter the amount from W5

5A

PAYG Income tax instalment:

Enter the amount from T7, or T9 if it’s varying in amount

6A

FBT Instalment:

Enter the amount from F1, or if you have varied your instalment amount for the quarter, copy the F3 amount here

7A

Deferred GST:

Enter the amount of deferred GST here

7C

Fuel tax credit over claim:

Enter the fuel tax credit over claim. Only complete this section if you need to decrease your entitlement to a fuel tax credit that you have claimed previously


8A

Total amounts you owned the ATO:

Enter the sum of 1A+1C+1E+4+5A+6A+7A+7C

F) The amounts ATO owes you

Screenshot from Deskera accounting software - BAS Report Summary section 

Box

Explanation

1B

GST on purchases:

Enter the total amount of GST on purchases here


1D

Wine equalisation tax refundable:

Enter the WET amount to be refunded to you


1F

Luxury car tax refundable:

Enter the luxury car tax amount to be refunded to you


5B

Credit from PAYG Income tax instalment variation:

Enter the amount from T9, if T9 is a negative amount


6B

Credit from FBT Instalment variation:

Enter the amount from F3, if F3 is a negative amount


7D

Fuel tax credit:

Enter the fuel tax credits that you’re entitled to for the tax period.


If you acquire, manufacture, or import taxable fuel into Australia, or when you use the fuel you manufactured, then you can claim the fuel tax credits


8B

Total amounts the ATO owes you:

Enter the sum of 1B+1D+1F+5B+6B+7D


G) Payment or Refund

Screenshot from Deskera accounting software - BAS Report payment section

Box

Explanation

9

Your Payment Amount:

Enter the payment amount owe to ATO, or the amount ATO owe you

Do you know that you can generate your Business Activity Statement using Deskera Books?

What is Business Activity Statements (BAS) in Australia Compliance?
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When is the due date of lodging BAS?

One of the essential things that you need to note is the due date of filing your BAS.

Your business GST turnover is the factor that determines your GST reporting and payment cycle. For example;

  • Quarterly, your GST turnover is less than $20 million.
  • Monthly, your GST turnover is $20 million or more.
  • Annually, if you are voluntarily registered for GST and your GST turnover is less than $75,000 or $150,000 for non-profit bodies.

The due date for quarterly reporting

Quarter

Due date

1. July, August and September

28 October

2. October, November and December

28 February

3. January, February and March

28 April

4. April, May and June

28 July

Note: If you choose to lodge your BAS online, you may be eligible for additional two weeks to lodge and pay your quarterly BAS.

The due date for monthly reporting

If your reporting period falls monthly, you will have to lodge and pay your monthly BAS on the 21st of the month following the taxable period.

For example, an August monthly BAS is due on 21 September.

The due date for annual reporting

The due date and pay your GST for annual reporting falls on 31 October.

If you are not required to lodge a tax return, the due date will be on 28 February, following the annual tax period.

One way to remember your reporting period is by setting calendar reminders on your phone for the critical date of lodging your report. Then, you wouldn't miss out on this crucial task.

How to lodge BAS?

After completing your Business Activity Statement and verified all the amount declared, you will have to lodge this form within the due date.

You can use a few methods to lodge your BAS:

  • Through your tax or BAS agent
  • Online using the SBR-enabled software,
  • If you are filing for a NIL statement only, you can call ATO by phone. Dial 13 72 26 anytime
  • By mail. Mail to;

Australian Taxation Office
Locked Bag 1936
ALBURY  NSW  2640

  • Government portal through your myGov account linked to the ATO (only if you're a sole trader)

Quick Tips when Filing Your BAS

Listed below are a few tips you need to note when filing, completing, and lodging your business activity statement correctly.

Please ensure that:

  • You fill in the PAYG installment and other information that is relevant for your business
  • Verify the amount in each section is true and accurate
  • No decimal numbers are allowed. You can round down to whole dollars.
  • Lodge and pay your tax liability by the due date
  • Update your business details within 28 days

How can I update my business details?

You must update the Registrar of the Australian Business Register (ABR) in the scenarios where:

  • You change your postal, email, or business address
  • Changes in business associates
  • Changes in main business activity
  • Changes in Australian Company Number or Australian Registered Body Number (ARBN)
  • Update in the name of trustees

You can follow the steps suggested below:

How can I make a payment to ATO?

Once you have collected GST from your customers, you need to remit the GST collection to the Australian Tax Officer within the due dates.

Make payment to ATO | Photo by Pickawood on Unsplash

Here are the few steps to make payment:

  • Pay via BPAY- Biller Code is 75556
  • Ensure that you indicate the correct payment reference number (EFT code) to ensure that your money goes to the correct account
  • Use a credit card or debit card that can be a Visa, MasterCard, or American Express card
  • Pay online
  • Pay by phone - make a call the Government EasyPay service on 1300 898 089

Penalty for late payment

Due to a busy schedule, as humans, sometimes we missed the due date of filing our tax return or forgetting to make payment, even though we have no intention of doing so.

However, that doesn't mean we are spared from our negligence. If you forget to lodge your BAS form or failed to make payment, you may be charged with a late penalty.

The ATO will still compute the penalty amount based on the following conditions:

  1. Using the statutory formula, based on your behavior and the amount of tax avoided
  2. Multiple penalty units based on the company size. You can refer to the table below for the penalty unit

Company Size

No of penalty unit

Small entity

(Company with turnover less than $1 million)

1 per period overdue

Medium entity

(Company with turnover of $1 Million or below $20 million or having PAYG withheld amount totalling between $25,001 and $1million in the previous year)

2 per period overdue

Large entity

(Company with turnover of $20 million and above PAYG withheld amount totalling to $1 million in the previous year)

5 per period overdue

Over the years, the penalty by unit amount has changed.

You can also check on the changes over the past few years below.

When Infringement Occurred

Penalty Unit Amount

On or after 1 July 2020

$222

1 July 2017 - 30 June 2020

$210

31 July 2015 - 30 June 2017

$180

28 December 2012 - 30 July 2015

$170

Up to 27 December 2012

$110

GST, BAS and Invoicing in Australia Using Deskera Books

Australia GST and BAS is a piece of cake with Deskera. You can setup an Australia company in minutes and start creating and sending invoices immediately.

With Deskera Books, you can generate beautiful invoice templates from the system without the need to design your template from scratch.

You can specify your customers' location and charge the correct tax rate using the tax configuration in the system.

Create your invoice using Deskera Books invoice generator

Here are the essential pieces of information that you can include in your invoice:

  • Your company name and address
  • The date when you issue the invoice
  • Your business number (GST Registration Number)
  • The purchaser's name and address
  • Term of Payment
  • The name of the products or services purchased and their description
  • Cost of each product and quantity purchased
  • Total amount payable
  • Tax component

Learn more about the invoicing feature using Deskera Books.

How to Use the Document Generator in Deskera Books?
Creating an invoice and a bill template for your organization is made easy withDeskera Books’ document generator. As a small business owner, if you have limited time to create a brand new billor invoice template, you can quickly generate these templates straight from yourDeskera Books account. …

Key Takeaways

And that is a wrap. From this article, you can take away the following points:

  • What is the sales tax in Australia?
  • What products are GST-free sales in Australia?
  • What are input-taxed sales?
  • What is GST credit?
  • What are the items excluded from the GST credit claim?
  • When do you need to charge GST?
  • What are the requirements to register for a GST account in Australia?
  • GST turnover computation
  • What is the GST number in Australia?
  • How can you register for a GST account?
  • What is the Australian Business Number (ABN)?
  • Reporting your GST Return to the ATO
  • Example of Business Activity Statement
  • When is the due date of lodging BAS?
  • How to lodge BAS?
  • Quick Tips when Filing Your BAS
  • How can I update my business details?
  • How can I make a payment to ATO?
  • Penalty for late payment

With Deskera, you can easily apply the Australia GST tax rates to your transactions and generate a proper sales invoice.

You can rest assured as the software will do the work for your tax calculation. Instead of spending a tremendous amount of time on manual tasks, you can have more time for the things you love with Deskera.



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