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About the BAS
How will a business make payments and report obligations under the New Tax System? Business will make their payments and report their obligations via a single compliance statement, known as the Business Activity Statement (BAS). What is the BAS? The BAS is more than just a GST return. It also allows businesses to report their obligations for:
- Luxury Car Tax;
- Wine Equalisation Tax;
- Pay As You Go (PAYG) withholding and instalments; and
- Fringe Benefits Tax (FBT) instalments.
The BAS will also allow businesses registered for GST to claim a special credit for wholesale sales tax paid on eligible stock on hand at 1/7/2000. This special credit must be claimed on any one activity statement lodged for a tax period that ends before 7 January 2001.
How will a business be able to "net off" their tax obligations? The BAS allows the business to "net off" their obligations, allowing a single payment or refund for each reporting/payment period, across the taxes above. So, if in a quarterly reporting/payment period, a business has:
- a GST credit of $10 000,
- a PAYG instalment liability of $5000,
- a PAYG withholding liability of $2000; and
- an FBT liability of $1500
they do not need to make any payments. The business will receive a credit of $1500. This is worked out by deducting total debits of $5000 + $2000 + $1500 = $8500 from the credit of $10 000.
Will the number of times businesses have to report and make payments in a year be reduced? Yes. Under the old tax system, a small/medium business could have up to 32 separate interactions with the ATO. Under the New Tax System, the number of interactions that a business will have with the ATO is markedly reduced. How often will businesses need to report? GST - including Wine Equalisation Tax (WET), Luxury Car Tax (LCT), Wholesale Tax (WST) - can be reported monthly or quarterly, depending on the annual turnover of the business. All businesses with an annual turnover in excess of $20m are required to report and remit electronically, every calendar month. Businesses with an annual turnover less than $20m may elect to report and remit electronically. For small/medium businesses, the PAYG withholding liability can also be reported monthly or quarterly, depending on the value of amounts withheld in the previous income tax year. Large PAYG withholders (ie. over $1m withheld in the previous income tax year) will continue to remit under their existing arrangements, which can be up to nine times per month. Businesses registered for GST, report and pay their PAYG Instalments quarterly. FBT is also paid quarterly, based on the business's previous FBT year's notional tax. If a business is required to report GST and/or Withholding Tax, on a monthly basis, every third month, they will report their PAYG instalment and FBT instalment obligations for the quarter, where required, together with their GST and/or withholding obligations for the third month of the quarter.
What information will the ATO Pre-print on the BAS? To assist Businesses, the ATO will pre-print: - the period covered by the BAS
- your Document Identification Number (a unique number allocated on generation of each BAS)
- your Australian Business Number (ABN)
- your due dates for lodgment and payment (these are usually the same, but can be different if you have an arrangement for an extension of time)
- your Business Name and address information, as shown on the Australian Business Register
- your Deferred Company/Fund instalment amount (if appropriate)
- the period you are reporting for each obligation (page 2)
- your PAYG Instalment Rate (page 2)
- your FBT Instalment amount calculated by the ATO (page 2).
What is the barcode on the Business Activity Statement? The barcode helps the ATO identify the type of form you have lodged when the form is processed (eg. whether the form is a Business Activity Statement or a Payment Summary etc). It also includes information about the version of the form. What is the Document Identification Number? The Document Identification Number (DIN) is used by ATO systems to identify your BAS during processing. Each BAS has a unique DIN. How do businesses receive their BAS? The ATO will send the personalised BAS to your business, either via the Internet (using private key/public key encryption) or to the nominated postal address on the Australian Business Register
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Completing the BAS
If I make a mistake filling in the Business Activity Statement can I use whiteout? Whiteout is acceptable, although tape whiteout is preferred to the type applied with a brush. Paper BAS forms are processed using a scanner. To allow accurate and timely processing of your BAS, the form must be completed using a black pen.
Can I fill in the Business Activity Statement using a typewriter/printer? Yes, the boxes for each question may be filled in using a typewriter/printer commencing with either the far left hand or far right hand box for each .
Do I show + or - at Labels 3 and 9? No, show the figure only. The ATO will work out whether the figure is a positive or negative amount. If the figure is at Label 3 is positive - this is your net GST payable.
If the amount at Label 3 is negative - this is your net GST credit.
If the figure is at Label 9 is positive - this is the amount you owe.
If the amount at Label 9 is negative - this is the amount the ATO owes you.
Do I show cents on the BAS? Show whole dollars only. Ignore any cents. (eg. show $400.39 as $400, show $400.87 as $400).
Which side of the form do I complete first? First check the details shown at the top of the front page of your activity statement. This includes your ABN and the period covered by the statement. Then complete the relevant worksheet on the back of the activity statement. Check the pre-printed information in each section of this page to see which period you are reporting on, if any, for each obligation.
If I have nothing to report at an item on the BAS (eg. G2 - Exports), do I put zero or should I leave the item blank? If you have nothing to report at a specific item (eg. G2) leave it blank. Do not write zero, 0 or N/A. If you do not have any obligations or entitlements to report on your activity statement for a particular reporting period, leave all items blank. However, if an instalment rate is pre-printed at T2 on your activity statement, you must complete label T1 (Instalment Income). If you do not have any instalment income for the period, you must write 0 at label T1. You must sign and date your activity statement and return it to the ATO by the due date even if you have not reported anything on the BAS.
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Returning the BAS (Lodgment & Payment)
How do businesses lodge their BAS? Businesses not using the services of a tax agent will be able to lodge their BAS using the ATO's Electronic Commerce Interface (ECI) via the Internet. The ATO issues free electronic commerce software to allow the importing of personalised Business Activity Statements and lodgment and payment via ECI. Business using the services of a tax agent can have the tax agent lodge their BAS via the Electronic Lodgment Service (ELS). Otherwise, businesses can lodge their BAS through the mail.
How do businesses make payments? Electronic payments may be made using the existing facilities (i.e., Direct Credit, Direct Debit), or BPAY. Other payments can be made via mail or at Australia Post. Payments are normally required within 21 days following the end of the reporting period. Businesses, however may make a voluntary payment at any time, which will be deducted from their net liability.
How do I make a voluntary payment? You do not record voluntary payments on the BAS. If you wish to make a voluntary or early payment to offset a future liability, you can do so by direct credit or BPAY using your EFT code (see pages 135 and 136 of the Business Activity Statement Instructions). Your EFT code is shown above the barcode on your payment advice form and is also provided in the internet-based electronic commerce system. If you don't have an EFT code, you can obtain one by contacting the ATO on 1800 815 886 If you prefer to make a voluntary or early payment at Australia Post or by mail, you can order a booklet of personalised payment advice forms by phoning 13 24 78 and following the prompts until you get to option 2.4, Request Personalised Payment Advice Forms. You will receive 6 payment advice forms in a cheque book style booklet. Please note that these payment advises can only be used for Activity Statement obligations.
What are the due dates for lodgment and payment? Payment and lodgment of the BAS is normally due 21 days following the end of the reporting period. However, the Commissioner has granted lodgment extensions for the first two monthly BAS (called the "2-1-0" initiative) and the first three quarterly BAS / IAS (called the "3-2-1-0" initiative).
What if the Due Date falls on a weekend or public holiday? If the due date for lodgment and/or payment of your BAS falls on a weekend or public holiday and: you are using a paper BAS You must ensure that your BAS and payment will be received in the ATO, at the mailing address shown on the BAS, by close of business on the last working day before the due date. you are lodging electronically You must ensure that your BAS will be received in the ATO by midnight on the due date. you are paying electronically You must ensure that payment is initiated before the daily bank cut- off time on the last working day before the due date. Your financial institution will be able to advise you of the cut-off time.
How can I tell you that I'm going to be lodging or paying late? You need to contact the Tax Office on 13 28 66.
Why does the bottom of the statement mention Australia Post? Australia Post outlets are authorised to accept payment of amounts owing to the ATO.
Is the bottom section of the form a payment slip? Yes, the payment slip appears at the bottom of the front of the activity statement. Fill in the amount you are paying.
What is the ATO Code on the payment advice made up of? The ATO Code on a BAS is 60 (because the client has an ABN). The ATO Code on an Instalment Activity Statement will be either 59 if the client does not have an ABN (ie. TFN quoted) or 60 if the client has an ABN.
Can I send my payment with my Business Activity Statement? Yes. You can return your BAS and / or payment in the pre-addressed envelope which you will receive with your BAS. The mailing address is also pre printed on the Payment Advice at the bottom of the BAS
I am below the $20 million threshold and have elected to lodge electronically. Can I change from lodging electronically to paper? It is possible to revert to paper lodgment if you are below the $20 million threshold. Use the Electronic Commerce Interface (ECI) - Registration, Cancellation or Change of Details form to do this.
Can there be a difference between the due date and the date payable? The date payable is the date by which you must pay the net amount owing. The due date is the date by which you must lodge your BAS with the ATO. This will usually be the same day, that is, the 21st day of the month following the end of a tax period.
What is the ATO's Electronic Commerce Interface (ECI) Practice facility? The ECI practice facility is a training and familiarisation tool established to give users who wish to deal electronically via the internet practice in lodging the BAS using the ECI. People can log on to the practice facility and complete a practice BAS form which they can then send electronically to the Tax Office. The benefit of this facility is that people can practice using this new electronic service and familiarise themselves with it. They also get a return acknowledgment that they have completed the BAS correctly and have been successful in lodging the BAS over the Internet. This facility has been available since February 2000.
How do I get help to use the practice facility? We have set up a call centre to help users of this facility. Technical experts are available 8am-8pm on weekdays to assist with problems by calling 1300 139 373.
Who can prepare the BAS for my business? Who can charge fees for the preparation of the BAS? Can I claim fees paid to that person as a tax deduction? Apart from registered tax agents and legal practitioners who are members of a recognised professional association, the only people allowed to charge a fee for providing a BAS service are:
- members of a recognised professional association that represents accountants and tax practitioners;
- bookkeepers working under the direction of a registered tax agent;
- entities that provide payroll services to employers but only a BAS service in relation to PAYG withholding matters; and
- customs brokers, but only a BAS service in relation to GST, WET and LCT matters.
The provision of a "BAS service" includes:
- preparing or lodging an approved form about a taxpayer's obligations under a BAS provision;
- giving advice about a BAS provision; and
- transacting any business with the Commissioner on behalf of a taxpayer in relation to a BAS provision.
- "BAS provision" is a law relating to GST, WET, LCT, PAYG withholding, PAYG instalments, FBT instalments, deferred company instalments and a special GST credit for sales tax paid on stock.
A legal practitioner is not allowed to lodge a BAS or an IAS, unless he or she is registered as a tax agent or qualifies as a BAS service provider under one of the above categories, eg the legal practitioner is a member of a recognised professional association. You should remember that you are ultimately responsible for the accuracy and completeness of the BAS. The law makes you vicariously liable for any penalties imposed as a result of a mistake made by your registered tax agent or BAS agent. The cost involved in preparation of the BAS is tax deductible.
Who can sign an Activity Statement? Once you have completed your activity statement and you are satisfied that all of the information provided is true and correct, it must be signed and dated. If you or your agent lodge your activity statement with the ATO in a paper form, you must sign the declaration stating that the information is true and correct. If you are lodging your activity statement electronically, the declaration must contain your electronic signature. If your activity statement is being lodged electronically by an agent, the agent will need to sign the declaration on the activity statement using their electronic signature. An agent must declare that:
- the activity statement was prepared in accordance with the information supplied by the entity
- the agent has received a declaration made by the entity that the information provided to the agent to prepare the activity statement is true and correct, and
- the agent is authorised by the entity to give the activity statement to the Commissioner of Taxation.
Where your activity statement is lodged by your agent, you must prepare a signed declaration stating that:
- you authorise the agent to give your activity statement to the Commissioner, and
- the information you provided to the agent to prepare the activity statement is true and correct.
This declaration must be made for each activity statement and can be in a paper form or an electronic document. That is a matter for you and your agent. You must retain the declaration, or a copy of it, for five years.
Does the 3-2-1-0 extension apply when I am only lodging a quarterly IAS (ie client is not registered for GST and will not be required to lodge a BAS) ? Yes.
If I am lodging my BAS and / or paying by mail, what is the address I send them to? You must return your BAS and / or payment in the pre-addressed envelope which you will receive with your BAS. The mailing address is also pre printed on the BAS and the Payment Advice at the bottom of the BAS.
I am a quarterly remitter of GST, but a monthly remitter of withholding tax. Will I lodge a single BAS form for September, or will I need to lodge 2 forms - one for my quarterly GST and one for my monthly withholdings? Businesses will receive only one activity statement for any reporting period. Please refer to the example of Maddy & Maxie Pty Ltd described in the Business Activity Statement Instructions (pages 16 to 27). Maddy and Maxie own and operate a supermarket through which they supply both taxable and GST-free supplies. They operate as a company, Maddy and Maxie Pty Ltd. Maddy and Maxie work full time in their supermarket and have one part-time employee. Maddy and Maxie Pty Ltd reports to the ATO on GST, PAYG withholding, PAYG instalments and fringe benefits tax instalments. The company lodges a quarterly activity statement to report its GST obligation and entitlement, PAYG instalment and fringe benefits tax instalment at the end of each quarter. It has to report PAYG withholding every month as it withheld more than $25 000 from employees in the last financial year. This means that for the first and second months of each quarter the company lodges a monthly activity statement to report its PAYG withholding liability. A worked example of the quarterly BAS for Maddy and Maxie Pty Ltd is shown on pages 24 and 25 of the Business Activity Statement Instructions. The BAS is for the period 1 July 2000 to 30 September 2000 (items A3 and A4 on the BAS). The pre-printed information in each section of the calculation sheet page of the company's BAS (page 25 of the instructions) shows that the company reports:
- GST for the period 1 July to 30 September 2000
- PAYG withholding for the period 1 September to 30 September 2000
- PAYG instalments for the period 1 July to 30 September 2000, and
- FBT instalments for the period 1 July to 30 September 2000.
The company's BAS is due on 11 November 2000 (items A5 and A6), that is Maddy and Maxie Pty Ltd is eligible for the 3-2-1-0 extension to lodge and pay all the obligations on the BAS. The 2-1-0 and 3-2-1-0 extensions apply to lodgment and payment of all the obligations on the BAS.
When will I receive my BAS credit refund? The ATO will pay any refund due on your BAS within 14 days of lodgment.
Will the ATO pay me interest if my BAS credit is delayed? Delayed Refund Interest (DRI) may be payable where a refund takes more than 14 days to issue. The DRI will be calculated by the ATO automatically and deposited into your nominated financial institution account. There are exceptions to the ATO automatically pay DRI, including: Delayed processing
Processing may be deferred when further information is required from the bsuiness to allow processing of the BAS to continue or for the refund to be finalised. Reasons for deferring processing include:
- Financial institution details are not present
- Financial institution details are incorrect
- A request by the ATO for further information.
Remember, you must provide the ATO with your financial institution account details when you register for The New Tax System to make sure you receive any amounts owing to you. Contact the ATO on 13 24 78 if you need to change your financial institution account details. You will need to provide proof of identity.
If a taxpayer has a BAS lodgment outstanding and a later BAS results in a credit, the refund will not be processed until the outstanding BAS is lodged. DRI will not be applied in these circumstances.
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Compliance and the BAS
What if I make an honest mistake on my BAS form? You are required by law to fill in your activity statement correctly. The law imposes penalties if you understate your tax liability or overclaim a credit. The ATO understands that taxpayers will need to come to terms with The New Tax System. If you make a genuine mistake and you voluntarily tell the ATO about it, any penalties that apply will be remitted. However, you will have to pay interest on any understated tax or overclaimed credit. (page 6, Business Activity Statement Instructions)
What if I mess up my form? The BAS form contains your pre-printed details. You will need to contact the ATO on 13 24 78 and request a replacement BAS form. (page 6, Business Activity Statement Instructions)
Can I get an extension to lodge my BAS? You may get an extension to lodge your BAS but only in exceptional circumstances. (page 134, Business Activity Statement Instructions)
Can I get an extension to pay? You may get an extension to pay but only in exceptional circumstances. (page 134, Business Activity Statement Instructions)
Can I claim my computer if I use it in preparation of the BAS for my business? You will be able to claim some of the costs associated with using your computer to prepare the BAS as a tax deduction. The amount you will be able to claim as a tax deduction depends on the ratio of your private to business usage of your home computer.
What is the amendment process for addition errors, etc? You will have to lodge a revised BAS. You should contact the ATO on 13 24 78 for your revised BAS to be sent to you. (page 6, Business Activity Statement Instructions)
Why do I have to bear the extra costs associated with completing the GST Calculation Sheet? The Business Activity Statement (BAS) is more than just a GST return. It allows businesses to report and pay their obligations under the New Tax System for the following regimes:
- goods and services tax (GST);
- wine equalisation tax (WET);
- luxury car tax (LCT);
- Pay As You Go (Withholding & Instalments); and
- fringe benefits tax (FBT).
The BAS and a comprehensive set of instructions on how to complete the BAS were developed in extensive consultation with business and tax practitioners. While most businesses will not need to use all sections of the instructions, the ATO developed one comprehensive set of instructions in response to requests from business and tax practitioners. These instructions make it clear that businesses need only complete a section of the BAS if they have an obligation for the period involved. Therefore, if a business does not have an obligation for a particular tax (eg. the wine equalisation tax) it should proceed to the next section of the activity statement and the instructions. To further assist businesses, the BAS has been developed as a personalised form and will indicate to the business, among other things:
- the obligations the business is required to report on the particular BAS; and
- the tax period for which the business is reporting on that BAS for each obligation.
Further, GST is a new tax and like any other new obligation, there can be expected to be some difficulties in becoming familiar with new requirements in the transitional period. On this basis, the Government has made available start-up assistance to assist businesses during this period of change. In addition, business will be allowed to write-off, in the current financial year, the total cost of any changes made in their business to equip them for the GST. The Commissioner has announced lodgment extensions which provide a settling in period to most businesses. This will allow these businesses time to get used to The New Tax System and the new way in which they need to interact with the ATO. Click here for more information on these extensions. After consideration of business and tax practitioner feedback, as they progress with further implementation of The New Tax System, an alternative option for reporting GST liability on the BAS was jointly announced in a media release by the Commissioner of Taxation and the Chairman of The New Tax System Advisory Board on 30 March 2000.
What are the methods of reporting GST on the BAS? There are two standard methods businesses can use to report their GST on their Business Activity Statement (BAS). Both methods are equally acceptable to the Australian Taxation Office (ATO) and you can choose the one that best suits your business. The two methods, as outlined in the Business Activity Statement instructions, are:
- the calculation sheet method (calculation method), and
- the derived from accounts method (accounts method).
Remember that regardless of which method you choose, you must keep the tax invoices that relate to your transactions to support your claims. This is normal business practice. The calculation method is explained in full in the Business Activity Statement instructions. You will also find a helpful worked example of how to use this method in the instructions and in the ATO's October 2000 publication How to keep your business records. You may find the accounts method explained here easier and quicker for your business. You can use this method if you have separately recorded the GST amounts for your supplies and acquisitions. For small businesses this may be as simple as having a GST column in your cashbook or spreadsheet. Using the accounts method
To use this method, you simply add all your separate amounts of GST recorded in your accounts to show in the GST section of your BAS. Add all the GST included in your accounts for your taxable supplies and show the total amount of GST payable at item 1A (G9 if lodging electronically via the ATO's Electronic Commerce Interface). Similarly, add all the GST credits included in your accounts for your creditable acquisitions and show the total amount of these credits at item 1B (G20 if lodging electronically via the ATO's Electronic Commerce Interface). Remember to exclude any expenses to the extent that they relate to acquisitions and importations for your personal use or for making input taxed supplies, as you cannot claim input tax credits for the GST included in these amounts. You should make any adjustments that relate to your supplies or acquisitions in your accounts, not at G7 or G18 on your BAS. If you have adjustments you have not included in your accounts, adjust the amounts at 1A or 1B. You must also fill in items G1, G2, G3, G10, G11 and G12 on your BAS for information purposes only. The Business Activity Statement instructions explain what amounts to include at these items. If necessary, you can estimate the amounts on a reasonably accurate basis from your accounts. These amounts can be GST inclusive or GST exclusive. The important thing is that the amounts you have shown at items 1A and 1B are accurately derived from your records and transactions and that you can demonstrate this, for example, through tax invoices. Unlike the calculation method, the amounts you show at items 1A and 1B are not arrived at by working through items G1 to G9 and items G10 to G20. Don't forget you may have to complete other GST-related items on your BAS - for example, complete 1G if you are claiming a credit for wholesale sales tax. The example Reporting your GST using the accounts method shows how to use the accounts method to report your GST obligations.
What about the additional clerical and accounting fees needed to comply with GST record keeping? Any additional clerical or accounting fees needed to comply with GST record keeping can be claimed as a tax deduction. Ongoing compliance costs may be factored into your pricing regime. In fact, any business with a turnover up to $10 million is entitled to an immediate tax write off for expenditure associated with gearing up for the GST, provided the expenditure is incurred before 1 July 2000. This expenditure may include software, plant and equipment, staff training and professional advice. The Government has set aside $175 million for this assistance.
Will there be an education program to assist those small businesses who do not complete their first BAS accurately or correctly? Tax Office is providing an extensive education and information campaign to help businesses understand their rights and obligations under The New Tax System. You should contact the Tax Office or your accountant if you need help. The ATO also offers a free Advisory Visit. This is where a tax officer comes to your business at a time convenient to you to explain how to get ready for The New Tax System. There are no strings attached - no audits or checking back - purely advice and assistance. An Advisory Visit can be booked through 13 24 78, or, if you have a group of ten or more, you can make a Seminar booking through (02) 6216 1450. Feedback from these visits has been extremely favourable.
What is the penalty if I pay my BAS obligations late? The general interest charge (GIC) will apply to the unpaid amount. The current GIC rate is 14.00%. It is applied to unpaid amounts on a daily compounding basis.
What is the General Interest Charge (GIC)? General Interest Charge (GIC) is calculated at a daily compounding rate on the outstanding balance of an account. GIC amends or removes late payment and other penalty provisions and replaces them with a uniform and automated process of calculating and imposing a penalty to your account. GIC is calculated on accounts that have had a debit closing balance for any day within the review period. The GIC amount calculated is a compounding interest rate accrued daily and imposed after a monthly review process. The per annum rate for GIC will be the Treasury Note Yield plus 8 percentage points (reviewed on a quarterly basis).
What is the penalty if my BAS is incorrect? If you make an honest mistake and this results in a shortfall in the amount of tax properly payable, the ATO will only require that you adjust the BAS to pay the correct amount plus a General Interest Charge. If the BAS is incorrect because you made a false or misleading statement and this results in a shortfall in the tax paid, in addition to being required to pay the shortfall plus a General Interest Charge, you may be liable for a penalty. The amount of the penalty will vary depending on the cause of the shortfall amount. The base penalty amount, which can be increased or decreased depending on whether there are aggravating or mitigating factors, is a percentage of the tax shortfall amount as follows:
- 25% where the mistake is caused by you not taking reasonable care
- 50% where the mistake is caused by you being reckless
- 75% where the mistake is caused by you intentionally disregarding the law
However, you will still have to pay interest on any understated tax or overclaimed credit.
What is the penalty if I lodge my BAS late? The penalty for lodging the BAS late is one penalty unit ($110) for each 28 day period, or part of a period, that the BAS is outstanding, up to a maximum of 5 penalty units ($550). For a business with an annual turnover between $1 million but less than $20 million, the penalty is multiplied by two. For a large business with an annual turnover of $20 million or more, the penalty is multiplied by five resulting in a maximum penalty of $2,750. The Commissioner also has the discretion to remit this penalty. The circumstances of a business, such as the amount of tax payable, the past record of paying tax and lodging tax forms, and the effort made by the business in trying to meet its obligations under The New Tax System, will affect whether penalties are remitted and the extent of the remission.
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Goods and services tax (GST)
What is consideration? For GST purposes, consideration means any form of payment (in money or anything else) made in return for a supply. Supplies are things you do in your business, eg. selling food and beverages or charging for legal or accounting services. Consideration includes doing something or not doing something in exchange for receiving a supply, or to get someone to make a supply, eg. an agreement you have with another business not to operate in a certain area in exchange for their agreement not to operate in your area. (see page 34 of BAS Instructions)
What is a supply? For GST purposes a supply includes:
- A supply of goods and/or services
- Provision of advice or information
- A grant, assignment or surrender of real property
- A creation, grant, transfer, assignment or surrender of any right
- A financial supply (see page 42 of the BAS Instructions) and
- An entry into or release from an obligation to do anything, to refrain from an act or to tolerate an act or situation
What is an acquisition? For GST purposes, an acquisition includes:
- an acquisition of goods
- an acquisition of services
- a receipt of advice or information
- an acceptance of a grant, transfer, assignment or surrender of any right
- an acceptance of a grant, assignment or surrender of real property
- an acquisition of a financial supply
- an acquisition of a right to require another person:
- to do anything
- to refrain from an act
- to tolerate an act or situation, or
- any combination of the above.
Does "total sales & income & other supplies" at G1 include GST? If you are using the GST calculation sheet method the amounts at this item are GST inclusive.
If you are using the GST derived from accounts method the amounts can be GST inclusive or GST exclusive. Item G1 includes all the payments and other consideration you have received for supplies you have made in the course of your business during the tax period for which you are completing your BAS. If you account for GST on a cash basis, you are not required to pay GST until you are paid for your supplies. Similarly, you cannot claim input tax credits for your purchases until you have paid your supplier. If you account for GST on a non-cash basis (commonly called accruals basis), you include the total amount receivable for supplies for which you have been paid in part or in full or for which you have issued invoices in the current tax period - whichever is the earlier. Similarly, you are able to claim input tax credits for your purchases when your supplier has issued an invoice or you have paid part of your account - whichever is the earlier. (See pages 34 to 39 of the BAS Instructions).
What does "other supplies" mean? "Other supplies" refers to items such as fees and charges for services, commissions, fares, royalties etc. Do not include at G1 any amounts received for private supplies such as the sale of your private residence or an item of household furniture. (See pages 34-39 of the BAS Instructions).
There is an "adjustments" item at G7 and an item at G18, what is the difference and how do I calculate and record these amounts? From time to time you may need to make an adjustment (up or down) if you have paid too much or too little GST on a previous activity statement. You can also treat as adjustments any changes in consideration or refunds that occur in the same period in which you record the amount of supplies and acquisitions at G1, G10 or G11. To avoid negative amounts on the BAS, adjustments are done off the BAS on the worksheets in the BAS Instructions. The net result of those adjustments are then reported on the BAS. If the overall result shows that you haven't paid enough GST, an increasing adjustment is required and the amount should be entered at G7. If the overall result shows that you have paid too much GST a decreasing adjustment is required and the amount should be entered at G18. The net result of adjustments will therefore only appear at one label or the other, not both. How business treats adjustments for the purposes of completing the BAS has been reviewed to provide business with greater flexibility. Business can now treat discounts and refunds on the BAS in the same way regardless of whether they relate to supplies/acquisitions in a previous period or to supplies/acquisitions in the same period. Business will then have two options for the treatment of discounts and refunds which will follow the treatment in their own accounting systems. They may either:
- show them as adjustments in the period in which the change in consideration occurs or the refund is made, or
- net them off against supplies and acquisitions.
Information and worksheets on how to calculate and record these amounts can be found under the instructions for G7 & G18 Adjustments. (See pages 59 -73 of the BAS Instructions)
What is an adjustment note? Adjustment notes are issued by suppliers to a business when the amount of consideration for taxable supplies changes. The recipient needs an adjustment note to claim more or less input tax credits than previously claimed. (see page 8 of BAS instructions).
What is a tax invoice? Is it issued by the ATO? Tax invoices are documents containing information about taxable supplies. In most cases tax invoices are issued by suppliers. In some special cases they may be issued by recipients of supplies (these tax invoices are known as recipient created tax invoices). If you make taxable supplies, your registered customers will need tax invoices to claim input tax credits for acquisitions with a GST-exclusive value of more than $50. If you are asked to provide a tax invoice, you must do so within 28 days of the request from the purchaser. (See Pages 7-10 of the BAS Instructions)
What is meant by "acquisitions for making input taxed sales & income & other supplies" at G13? You are not entitled to input tax credits for GST included in acquisitions and importations related to making input taxed supplies. However, if you make financial supplies you could be entitled to a partial credit for certain acquisitions. G13 includes the total amount of importations and acquisitions that relate to input taxed supplies. A list of input tax supplies can be found at pages 54 & 55 of the BAS instructions.
What is meant by "non-income tax deductible acquisitions" at G15? Examples of acquisitions and importations which are not deductible for income tax purposes can be found on page 56 of the BAS Instructions.
What is the difference between a creditable acquisition and a non- creditable acquisition at G16 & 17? How is this different from "acquisitions" referred to at G10 and G11? Creditable acquisitions are purchases and expenses made for a creditable purpose, on which you have paid GST. You acquire things for a creditable purpose if you acquire them for use in your business (unless you use them for making input taxed supplies). Things you acquire solely for private use are not creditable acquisitions. Non-creditable acquisitions are acquisitions and importations for which you cannot claim an input tax credit. G16 shows the total of your non-creditable acquisitions, including items used to make input taxed supplies, items used partly for private purposes and acquisitions for which you did not pay GST (G13, G14 & G15). The amounts that are included in item G11 are the payments for all acquisitions (including importations BUT excluding capital items) for use wholly or partly in your businesses, for the relevant tax period for which you are completing your BAS. You do not include at G11 any acquisitions or importations that are not partly or fully for use in your business. Capital acquisitions are included at G10. For GST purposes, an acquisition includes:
- an acquisition of goods
- an acquisition of services
- a receipt of advice or information
- an acceptance of a grant, transfer, assignment or surrender of any right
- an acceptance of a grant, assignment or surrender of real property
- an acquisition of a financial supply
- an acquisition of a right to require another person:
- to do anything
- to refrain from an act
- to tolerate an act or situation, or
- any combination of the above.
The difference between your total acquisitions and your non-creditable acquisitions, that is, the extent to which your acquisitions relate to a creditable purpose, is put at G17. (G17 = G12 - G16.) (See pages 45-57 of the BAS Instructions.)
I received a Third Party Insurance renewal which is detailed as a Tax Invoice. It shows an amount of $190.00 for Insurance, and an amount of $19.00 as GST on Insurance. At what items are these amounts put? Page 52 of the BAS Instructions states "for compulsory third party motor insurance premiums paid before 1 July 2003, you cannot include the amount of the premium in your acquisitions". Therefore, you would not enter either of these amounts at any item.
What impact will The New Tax System have on imports? From 1 July 2000, GST will be payable on most goods imported into Australia. GST will be payable by both businesses and private individuals, regardless of whether they are registered for GST. However, if you are registered and you import goods for use in your enterprise, you will be able to claim an input tax credit for any GST you pay on the importation (provided that it is a creditable importation). Some imports will be non-taxable for GST if:
- they would have been GST-free or input taxed if supplied within Australia (eg basic food, medical aid & appliances), or
- they qualify for certain customs duty concessions.
Australian Customs will collect GST on taxable importations. The GST is 10 per cent of the value of the taxable importation. The value of the taxable importation is based on the customs value of the goods, not on the purchase price. The value of a taxable importation is the sum of:
- the customs value of the goods
- any customs duty payable
- the amount paid or payable to transport the goods to the port or airport of final destination in Australia
- the insurance cost for that transport, and
- any wine equalisation tax payable.
What is a GST group? Companies within a 90% owned group, and in some cases other entities (such as non-profit bodies), can be approved as a GST group. One member of the group then deals with all the GST liabilities and entitlements (except for GST on most taxable importations) of the group. Intra-group transactions are excluded from GST.
What are the rules for reporting GST for a GST group? If you are the representative member of a GST group, include at the relevant GST items only amounts relating to transactions made to (or from outside) the GST group. Do not include transactions between members of the GST group. However, transactions between group members are included if:
- the member is a participant in a GST joint venture and acquired the thing supplied from the joint venture operator, or
- the transaction is a taxable supply because it is a supply of other than goods or real property made from offshore.
If you are a member of a GST group, other than the representative member for the GST group, do not complete the GST section of your BAS.
What is a GST branch? A branch of a GST registered entity can be separately registered as a GST branch. Separate GST returns are given, and separate payments and refunds of GST are made, in respect of the branch.
What are the rules for reporting GST for GST Branches? If you are the parent entity of a registered GST branch, do not include amounts at the GST items that relate to transactions of your GST branches (except where you are a party to the transaction). It is your responsibility to ensure that an activity statement is lodged for each of your GST branches. You must still lodge an activity statement on your own behalf unless all of your enterprises are carried on through your GST branches. If you are a registered GST branch, include only amounts relating to your own transactions in the GST section of your BAS. Include amounts relating to transactions with your parent entity and with other GST branches of your parent entity.
What is a GST joint venture? Companies engaged in a joint venture can have it approved as a GST joint venture. The joint venture operator then deals with the GST liabilities and entitlements arising from the joint venture operator's dealings on behalf of the participants in the joint venture.
What are the rules for reporting GST for GST joint ventures? If you are the joint venture operator of a GST joint venture, include the amounts relating to transactions you enter into on your own behalf and on behalf of the participants in the joint venture in the course of joint venture activities in the GST section of your BAS. Do not include supplies made to joint venture participants if the participant made the acquisition for consumption, use or supply in the course of joint venture activities. If you are a participant in a GST joint venture other than the joint venture operator, do not include any amounts in the GST section of your BAS for acquisitions made from the joint venture operator for consumption, use or supply in the course of the joint venture.
If I account on a cash basis and purchase an asset under a hire-purchase agreement, do I include the entire asset value in G10 (capital acquisitions)? If the entire asset value was recorded as a capital acquisition at G10, it would interfere with the operation of the GST calculation sheet. This is because the entire asset value would be recorded at G10, but the enterprise would only be entitled to claim input tax credits based on the actual hire-purchase payments that it made during the tax period. For example, if the asset was valued at $55,000 (to be purchased in 50 monthly instalments of $1,100 plus $50 interest), then the input tax credit entitlement would be $100 per month (or $300 per quarterly tax period). If you included the entire $55,000 at G10 in the tax period where you purchased the asset, you would overclaim your input tax credits (because you would claim a $5,000 credit in the first period). Accordingly, when you acquire an asset under a hire-purchase agreement, you should not include the entire asset value in G10 in the period that you first acquire the asset. Instead, each hire-purchase repayment should be accounted for by including any interest charge at G11 (other acquisitions), with the remainder being included at G10 (capital acquisitions). The interest component would also be included at G14 (acquisitions with no GST in the price). Where the hire purchase relates to the acquisition of a new motor vehicle, the transitional rules may apply. Additionally, the amount is limited by the motor vehicle depreciation limit. If the agreement to purchase a motor vehicle is entered into during the period 1/7/00 - 30/6/01, no amount would be included at G10, regardless of the accounting method used. For cash accounting purposes, this will apply for the entire period of the agreement. If the agreement to purchase a motor vehicle is entered into during the period 1/7/01 - 30/6/02, there is only a 50% input tax credit entitlement (subject to extent of creditable purpose). For cash accounting, 50% of the principal payment would be shown at G10 for the entire period of the agreement. For non-cash accounting, 50% of the total price would be shown at G10 in the period in which the first payment is made or an invoice is issued, whichever is earlier. On or after 1/7/02, if a motor vehicle is acquired via a hire purchase agreement, the normal rules apply.
How do I complete my BAS in order to claim input tax credits in respect of periodic supplies that I purchased pre 1 July (eg. insurance premiums)? Where you made a payment pre 1 July in respect of an acquisition that spans 1 July, you will be entitled to claim input tax credits in your first GST return (BAS). In order to claim your input tax credits, you should include at G10 or G11, the portion of the purchase price that relates to the post 30 June component of the supply. For example, if the cost of a 12 month maintenance contract was $1,050 (paid for up front) and half the supply took place prior to 1 July, and half took place on or after 1 July, then you would account for $550 in G11 in your first BAS. However, you could only include the figure at G11 and claim an input tax credit if you held a valid tax invoice (or special transitional invoice) for the acquisition. If the tax invoice does not separately express the price of the taxable supply, but only states the GST component of the total price, then you should multiply the GST component by 11 and include this figure at either G10 or G11, as appropriate.
Where do I include superannuation on the BAS? If you are an employer: Contributions made by an employer to a superannuation fund are not reported on the BAS. A contribution is made as a result of the contractual relationship that exists between the employee and employer. It involves the employer paying a sum of money into a superannuation trust for the absolute benefit of the employee beneficiary. The contribution does not result in the employer acquiring an interest in the superannuation fund - thus there are no financial supplies between the fund and the employer. The contributions do not involve the acquisition of any service from the superannuation fund by the employer. The contributions are made by the employer as a result of its acquisition of employee services. The contributions are made in satisfaction of contractual obligations the employer has with its employees. If you are a Superannuation Fund: Superannuation funds are required to report earnings from making financial supplies at G1 and G4 on the BAS. Whilst employer contributions to a superannuation fund will be consideration for a financial supply to the employee, for the purposes of the BAS they will not constitute 'earnings' from the making of 'financial supplies'. Earning is interpreted to mean the profit or 'margin' derived by an entity on making financial supplies. This requires that both the acquisition and supply of the thing be taken into account in determining the extent of the earnings or margins. G1 on the BAS requires all payments and other consideration received for making a supply to be included at that item. However, this requirement is modified as the instructions go on to state that for financial supplies, only the earnings from making financial supplies are to be included. Whatever earnings figure is declared at G1 will also appear at G4. Employer contributions deposited with a superannuation fund do not constitute earnings on a financial supply made by the fund. These amounts should not appear at G1 or G4.
If I account for GST on a cash basis, do I include an amount at G10 or G11 (acquisitions) if I received goods or services before 1 July 2000, but paid for them on or after 1 July 2000? No. As the acquisition was made before 1 July 2000, it is not included in your BAS. However, the result may be different where a supply is made progressively over a period spanning 1 July 2000.
Where do I include interest and dividends received by the business? Interest received by the business is included at item G1 (Total sales & income & other supplies) and at item T1 (Instalment income). You should also show the interest at Item G4 (Input taxed sales and income and other supplies). Dividends received by the business are only included at item T1 (Instalment income). The imputation credit associated with any franked dividends will not be included at item T1 for most businesses. [Only include imputation credits (which are statutory income) at item T1 if you are a trustee of a superannuation fund, eligible approved deposit fund or pooled superannuation trust. If you are a life insurance entity or a registered organisation, include imputation credits arising from your complying superannuation and roll-over annuity business in your instalment income at T1.]
If I have a residence that I let out occasionally, is this a commercial residential premise? No. This is a private residence. A commercial residential premise is a hotel, motel, inn, hostel, ship, boarding house, caravan park or a camping ground.
When a vendor does not provide an ABN on an invoice, at what item on the BAS does the acquisition go? The whole amount of the purchase goes at G10 (if it is a capital acquisition) or G11 (if it is not a capital acquisition). It also needs to be shown at Item G14 as an acquisition with no GST in the price. This is because you cannot claim an Input Tax Credit if you do not have a tax invoice. In addition, where an enterprise supplies you with goods or services and does not provide it's ABN on it's invoice or some other document relating to the supply, you must withhold 48.5 per cent of the payment. This withheld amount is reported at item W4.
How do I report a payment from one of my customers if they have subtracted 10% from their amount owing to me? If you account for GST on a cash basis, the consideration received should be reported at G1 on the activity statement relating to the tax period that the consideration is received. The balance of the consideration should be reported at G1 on the activity statement relating to the tax period that the balance of the consideration is received. If you do not account for GST on a cash basis, the entire amount, including the 10% deducted by the recipient, should be reported at G1. The 10% deducted is not shown separately at any item.
I inadvertently did not claim an input tax credit on my BAS even though I had a compliant tax invoice for that tax period. Do I have to make an adjustment on the BAS for a subsequent tax period in which I discovered the error? You must take all reasonable care to ensure that your BAS is correct in the first instance. Omissions may be corrected by lodging a revised BAS. However, in certain situations an omission can be corrected by taking it up in the BAS for a subsequent tax period. For example, a tax invoice may not be included in the BAS for the relevant tax period because it was not received or was received late etc. This invoice can be subsequently taken up in the BAS as revenue or expense relevant to the subsequent tax period. It is not necessary to include this invoice as an adjustment in the BAS. However, mistakes or omissions of significant amounts discovered after a long period can be corrected only by lodging a revised BAS.
Where on the BAS do I include Australian taxes, fees and charges that are excluded from the GST by Determination 2000 of the treasurer? If you collect revenue relating to Australian taxes, fees and charges that are excluded from the GST by Determination 2000 of the Treasurer, you do not include this revenue at any label on the BAS. The STOP box on page 34 of the BAS Instructions states in part:
"Do not include payments you have received for Australian taxes, fees and charges that have been excluded from the GST by Determination 2000 of the Treasurer". If you make payments that include Australian taxes, fees and charges that have been excluded from the GST by Determination 2000 of the Treasurer, you do not include the amount of the Australian taxes, fees and charges at any label on the BAS. The payment, less the amount of the Australian taxes, fees and charges, is reported at label G10 or G11 and if there is no GST in the price, at label G14.
How do I report purchase of shares on the BAS? If you purchase shares as an individual investor The purchase will not appear on a BAS. If you purchase shares as part of an enterprise you carry on Cost of share: The cost of the share is not shown on the BAS. Stamp duty: GST does not apply in respect of stamp duty on the purchase or sale of shares. This is because stamp duty is included under Division 81 of the GST Act and specified in Determination 2000 of the treasurer. The stamp duty on the purchase of shares should not be shown on the BAS. Brokerage fees: This is reported at items G11 and G13. However, at item G13, you only include 25% of the amount included at item G11. Refer to page 54 of the BAS Instructions.
How do I report sales of shares on the BAS? If you sell shares as an individual investor The sale will not appear on a BAS. If you sell shares as part of an enterprise you carry on Gross proceeds - The need to complete items on the BAS is dependent on whether you have earned anything on the supply. If you sell the share at a price less than or equal to the price you originally paid for the share, you do not report this on the BAS. (ie. Do not show any amount if you make a loss on the transaction.) If the share is sold at a price higher than the original purchase price, the difference between these 2 prices would be included at items G1 and G4. Do not take into account any expenses incurred in selling the share in calculating this amount. (These will be shown at G11 and G13). Stamp duty: GST does not apply in respect of stamp duty on the purchase or sale of shares. This is because stamp duty is included under Division 81 of the GST Act and specified in Determination 2000 of the treasurer. The stamp duty on the sale of shares should not be shown on the BAS. Brokerage fees: This is reported at items G11 and G13. However, at item G13, you only include 25% of the amount included at item G11. Refer to page 54 of the BAS Instructions.
How are supplies of long-term accommodation shown on the BAS? If you have made supplies of long-term accommodation to an individual for a continuous period of 28 days or more in commercial residential premises and you have chosen not to treat the supply as input taxed and are using the GST calculation sheet method, include an amount equal to the GST payable on the supply multiplied by eleven at item G1. If you use this method of working out the GST payable on supplies of long-term accommodation you may find it difficult to reconcile your cash book or general ledger. For this reason you may wish to use the GST derived from accounts option (if you are eligible) to complete your BAS. Where you have chosen to treat the supply as input taxed you will include the rent received at G1 and G4 on the BAS. Rent received would be included at label T1 (Instalment Income).
Can companies, funds or trusts include private use value at item G15? No. The asset is owned by the entity, that is the trust, fund or company, and any non-business use by employees or directors is not private use to be included at G15. The private use may be considered fringe benefits under the Fringe Benefits Tax rules, but there is not private use by the company, fund or trust.
Where do I report lease payments on the BAS? Lease expenses are reported at item G11. If GST is not included in the lease expense, the amount of the expense is also included at item G14. Remember that the GST transition rules may have an impact on whether GST is included in the lease.
Do I include the amount paid for the purchase of a second-hand motor vehicle on my BAS? If you have purchased a second-hand motor vehicle you include it at G10 on the BAS. If you did not pay GST on the purchase you also include it at G14. There are transitional rules that apply to the purchase of new motor vehicles. However, the same rules do not apply to purchasing a second-hand motor vehicle.
Where do I include workcover payments on the BAS? The amount of the premium, excluding stamp duty, is reported at item G11.
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Wine equalisation tax (WET)
Where do I find information to complete item 1C? This item relates to wine equalisation tax payable on the taxable sale of wine in the period relating to the BAS. Information on how to complete 1C can be found on pages 78-80 of the BAS Instructions. You should take care when completing Item 1C and to pay strict attention to the examples shown in the booklet.
Where do I find the information to calculate the "WET refund" at 1D? If in a previous tax period you paid more wine equalisation tax than was properly payable, you can claim a credit for the extra tax you paid. To be able to claim a refund, you must not have passed the WET on to the purchaser or, if you did pass the WET on, you have since refunded the WET to the purchaser. All claims for credits must be made within four years of the time when the credit ground (reason for claiming a credit) arises. Please refer to pages 81-86 of the BAS Instructions and the work sheet provided when you complete item 1D.
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Luxury car tax (LCT)
I make taxable supplies of cars, do I have to feel in the "LCT payable" item at 1E? When entities such as retailers, wholesalers and manufacturers make a taxable supply of a luxury car, they will pay LCT. Importers (including private buyers) that make a taxable importation of a luxury car will also pay LCT. If you are making taxable supplies of luxury cars then you must fill in 1E. A luxury car is defined in the information on pages 88 & 89 of the BAS Instructions. You must be registered for GST to collect luxury car tax. Luxury car tax is payable on all supplies or importations of luxury cars unless the purchaser quotes their ABN to the supplier or, in the case of taxable importations, to Customs. To be eligible to use the quoting system the purchaser must have the intention of using the car for one of the following purposes, and for no other purpose:
- holding the car as trading stock, other than holding the car for hire or lease; or
- carrying out research and development for the manufacturer of the car; or
- exporting the car in circumstances where the export is GST-free.
How do I work out the amount shown at item 1E? Please refer to the examples shown in the BAS Instructions when completing item 1E (see pages 90-94 of the BAS Instructions). Luxury car tax applies at the rate of 25% of the value of the car, excluding goods and services tax, above the luxury car threshold. The current threshold is $55 134 and this amount is adjusted for an inflationary factor every year. (See the worksheet on page 98 of the BAS Instructions.) The following formula is used to calculate LCT:
| 25 | x 10 x (luxury car value - luxury car threshold) | | 11 |
How do I work out "LCT refund" item at 1F? Luxury car tax refundable is included at Item 1F. This item includes any adjustments to luxury car tax paid in previous tax periods if a change in your circumstances means that you paid too much luxury car tax on a previous activity statement. Refer to pages 94-97 of the BAS Instructions and the worksheet on page 98 for more information.
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Special credit for wholesale sales tax (WST)
How do I work out the "special credit for wholesale sales tax" at 1G? If you are registered for GST you can claim a special credit for wholesale sales tax paid on eligible stock on hand at 1/7/2000. You must claim the credit on any one activity statement lodged for a tax period that ends before 7 January 2001. To obtain the credit for wholesale sales tax you:
- Work out the amount of sales tax charged on the purchase or importation of goods which you held for sale or exchange (but not for manufacture) at the start of 1 July 2000.
- Reduce the amount of credit to allow for discounts, credits or rebates which decreased the amount of sales tax you were charged for the goods.
- Write this amount at 1G .
(See pages 100 & 101 of the BAS Instructions)
If I am a quarterly remitter of GST, but a monthly withholder, can I claim my special credit for wholesale sales tax in my first monthly BAS? No. You must claim the credit on any one activity statement lodged for a tax period that ends before 7 January 2001. A tax period is the length of time for accounting for GST on your activity statement. It may be quarterly or monthly.
Can I perform a stocktake after 30 June 2000 to claim the special credit for wholesale sales tax paid on stock? Yes. The stocktake must be conducted as near as practical to July 1 2000 but if circumstances prevent this occurring a stocktake may be held at a later date. Only stock on hand as at 1 July 2000 may be included to determine the sales tax paid and therefore your special credit amount. However, you must claim the credit on any one activity statement lodged for a tax period that ends before 7 January 2001
Instead of conducting a physical stocktake on 1 July 2000, can I value my stock as at 1 July 2000, to determine the sales tax paid and therefore the special credit amount? No. The mere adoption of a consistent basis of stock valuation is insufficient. Unless your business has a perpetual inventory system with an annual stocktake and provision for adjusting discrepancies, it will be necessary to conduct a physical stocktake as near as practical to 1 July 2000.
Can I use the "mixed business method" without actually undertaking a six week analysis of purchases? No. Use of this method is conditional upon undertaking the analysis of purchases. Therefore, you will need to use some other acceptable method to calculate the credit.
If I acquire a business and the stock on hand is purchased "at valuation", on what value is the special credit claimed? Where the contract stipulates the amount of sales tax included in the purchase price of the stock, the claim will be equal to that amount of tax. Where the transfer includes certified copies of stock purchase invoices, the claim would be allowable to the extent of the sales tax shown on those invoices.
If I am a wholesaler, can I use the Small Business Exemption (SBE) for sales tax to claim a credit under Item 1G for my stock on hand at 1 July 2000? Yes. The GST Transition Act refers to goods "held for the purposes of sale or exchange (but not for manufacture)". However, a manufacturer utilising the SBE provisions eg. cottage industries, is not entitled to a special GST credit for sales tax that they will have paid on raw materials to be used in manufacturing goods.
If I am a service provider, eg a repairman, can I claim a special credit for wholesale sales tax borne on incidental goods (eg. nuts and bolts) that are not separately identified on an invoice? Yes. If you are holding parts for sale in a contract involving the supply of parts and labour, the parts are trading stock and any sales tax borne by you on parts held for that purpose can be claimed as a special credit at item 1G on the front of your BAS. This is so regardless of whether the parts are separately listed on the invoice.
Do my packaging materials qualify as goods for sale or exchange and can they therefore be considered as trading stock? Yes. These include padded boxes in which jewellery is sold and plastic bags in the roll for taxpayers or customers to select and secure fruit and vegetables for their sale. Examples of goods not considered to be trading stock include a serviette, plastic knife and fork provided along with takeaway food and supermarket and department store carry bags.
To claim the special credit, do I need to list every item separately? No. Once you have worked out the total amount of wholesale sales tax charged to you on the purchase or importation of goods which you held for sale or exchange (but not for manufacture) at the start of 1 July 2000, enter this amount at item 1G.
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Pay As You Go (PAYG) withholding
I understand what is meant by "salary & wages", but what are "other payments" at W1 and W2? "Other payments" refers to payments such as commissions, directors fees, compensation, sickness and accident payments and a range of other types of payments from which you are required to withhold amounts at a rate shown in the Commissioners published tax tables. (See pages 107 & 108 of the BAS Instructions) The total amount also includes all payments subject to withholding whether or not you have withheld an amount from the payment because it was below the income tax threshold at which income tax is required to be withheld. You do not include at this Item any payment from which you have withheld an amount where a tax file number has not been quoted in respect of an investment distribution or an ABN has not been quoted on an invoice. The amounts withheld for these payments are recorded at W3 and W4 respectively. (See pages 108-110 of the BAS Instructions.)
Are the "other payments" at W1 inclusive of GST? No. These are payments which would not be subject to GST, because they are payments from which you are required to withhold amounts at the rate shown in the Commissioner's published tax tables. However, where a payer under a voluntary agreement is not entitled to a GST input tax credit, GST would be payable on the supply by the payee. The GST exclusive amount of the payment is subject to withholding and included at item W1.
Are amounts to be withheld from dividends, interest & royalties to non-residents reported on the BAS? No. The previous arrangements for reporting these obligations will remain in place until 1 July 2001.
Where are amounts withheld from salary and wages shown on the BAS? For Small and Medium withholders:
Unless the ATO has made other arrangements with you or your employees, you must withhold at the rates shown in the Commissioner's published tax tables and only withhold amounts from payments made to individuals. The amounts withheld are reported at item W2. Completing W2
Step 1 - Work out the total amount of salary and wages and other payments listed at W1 that you have paid during the period. This would include payments of all salary and wages paid to employees, and the range of other payments outlined at W1.
Step 2 - Write at W2 the total amount withheld from payments recorded at W1. For Large withholders:
There are separate arrangements for the notification and payment of PAYG amounts withheld by large withholders, that is, those who withhold more than $1 million. If you are a large withholder, the ATO will send you the guidelines on how to pay PAYG amounts you withhold.
What is a voluntary agreement? Pay As You Go (PAYG) voluntary agreements enable businesses to withhold amounts from payments they make to workers (such as contractors) to help the workers provide for their income tax liability. More information about voluntary agreements is contained in a fact sheet (NAT3063).
If I enter into a voluntary agreement with an individual payee, at what item on the BAS should amounts paid to the payee be shown? You include salary, wages and other payments (including payments made under a voluntary agreement) at item W1. This amount is the total amount paid before withholding any amounts. A list of these other payments can be found on page 107 of the BAS Instructions. The amount withheld from the payment is included at item W2.
What are the GST implications of entering into a voluntary agreement? For the payee:
If a payee is not registered for GST they cannot include GST in the price of the goods or services they supply, nor are they entitled to input tax credits. If a payee is registered for GST, they only charge GST under the voluntary agreement if the payer is not entitled to a full GST input tax credit for the goods or services being supplied. The payer must indicate, on the voluntary agreement form, whether or not they are entitled to a full input tax credit. Either way, the payee can claim input tax credits for any GST paid on goods or services bought and used in performing the work under the voluntary agreement. For the payer:
If the payer would normally be entitled to a full GST input tax credit, the payee cannot charge GST on the goods or services they supply under the voluntary agreement. If the payer is not entitled to a full GST input tax credit, the payee must charge GST on any taxable supplies they make under the voluntary agreement. The payer would report these amounts at G11 and G14.
If I am an investment body and I make Investment Distributions to a resident investor who has not quoted a TFN, do I report amounts at G11 and G14 as well as at W3? Where you make investment distributions and the resident investor has not quoted a TFN, you must withhold an amount from the investment distributions made to the investor of 48.5% of the distribution and include this amount at item W3. As the amount paid is not an acquisition, it is not included at either item G11 or item G14.
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Pay As You Go (PAYG) instalments
How do I work out my instalment income at T1? Instalment income at T1 is, as a general rule, the gross ordinary income derived in the quarter that is assessable income for that income year. Some examples of ordinary income earned from your business and investment activities can be found on page 115 of the BAS Instructions. Do not include in your gross ordinary income the GST, WET or LCT you charge your customers, clients or tenants. See the fact sheets on calculating instalment income for partners and beneficiaries of trusts.
How do I work out the Commissioner's Instalment Rate at T2? The Commissioner's Instalment Rate is your instalment rate worked out by the ATO based on the most recent assessment for your last income tax return that has been lodged. If this is your first PAYG instalment for the income year the instalment rate pre-printed at T2 will be the one calculated by the ATO. If this is not your first PAYG Instalment for the income year the instalment rate pre-printed at T2 will either be the instalment rate calculated by the ATO or the varied instalment rate you have notified on a previous activity statement for the income year. (See pages 117 & 118 of the BAS Instructions). For details of how the ATO calculates your instalment rate refer to the technical guides to instalment rates, notional tax and variations. Specific technical guides are available for companies, superannuation funds and individuals.
Can I change my instalment rate? How? The instalment rate at T2 can be varied, if you believe that instalments worked out using the pre-printed instalment rate will result in you paying more (or less) than your expected tax liability for the income year. You can choose to vary your instalment rate each quarter, if necessary. Once you have chosen to use a varied instalment rate you MUST either: - continue to use that varied instalment rate for the remaining quarters of THAT income year, OR
- choose another varied instalment rate.
This situation applies even if the Commissioner notifies you of a new instalment rate based on a later assessment. The varied instalment rate you have chosen for an income year does NOT carry over to the next income year. In that new income year you may either: - use the Commissioner's Instalment Rate (calculated by the ATO), or
- make a new choice to use a varied instalment rate.
You may be liable to pay the General Interest Charge if your varied instalment rate is less than 85 per cent of the instalment rate which would have covered your actual tax liability for the income year. The ATO will work out that instalment rate from your assessment for the income year. If you are varying your instalment rate write the varied rate in T3. You must tell the ATO at T4 why you have decided to vary your instalment rate. There is a list of codes available indicating reasons for the variation on page 119 of the BAS Instructions. Your varied rate will not carry over to the next income year. (See pages 118-119 of the BAS Instructions.) For guidance on how to vary your instalment rate refer to the technical guides to instalment rates, notional tax and variations. Specific technical guides are available for companies, superannuation funds and individuals.
How do I work out my PAYG instalment at 5A? Use the following formula to work out your PAYG instalment at item 5A: Instalment rate x Instalment income for the quarter The instalment rate you use is the one pre-printed at T2 or the varied instalment rate you have written at T3. Your instalment income for the quarter is the amount you have written at T1. (See pages 119-120 of the BAS Instructions for further information)
I was told that I could get a credit for previous income tax instalments if my instalment rate changes. Is this correct? Where do I record it? You may be entitled to a credit from earlier instalments in the same income year if you have varied your instalment rate and the rate you have written at T3 is less than the instalment rate pre-printed at T2. You can only claim credits if you have varied your instalment rate and earlier instalments in that income year were worked out using a higher instalment rate. This credit is offset against your other liabilities on your BAS (that is, it will be included in the net amount payable or refundable at item 9 on your BAS). The steps you need to take to calculate any amount of PAYG instalments credits are set out at pages 120-121 of the BAS Instructions.
I plan to lodge a quarterly BAS and the ATO has advised me of my instalment rate based on my 1998-99 income tax return. In 1999-2000 I suffered an income loss. Can I apportion that loss on a quarterly basis on my BAS? You do not apportion a tax loss on a quarterly basis on your BAS. Your instalment income is your gross ordinary income for a quarter without adjustments for expenses or losses from an earlier year. [Note: if you are a trustee of a superannuation fund eligible approved deposit fund or pooled superannuation trust you must include statutory income was well as ordinary income in your instalment income.] The ATO will calculate a new Commissioner's Instalment Rate for you when you lodge your tax return for 1999-2000. This instalment rate will take into account your allowable deductions and losses from an earlier year. You can vary your instalment rate if the instalments worked out using the rate notified by the ATO will result in you paying more (or less) than your expected tax liability. You can choose to vary your instalment rate each quarter, if necessary. Once you vary your rate you will not be able to use any ATO calculated rate for the remainder of the income year. You may be liable to pay the General Interest Charge if your varied instalment rate is less than 85 per cent of the instalment rate which would have covered your actual tax liability for the income year. The ATO will work out that instalment rate from your assessment for the income year. If you chose to vary your instalment rate this is done on your activity statement. See the Business Activity Statement Instructions or the Instalment Activity Statement Instructions for more information.
Do I include amounts I received from Diesel Fuel Rebates and the Diesel and Alternative Fuels Grant Scheme in my instalment income? These amounts are assessable income and are included as instalment income at item T1. The diesel fuel rebate is assessable income in the hands of the recipient if it is paid as a consequence of the recipient's income producing activities. For example, if a taxpayer is carrying on a farming business and the diesel fuel, which gave rise to the entitlement to the rebate, is consumed in the course of farming then the rebate has the character of assessable income in the farmer's hands. The rebate received by the recipient is income according to ordinary concepts.
Why have I received an instalment rate when my business is no longer trading? Your instalment rate is based on your most recent assessment for your last income tax return that has been lodged. For most individuals if your last income tax return shows $1,000 or more of income from business or investments you will be given an instalment rate. If you are a company, regardless of the amount of assessable income, unless you have lodged a final return, you should expect to get an instalment rate. If you receive an instalment rate, you still need to lodge an activity statement. Your instalment rate will be withdrawn following lodgement of the final income tax return for your business.
Will the ATO issue me with a new instalment rate when I lodge my tax return for the 1999-2000 financial year? If so, will the new rate take effect for the rest of the year? The ATO will calculate a new Commissioner's Instalment Rate for you when you lodge your tax return for 1999-2000. Your new instalment rate will take effect from the quarter in which you are notified of the rate and will continue until you are either notified by the ATO of a new instalment rate or the ATO notifies you that the instalment rate has been withdrawn.
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Fringe benefits tax (FBT)
How do I calculate the "fringe benefits tax instalment" at F1? How do I vary this at F3? Item F1 is the FBT instalment amount for this quarter. This amount is usually based on the previous year's FBT liability. It is pre-printed on the BAS. (See page 126 of the BAS Instructions.) If you estimate that your total FBT payable for the FBT year ended 31 March will be different from your notional tax amount, you may pay varied instalments based on your estimated liability. First you need to estimate your total FBT payable. You may use the gross-up formula applicable for the FBT year ended 31 March 2000. You will still be required to pay by instalments if you estimate that this year's FBT liability will be less than $3000, unless you expect this year's liability to be nil. To vary your FBT instalment use the following formula: [Estimated total FBT payable (F2) x Relevant fraction]
less
[Previous instalment liabilities - Any previous credits claimed] (See pages 127-128 of the BAS Instructions) You must tell the ATO at F4 why you have decided to vary your instalment. There is a list of codes available indicating reasons for the variation on page 128 of the BAS Instructions.
What amount do I transfer to the "fringe benefits tax instalment" at 6A? Does it come from F1 or F2 or F3? If you are using the FBT instalment amount pre-printed at item F1, transfer that amount to 6A. If you have varied your FBT instalment amount for the quarter, transfer the amount recorded at F3 to 6A. (See page 128 of the BAS Instructions)
What is a variation credit from prior fringe benefits tax instalments at 6B? You may get an FBT instalment credit if you vary your notional tax to an amount lower than the FBT payable in the previous year. There is a formula you may use to assist you in the calculation of the amount to be credited (see pages 129 & 130 of the BAS Instructions)
I have a new company and have not paid FBT in previous years but estimate that my liability will be greater than $3000. Will I be required to pay a FBT instalment? The short answer is NO. No pre-printed amount should appear at F1 where a client has never lodged an FBT return. Should there be a pre-printed amount at F1, the client should ring the ATO on 13 24 78 to query why there is an amount.
If I estimate my FBT liability will be greater than $3000, can I make a voluntary payment towards my 2001 FBT liability? Yes. Clients who are registered as FBT payers with the ATO can make voluntary payments on their FBT account towards their future FBT liability. However this should not be done through the BAS statement. Voluntary payments can be sent with a covering letter to: Payments from Vic, Tas, SA, WA and NT to ATO Mail Payments, Private Bag 1936, Albury NSW 1936 Payments from QLD, ACT, and NSW to ATO Mail Payments, Private Bag 1793, PENRITH NSW 1793 A client who is not registered for FBT must do so before payments can be accepted.
At what items do acquisitions made to provide fringe benefits to employees go on the BAS? Business acquisitions are included at item G10 (if it is a capital acquisition) or G11 (if it is not a capital acquisition). Do not include acquisitions where the expense is wholly private in the hands of the employee and does not relate directly to their activities as an employee. Any acquisitions that are related to making input taxed supplies are also included at item G13. Any acquisitions that are GST free or have no GST in the price are included at item G14.
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Deferred company/fund instalments for 1999/2000
How do I work out my "deferred company instalment" at item 7? If you are a company, superannuation fund or other entity liable to pay instalments under the company or superannuation fund instalment system and you were within the company or superannuation fund instalment system in the 1999-2000 income year, you may be entitled to defer all or part of your final 1999-2000 instalment liability. The deferred amount is repaid in interest-free instalments. You are entitled to defer all or part of your final 1999-2000 instalment liability only if you are liable to pay a quarterly PAYG instalment for the first instalment quarter of the 2000-01 income year. If you choose to pay an annual PAYG instalment for the 2000-01 income year, you are not entitled to defer your final 1999-2000 instalment liability. If you have lodged your 1999-2000 income tax return there should be a figure pre-printed at item 7. This is an instalment of your deferred 1999-2000 instalment liability. You must include this amount in the net amount of your obligations at 9 on the front of your activity statement. If there is no amount pre-printed at item 7 and:
- you have chosen to defer part of your final instalment liability for the 1999-2000 income year, and
- you have become liable to repay part of that deferred amount
you need to work out the amount to be repaid.
The steps for calculating the deferred company or superannuation fund instalment are described in detail at pages 122-123 of the BAS Instructions
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