Common Errors to Avoid On Your BAS

Many business owners do not find it easy with completing their Business Activity Statement (BAS).  Many of them get penalized for lodging their BAS late or for not recording their incomes correctly.


Common Errors to Avoid On Your BAS

Many business owners do not find it easy with completing their Business Activity Statement (BAS).  Many of them get penalized for lodging their BAS late or for not recording their incomes correctly.  Any penalized individual will have to pay $170 per 28 days. Large or medium taxpayers are charged higher penalties.

Preparing the Business Activity Statements can be bedeviled by three common errors, and these errors are discussed below.

Is there any need to register for GST?

We need to ask if there is need to register for GST before we start addressing the three main errors.  It is important to register for GST if your business has the potential to earn up to $75,000 in the next one year.  No need to register, however, if your business will not earn up to that within the stated period. The case is however different for those that are providing taxi services. The reporting obligation of a business automatically continues once such a business registers for GST.  If the income ever falls below $75,000 thresholds, then you can simply cancel the GST registration except if:

  • You are a resident of Australia and act as an agent for any non-resident that needs GST registration
  • The business is registered for GST and is in liquidation
  • The individual needs to register for GST and is also bankrupt
  • The business belongs to an individual providing Uber travel or taxi services.
  1. Incorrect busies expense classifications

All expenses are not subject to GST. As a result, there is need to be careful about how to allocate your expenses.  Many businesses claim back GST incorrectly on GST-free expenses, like bank charges, owner’s drawings, direct fees, interest, ASIC fees, motor vehicle registration, superannuation and staff wages. Wages are reported at the W1 as a business expense on your BAS; however, they are not part of the general expenses reported on G11; this is the form for all non-capital purchases.  You are not expected to include superannuation expenses as part of the gross wages reported on W1.

Business asset purchase that is worth more than $10,000 should not be recorded on the G11 but under capital purchases on G10 in BAS.

  1. Treatment of equipment and vehicle finance loans

This subject also gives many business owners problem when filling their BAS.  Different GST implications apply to lease payments and chattel mortgage these are tricky areas for many business owners. In case your asset financing was done through a chattel mortgage, it is possible to claim the full component of the asset’s purchase price when filling the next BAS after you have already acquired the equipment or vehicle.  You will not have to bother about GST when it comes to the monthly repayment.  The ownership of the asset is retained by the financier in the case of a lease, and as a result, you cannot lay claim to the GST the asset’s purchase price. Be that as it may, you will have to consider GST for your monthly lease rentals.

  1. Supplier not registered for GST when claiming credit in GST on the purchase price.

If the supplier has not registered for GST and is also not charging GST on their goods and services, then it is impossible for you to lay claim on GST. No need to worry anyway; up to 99% of your suppliers will most probably be registered for GST. Be that as it may, you still need to check the source of the invoice of these suppliers to know if the invoice is a Tax Invoice bearing GST component.

The three errors above should not be a problem anymore with the information provided above.

Meeting the deadline

Many people in this country lodge their Business Activity Statement very late. For those that are registered for GST, it is very important for them to lodge a Business Activity Statement quarterly or monthly.

  • If you are lodging your BAS on the first quarter, the lodging should be done on the 28th October 2017; this period falls between July and September.
  • For those lodging in the second quarter, which falls between October and December, they need to lodge on the 28th February 2018.
  • If lodging in the third quarter, the deadline is on the 28th April 2018.
  • For the fourth quarter, on the other, lodgment deadline is on the 28th July 2018.