The New World of GST Codes – Simpler BAS

Simpler BAS

GST or Not Included

The ATO has simplified the GST reporting system to make it simpler for a business to conduct its trading with less complexity in applying the GST law. This is great news for Small Businesses with an annual turnover of less than $10M.

To trade in Australia a business must:

  1. Obtain an ABN.
  2. Decide whether to register for GST, (compulsory once your turnover is more than $75,000 pa for a business, or $150,000 for Not-for-Profit entities. Transport providers must register regardless of turnover).
  3. Understand what sales the business makes and how GST is to be applied to those sales.
  4. Understand what GST the business pays on its expenses and know how much GST it is allowed to claim back.

Simpler BAS System

  • When conducting business or doing the books:
    • Code sales where GST applies to the GST code.
    • Code expenses that have GST you are allowed to claim back to GST code.
    • All other sales and expenses can be coded to Not Reportable or Excluded codes.
  • On each BAS, report the amount of GST collected in 1A and the amount of GST to be claimed back in 1B.
  • Report the total of all sales in G1, (report this value from the profit and loss for the same period).

Tax Codes and Reporting Fields

It will no longer be required to report export sales, GST free sales, capital purchases or non-capital purchases on the BAS.

You will still need to report PAYG Withholding, PAYG Instalments, Wine Equalisation Tax, Fringe Benefits Tax, Fuel Tax Credits and Luxury Car Tax if required for your business.

You and / or your bookkeeper may still choose to use multiple tax codes for reporting and/or auditing purposes; however, the BAS reporting will be simplified.

You are still required to keep all records as required by the ATO to validate all business transactions.

Who Does it Apply to?

Under the new “Small Business” definition, any business with turnover below $10m will lodge the new Simpler BAS.

When will the Simpler BAS start?

Simpler BAS system starts on 1 July 2017.

Why have the ATO introduced Simpler BAS?

Simpler BAS has been introduced because of the complexity of applying GST law to business i.e., different types of sales have different types of GST classifications; the same goes for expenses. The BAS reporting has required allocation of every sale between one of at least six different reporting options and expenses between seven options.

The allocation between these reporting classifications has been inaccurate and does not alter the amount of GST to be paid or claimed.

Government are simplifying business by allowing a business to report with a basic system that is closely aligned to just getting on with doing business

What to do

  • When making a sale do you have to charge GST?
    • Code it to GST, code everything else to not.
  • When incurring expenses, did you pay GST that you can claim back?
    • Code it to GST, code everything else to not.

Contact Virtual Assistant on Call for more details.

[Courtesy of ICB Institute of Certified Bookkeepers]

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