5 Tips To Avoid Common BAS Mistakes

February 1, 2022    Accounting Services Perthwa

In Australia, businesses with an annual turnover of $75000 have to register for the GST, and every GST-registered business has to lodge the business activity statement (BAS) within its deadline. You may lodge it yourself or take help from one of the BAS agent services based in your area. However, people repeatedly make vital mistakes, leading to penalties. This blog discusses some valuable tips you may consider to avoid these common mistakes and prepare your BAS correctly.

Five Important Tips To Avoid Common BAS Mistakes

Over the years, experts have observed the trends and have developed the following tips. Using these tips will reduce the risks of making common BAS mistakes pointed out by ATO. 

 

1. Check the accounting method you use and print the appropriate records, accordingly

 

While registering your business (having a turnover under $2 million) for GST with the Australian Taxation Office (ATO), you must choose the accounting method for your GST. There are two methods of accounting - cash and accrual. 

  • Even though most small businesses choose cash-based accounting, it may not be the best choice for you, especially if you have a cash-based business. Suppose you own a restaurant, have no debtors, and pay your creditors within time. 
  • In that case, you must select the accrual-based accounting method. This arrangement will allow you to claim your GST immediately on the purchases, thus benefiting your cash flow.

Whatever method you choose, you must make the required update in your accounting system. Reports will be different for the two methods, so it will be important to print the correct ones.

 

2. Mention the amount of wage for just one month if you want to prepare a quarterly BAS

 

If there are employees in your office, and more than $25000 is withheld per annum in Pay-As-You-Go withholding, you may be moved to a monthly lodgement cycle. 

  • If such a thing happens, the ATO will provide you with written advice. In that case, you will be required to lodge quarterly BAS and monthly IAS (Instalment Activity Statements).
  • Remember that while PAYGW reporting is done once a month, GST reporting has to be done once a quarter. 
  • Thus, if you lodge your Q1 BAS in September, the GST and PAYGW reporting should be made for the entire quarter (1 July to 30 September) and only September, respectively.
 

3. You should not vary the amount of your PAYG Income Tax Instalment unless your accountant has advised you

 

While calculating the amount of income tax payable by you, the ATO procedure sometimes lags 1-2 years behind ‘real-time.’ Situations may change over this period. A business may expand or shrink, and if such a thing happens, you may plan to vary or change the requested amount of income tax instalment. 

  • However, if you vary the instalment amount downwards and have a payable income tax amount at the end of the financial year, you may have to pay penalties to the ATO.
  • We recommend not to do it, and instead, you must check with your accountant or bookkeeper before checking the amount you have already paid. There are many top business accountants Perth whom you can contact for professional assistance.
 

4. You must lodge your BAS by the deadline

 

One of the crucial mistakes people make is failing to lodge the BAS by the relevant deadline. 

  • If you want to lodge it yourself, your deadline will be the 28th day of the month, which comes immediately after the quarter ends. But, one thing to note is that for the December quarter, the deadline is 28 February. 
  • On the other hand, if a registered tax or BAS agent lodges it for you, there will be an extra month in addition to the deadline.
  • The ATO is strict about late lodgements, and from the deadline to up to five months, you will be fined $180 for each month you delay. 
  • Also, as each lately lodged BAS involves a separate penalty, the total amount may cost you a huge.
 

5. Don’t forget to mention the GST-free amount in total sales

 

In your business activity statement form, the total sales for a specific period have to be entered in Box G1. In addition, you should also include any other amounts already reported in boxes G2 and G3. These amounts must be reported as GST-exclusive or GST-inclusive.

At the end of the financial year, the ATO thoroughly checks the lodged BAS and income tax returns to identify discrepancies. For this purpose, officials use cross-references, so it is important to report the revenue correctly.

How Can You Fix A Mistake?

You will always have the option to amend the BAS mistake in the next BAS. Revising the original BAS can also be possible, but everything will depend on whether the mistake is related to debit or credit.

Usually, business owners can correct mistakes related to fuel tax credit and GST in their next BAS. But, if you fail to do it, a revision must be lodged.

When Should You Make An Adjustment?

Many people ask about the specific BAS adjustment period to correct the mistake they have committed by overstating their GST liability. The ATO provides a time limit of four years to adjust, and this period is calculated from the time the mistake was made.

How Can You Lodge Your Changes?

  • SBR (Standard Business Reporting) enabled software and online services are available for businesses to lodge their changes.
  • If you are a sole trader, you can use online services available for individuals. But for that, you must have an ATO-linked myGov account.
  • You can also directly call the ATO office to get a revision form.
  • Your hired BAS or tax agent may also help you in it.

Who Can Help?

The whole process of preparation and lodgement of BAS is pretty complicated, so it will be a good idea to involve someone with years of experience. Whether correcting GST mistakes or hiring a professional accountant or bookkeeper, Accounting Services Perth is always here to help you. We are known for providing top-rated services in every area of accounting at affordable prices.

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