How to pay your Business Activity Statement
When running a small business that is GST registered, it's essential to pay your Business Activity Statement (BAS) bill on time. The BAS is a report that businesses must lodge with the ATO monthly, quarterly or annually to confirm their GST, Pay-As-You-Go (PAYG) withholding and other taxes. This post explains how you can pay and why it's important to pay on time.
What is a BAS?
The BAS was mandated as a reporting requirement on 1 July 2000. Introduced as a way for the ATO to monitor and track GST compliance among registered businesses, the report ensures that GST is being collected and remitted correctly during the financial year. The form includes details of GST collected and GST credits claimed by the business, and other taxes such as PAYG withholding. It is required to be lodged by businesses registered for GST.
When do you need to lodge your BAS?
A business can find its Business Activity Statement (BAS) reporting schedule by contacting the Australian Taxation Office (ATO) or checking its registration details on the ATO or myGov portal. The ATO will assign a reporting schedule based on the business's turnover and other factors, and the plan will be confirmed when you register for GST. Most small businesses are required to lodge their BAS every quarter. If a business has a GST annual turnover of $20 million or more, you must lodge your BAS monthly.
How is a BAS calculated?
After a BAS is lodged, the business may need to pay the ATO if the GST collected by the business is greater than the GST credits (GST you paid to suppliers and vendors) claimed. The difference between the two amounts is the net GST that the business owes to the ATO. If a business is entitled to a refund (the business paid more GST than earned), it will be credited to its nominated bank account.
How do you pay a BAS bill?
The BAS lodgment and payment process is vital for compliance with tax regulations and maintaining accurate records of GST transactions. Here are some ways you can pay your BAS bill:
- Online: You can pay your BAS bill online using the ATO's online services. This includes using myGov or the ATO's Business Portal. You must have your Tax File Number (TFN) or Australian Business Number (ABN) and a valid credit or debit card.
- Credit card: The ATO accepts payments by credit card through its online services. Paying your BAS bill by credit card may result in additional fees, depending on the credit card issuer.
- Electronic funds transfer (EFT): You can pay directly from your bank account using the details provided on your BAS statement.
- BPAY: You can make a payment using BPAY. You will need the Biller Code and Reference Number provided on your BAS statement.
- Mail: If you prefer, you can mail a cheque or money order to the ATO, including your payment slip or reference number.
What happens if I pay my BAS bill late?
If you pay your BAS bill late, you may be subject to penalties and interest charges from ATO. Any additional fees depend on the amount of tax owing and the time it is overdue. The ATO may charge a general interest charge (GIC) on any outstanding tax debt, which is calculated daily and is based on the official cash rate set by the Reserve Bank of Australia. The GIC accrues from the original due date of the tax debt until it is paid in full.
In addition to interest charges, the ATO may impose penalties for late payment, ranging from 5% to 25% of the unpaid tax. If the delay is deemed a result of intentional avoidance or taking an unreasonable position, then the penalties may be higher.
What repayment or hardship plans does the ATO provide for BAS bills?
The ATO provides various options for businesses that need help paying their debt on time. These plans are designed to help enterprises to manage their tax debt and can include the following:
- Payment plans: The ATO allows businesses to pay their tax debt in instalments rather than in one lump sum. Payment plans can be set up on the ATO's portal or by contacting them directly.
- Remission of penalties and interest: The ATO may waive penalties and interest charges that have been applied to a tax debt if the business can demonstrate a genuine inability to pay the debt.
- Financial hardship: If a business is experiencing severe financial difficulty, it may be able to apply for a temporary deferral of payment. The ATO will consider the application based on the business's individual circumstances.
It's important to note that to be eligible for these options, the business must be up to date with their lodgments and contact the ATO as soon as they know they cannot meet their payment obligations. It's always best to connect with the ATO as soon as possible to discuss options and the best course of action to take.
How quickly is a BAS credit paid back to the business?
The time frame for a credit to be paid back to the business can vary depending on ATO processing times and the method of lodgment chosen.
For electronic BAS lodgments, the ATO generally processes the activity statement within 14 days of receipt, and the credit will be paid back to the business within this timeframe. The credit will be paid directly into the nominated bank account if the business has elected to receive payments via electronic funds transfer (EFT). For paper lodgments, the processing time may take longer. The ATO will process the statement within 21 days of receipt, and the credit will be paid back to the business accordingly.
BAS Lodgment FAQs
What is BAS lodgment?
BAS lodgment is the process of submitting your Business Activity Statement (BAS) to the Australian Taxation Office (ATO) in order to report on your business's tax obligations.
Who needs to lodge a BAS?
All businesses registered for the Goods and Services Tax (GST) with an annual turnover of $75,000 or more are required to lodge a BAS.
How often do I need to lodge a BAS?
The frequency of your BAS lodgment depends on the reporting period you have chosen. The most common reporting periods are quarterly, although some businesses may be required to lodge monthly or annually.
What information do I need to include in my BAS lodgment?
The information you must include in your BAS lodgment will depend on your business's tax obligations. Typically, you will need to report on your GST liability, Pay As You Go (PAYG) instalments, and other tax obligations, such as Fringe Benefits Tax (FBT) or Luxury Car Tax (LCT).
When is my BAS due?
The due date for your BAS will depend on your reporting period. Generally, quarterly BAS lodgments are due on the 28th day of the month following the end of the quarter, while monthly lodgments are due on the 21st day of the following month.
What are the consequences of not lodging my BAS on time?
Failing to lodge your BAS on time can result in penalties and interest charges. The ATO takes compliance with BAS lodgment requirements seriously and expects businesses to meet their reporting obligations.
What if I need help with my BAS lodgment?
If you need help with your BAS lodgment, you can seek assistance from a registered tax agent or BAS agent. These professionals can help you navigate the complexities of the tax system and ensure you are meeting your reporting obligations.
What if I need to correct my BAS lodgment?
If you make a mistake on your BAS lodgment, you can correct it by submitting an amended BAS. It would be best to do this as soon as possible to avoid penalties or interest charges.
The ATO has made it easy to pay your BAS on time by supporting multiple methods. There are several ways to pay, including online, EFT, BPAY, mail, phone and via credit card. Each method has advantages, and the final decision depends on your business preference. If you pay late, fees and penalties may apply, so if your business is having financial difficulties, you should reach out to the ATO immediately, as they may be able to help.