A lot of new small business owners think that a BAS (Business Activity Statement) is for them to record GST only. There are, however, three key sections (and even more for particular industries such as wine and farming/transport) that are included in a BAS. These are:
1. GST – this is where you record the net sum of (a) GST you have collected from sales and (b) credits for the GST you paid on purchases.
2. PAYG Withholding – When you pay staff wages, you are required to withhold tax from their salary. The tax withheld from their salary is included on the BAS as a PAYG Withholding amount.
3. PAYG Instalments – If you paid income tax in your previous tax return, you may find that you are required to pay income tax instalments as part of your quarterly BAS. These instalments can be calculated in one of two ways (a) either as an ATO estimated instalment based on your last year’s tax amount, or (b) as an instalment you calculate based on your income for the quarter and the ATO’s specified rate. These PAYG instalments act as credits against your tax bill come the end of financial year.
This Tax Tips Tuesday is brought to you with love by Nudge Accounting. You can read other Tax Tips here.