Taxpayers who are registered for GST must report their tax obligations to the ATO on a Business Activity Statement or BAS. Depending on the turnover of your business you have the option of reporting and paying your tax obligations on an annual, quarterly or monthly basis. When you register for GST it is important to check whether you are lodging on a cash basis or a non-cash (accruals) basis as this may have an effect on cash flow.
Below is a brief summary of the common labels you may need to complete when preparing your next BAS.
Goods & Services Tax
| Item | Description | Tip |
| G1 | Total sales including GST free sales and GST | Do not include bank transfers between accounts, inter-entity loans and owner’s capital |
| G3 | Total GST free sales | These include sales on basic food, some medical, health & care services and some childcare services etc. |
| G10 | Total capital purchases including GST | These include purchases of plant & equipment, motor vehicles, office furniture etc. above $1,000 |
| G11 | Total Expenses including GST | Do not include wages, superannuation, bank transfers between accounts, owner’s drawings & inter-entity loans |
| 1A | GST on Sales | GST on your sales (if they’re subject to GST) should be 1/11 of the Sales reported at G1 |
| 1B | GST on expenses | GST free expenses include bank fees, third party insurance & stamp duty. All other expenses subject to GST should be 1/11 of the gross expense. |
| Interest
Owner drawings ATO payments Inter-entity loans Superannuation |
PAYG Withholding
| Item | Description | Tip |
| W1 | Total Salary, wages & other payments | Include wages, director fees, certain allowances, employment termination payments & leave payments.
Do not include salary sacrifice payments, superannuation, foreign interest & dividends |
| W2 | Amounts withheld from salary, wages & other payments | Include amounts withheld from the payments reported at W1. For more information refer to ATO’s website here. |
| W3 | Amounts withheld where no ABN is quoted | If a supplier does not quote their ABN (such as a tax invoice) you will generally be required to withhold 49% of the invoice payment |
PAYG Instalment
The ATO may require you to make payments toward your income tax liability.
The BAS allows you to select between two options:
1. Instalment Amount – This is automatically calculated based on the last tax return you lodged.
2. Instalment Rate – This allows you to calculate the instalment rate based on your expected income tax liability at the end of the financial year.
If you require assistance in completing your Business Activity Statements call Optima Partners today at 0862672200
