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Simpler BAS and implications on businesses

Business Activity Statements (BAS) reporting has often been a time consuming and complex process for many small and medium enterprises (SMEs) since goods and service tax (GST) was introduced in 2010. The Australian Taxation Office (ATO) is introducing Simpler BAS for SMEs to reduce the reporting burden. If your annual turnover is less than $10 million, you will report GST on Simpler BAS (unless you report GST by installment).

SMEs who use Simpler BAS will be required to report for the following fields only;

  1. G1 Total sales
  2. 1A GST on sales
  3. 1B GST on purchases

In other words, SMEs are no longer required to report the following fields;

  1. G2 Export sales
  2. G3 GST free sales
  3. G10 Capital purchases
  4. G11 Non-capital purchases

This means that businesses will need only three GST codes instead of seven when reporting BAS. This will not only save time for business owner, accountant & bookkeeper but also reduce room for error….less is more!

However, please be aware that Simpler BAS only affects the GST field, that is, other BAS fields such as PAYG instalment, PAYG withholding and luxury car tax remain unchanged.  Also this does not change the frequency of BAS submissions.

Although this change will reduce the time to complete the BAS and simplifies recording GST information, the change will not significantly change the amount of work performed to get all GST number right! Please do not sacrifice the time that you spend on GST reconciliations as it mean creating more room for mistake. GST still has to be recorded in the correct manner as the underlying GST law has not changed, at Tailored Accounts, we are actually spending the time saving on report to build more layer of GST reconciliation to ensure that our quality assurance is maintained.

While the change is likely to only provide a small reduction in the reporting burden, this certainly has some effects on the setup & function of your accounting department. Not all the accounting software fully supports this change or will require some adjustments or variations. If you need any support in regards to Simpler BAS, please contact Tailored Accounts.

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