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How to Calculate Your BAS & GST

How to Calculate Your BAS & GST

Managing your BAS is a critical aspect of bookkeeping and crucial to the continued existence of any business. However, understanding BAS can be a challenging task if you’re a small business owner or new to running a business.

Here, we provide a complete coverage of how to calculate BAS, GST, and everything else you need to know for tax time. Complete knowledge of filing key business reports can help ensure your business stays compliant while helping you get concessions where possible.

As a business owner juggling many tasks, you may find yourself scratching your head at times. If you want to prevent errors leading to penalties and wish to focus on running your business, you should consider hiring a registered BAS agent to complete the task for you.

What is BAS?

The Business Activity Statement (BAS) is a comprehensive tax report you submit to the Australian Taxation Office (ATO) monthly, quarterly or yearly. Businesses complete the BAS to report and pay Goods and Services Tax (GST) and all other relevant business taxes. Every Australian business registered for GST needs to lodge the form at the ATO.

The ATO mandates BAS as a tax reporting requirement and has been allowing small businesses to use a simpler BAS system since 2017, making the process easier and faster. Managing BAS can help business owners monitor business finances: tracking your income and expenses lets you calculate GST and other BAS liabilities.

The option of quarterly submissions in BAS means you can break down a bigger job of tracking with the convenience of doing the submission four times a year. You can use the quarterly method to your advantage, for making minor adjustments, including setting aside the right amount of money for payment and making observations a few times a year. Since you’re collecting money for the ATO daily, tracking the activity can help you understand the likely tax liability.

A BAS form serves several purposes, including reporting and paying:

  • Goods & Services tax (GST)

  • Pay-As-You-Go (PAYG) Income Tax Instalments

  • PAYG Withholding Taxation 

  • Fringe Benefits Tax (FBT) Instalments

  • Fuel Tax Credits 

  • Wine Equalisation Tax (WET) 

  • Luxury Car Tax (LCT)

What is GST?

GST stands for Goods and Services Tax, which applies to the prices of most products and services in Australia. Your business collects the current rate of 10% GST for the government any time you sell your items or services and receive revenue in return.

The collected GST is used by the government in various public works and development. It is eventually distributed across states to help pay for infrastructure and public services, such as public schools, roads, hospitals etc.

GST came into existence in July 2000, replacing multiple levies, duties and taxes by the state and federal governments. Customers who are the end-users of products and on the receiving end of a transaction are the ones paying GST.

Despite the levying of GST,  most basic foods, some medical, health products and some education courses happen to be GST-free for ease of the consumer. In addition, as a small business owner it may help to know that selling a business as a going concern is GST-free as long as conditions for GST-free sale are met.

After registering for GST, the ATO sends you a BAS form to complete which makes bookkeeping, BAS preparation and lodging less complicated. Some other perks of BAS GST reporting also include:

  • Fewer GST classification codes

  • No need to split your purchases into non-capital and capital

  • GST-taxable and non-taxable purchases are a single bookkeeping entry

  • Setting up accounting software is easy and automation effortless

Who is Eligible for BAS and GST?

Only those who register for GST are eligible to submit BAS. Plus, you only register for GST once—even if you’re operating multiple businesses.

However, the good news is that not everyone has to register for GST unless:

  • Your business is generating a minimum gross income of over $75,000 a year

  • You’re running a non-profit organisation with a gross income of over $150,000 a year

  • You are a Taxi driver or individual offering rideshare services regardless of the turnover—or whether you rent or own the vehicle

  • You intend to claim future fuel tax credits

Businesses under the threshold can register for GST voluntarily as well. However, failure to register and collect GST can land you in legal difficulty and GST registration comes with both benefits and extra conditions to consider. So if you’re not yet eligible, weigh your options before registering for GST.

If you are eligible for GST, take note of the timelines of registration:

  • You have 21 days to apply once you reach the required threshold

  • You must stay registered for a minimum of 12 months

Registration is unnecessary if your business is in its early stages. But it’s a legal requirement to register for GST once the money comes in. After registering for GST and an Australian Business Number (ABN), the ATO will let you know when to lodge your BAS. You can check out the link to the ATO Business Portal for further information and access to GST registration.

What are BAS Timelines & Due Dates?

You have specific lodgement dates that you need to meet for quarterly returns. The BAS due dates applicable for the 2022/23 financial year are:

Quarter

Quarterly Return Periods

Due Date Before

1

1 July 2022 to 30 September 

28 October 2022

2

1 October 2022 to 31 December 2022

28 February 2023

3

1 January 2023 to 31 March 2023

28 April 2023

4

1 April 2023 to 30 June 2023

28 July 2023


The BAS payment due dates depend on your reporting cycle, and your business’ annual GST turnover determines the cycle. Small businesses with less activity to report usually have quarterly or annual payment dates.

Other business size considerations include:

  • Businesses with an annual GST turnover of $20 million and less report quarterly—unless the ATO informs them otherwise

  • An annual GST turnover of over $20 million means your BAS is due monthly

  • Businesses that voluntarily register for GST and have a turnover of less than $75,000 report annually— whereas the limit for not-for-profit organisations is $150,000

BAS GST Cycles

For better understanding, also keep the following timelines in mind when managing BAS. 

  • Quarterly: Businesses on a quarterly BAS schedule have the next due date on the 28th day of the month after the financial quarter. However, the second quarter that ends in December has the reporting deadline for February.

  • Monthly: Business lodging monthly BAS have the next due date on the 21st day of the following month.

  • Annually: Businesses that fall into the annual BAS due dates category have up to 31st October. A business that doesn’t need to lodge a tax return has a due date of 28th February after the annual tax period.

Changing Your GST Payment Cycle

You can change your GST cycle depending on your circumstances. Some reasons for changing the cycle include:

  • You are experiencing GST turnover changes

  • You are opting to report and pay using a different cycle

  • After a natural disaster

  • When the date falls on a public holiday or weekend

Changing the cycle early in your lodgement period allows for commencing the new schedule right away. Otherwise, the new cycle takes effect at the start of the next quarter or year.

How to Do BAS

Once you clearly understand BAS, GST, their eligibility and timeline, the next step is to calculate GST and to do a BAS statement—which we explain separately here.

Hiring a BAS agent for this task can help extend deadlines for GST & BAS, which is not the case if you choose to submit BAS on your own. If you have BAS lodgements running late, you can consider outsourced bookkeeping services as a viable option.

Calculating GST

Businesses have various methods of recording and calculating GST. Some prefer comprehensive excel spreadsheets, while others are comfortable using payment and invoicing systems.

Keep an eye on your GST calculations for BAS statements with the ATO GST Calculation Worksheet. The worksheet is ideal if you don’t have software generated BAS forms and want a link from the BAS return and accounting system reports. You don’t have to lodge it with your BAS, but can file it with a copy of the BAS it is relevant to. The worksheet is for filling out online though some browsers don’t allow this. Instead, you can download the form to your desktop, open it with a PDF viewer, and fill in the fields. Print the complete file and file it with your records.

Businesses can also calculate GST directly from their accounting records. The formula for finding GST is P x 0.1 = G, where P is the original price, G is the GST amount, and 0.1 is the converted form of 10%.

The GST reporting and payment periods are mentioned in the BAS and as discussed previously, your schedule can be monthly, quarterly, or annually. To make things easier, you can also use this GST calculator to work out your GST.

Accounting Method

A critical part of the BAS calculation is the accounting method you’re using. The two methods for calculating your GST are cash and accrual.

The cash accounting method involves tracking cash flows [cash inflow and outflow from your business]. This strategy does not require recording the invoice cost until you pay for it. Plus, you don’t record a sale until you receive payment on an invoice you send out.

The accrual accounting method records sales and expenses as they take place, instead of when cash changes hands. For example, the invoice you send out on Monday appears in your books the same day—even without receiving the money. An accrual account shows how much amount is owed and what you owe others.

The best method for your business depends on:

  • The business size

  • Complexity of transactions

  • Accounting and bookkeeping resources you have

Accounting for GST using the cash accounting method considers the transactions you’ve made and you should choose this method if you run a small business that handles cash. Accrual accounting is more complicated and suitable for businesses that don’t receive payments right away. The system helps track the true financial position of your business because you have a clear picture of the money you owe and owed to you. Use this method if you’re running a business that handles contracts and large transactions and use the first tax period when you issue the invoice relating to a sale or payment when accounting for GST.

Preparing BAS

BAS is personalised to each business, depending on your GST registration details. So, you must report using the form you receive from the ATO.

Fortunately, most BAS lodgement occurs online. This method makes it easy to get help while completing the form. You also get an extra two weeks to lodge and pay your quarterly BAS when you lodge online.

Make sure to include the following minimum information for a simple BAS:

  • The GST amount you owe (or are claiming)

  • The PAYG tax you withhold from your salary and wages of employees

  • GST payment variations in case of mistakes in a previous BAS or when accounting for cancelled sales, rebates, and bad debts

  • PAYG tax payment from an error during in an earlier return

  • The total amount you are remitting to the ATO

  • Additional: Larger businesses may also report on Fringe Benefits Tax, Luxury Car Tax, Wine Equalisation Tax and Fuel Tax Credits.

You can prepare BAS in several ways, including:

  • Calculate and report quarterly—An option for all quarterly businesses. You calculate and report the GST labels in your BAS and pay GST each quarter. 

  • Calculate quarterly and report annually—You calculate and pay the GST amounts quarterly, but report only the collected and paid GST annually. 

  • Pay instalment amount and report annually—The method lets you pay the ATO mandated GST amount in quarterly instalments. The ATO expects you to complete and lodge an annual GST reconciliation report. 

  • PAYG income tax instalment—Pay-As-You-Go instalments you pay in incremental amounts towards your end-year income tax liability. 

What are BAS Errors and Adjustments?

Rectifying a mistake on your previous BAS differs from an adjustment. A BAS error or mistake is when you enter the wrong amount during lodgement. An adjustment is a change in purchase or sale that was correct at the time of lodging.

Examples of BAS mistakes are:

  • Categorising a GST-free purchase or sale as taxable

  • Counting some purchases twice

  • Errors while exporting or typing in the data

  • Classifying a taxable purchase or sale as GST-free

Examples that require an adjustment include:

  • When the price of a purchase or sale changes

  • When you return the goods or a customer cancels their purchase

You can fix a BAS error or mistake using your next BAS or you can revise the original form. For example, fuel tax credit and GST mistakes are correctable using the next BAS. However, you’ll need to lodge a revision if you cannot correct the error in the next BAS.

What’s Next?

Through this detailed guide, you should now be able to understand and manage doing BAS yourself, including completing your BAS form, collecting GST and claiming credits on your business expenses.

Now that you are done with calculating BAS, the next step is to lodge BAS at the ATO online portal, using your accounting software or via mail even. To avoid errors and gain the maximum BAS lodging benefits for your small to medium business, consider hiring a BAS GST or tax agent as a critical step in lodging your BAS.