The ATO has realised there are too many labels to complete on the BAS (Just on the GST side of things there are 24 different labels, and that does not include Wages, Provision for Income Tax, Fuel Tax Credits, etc!) […]
The ATO has realised there are too many labels to complete on the BAS (Just on the GST side of things there are 24 different labels, and that does not include Wages, Provision for Income Tax, Fuel Tax Credits, etc!) So, the “simpler BAS” will be introduced from 1 July 2017 for small businesses (turnover below $10M), it is not compulsory, but if used it will mean that some of the information currently reported on the BAS will no longer be required.
How exactly does the “Simpler BAS” work and will it actually simplify our business lives?
With the simpler BAS you will only need to report to the ATO:
Some businesses will also have other obligations they have to report on the BAS such as: Pay as You Go instalments (the T fields), Pay as You Go withholding (the W fields) or other taxes such as Luxury car tax, Fuel tax credits or others. If you have additional reporting obligations, you’ll report them on your Simpler BAS, just as you did before.
Here is a link to the ATO’s video on the Simpler BAS, if you would like to watch a video on the subject.
In your accounting software you will only need to have two GST tax codes – “GST” or “NO GST”, which isn’t that different from what you have currently – if you are doing your own bookwork, you would probably be only using “GST on Expenses” and “GST Free Expenses” when entering things you have bought.
Software companies are busy implementing these changes and ensuring the transition will be as smooth as possible. We will let you know once these changes have been finalised and send out some training information on how to process transactions.
Use of the Simpler BAS does not mean that you no longer need to engage a BAS or Tax Agent to prepare your BAS. From the Institute of Certified Bookkeepers May 2016 Newsletter – “The underlying GST law is not changing – only the reporting. Someone still has to explain to a business how GST applies to them and then check whether the business has been getting it right.”
Basically the ONLY thing that has really changed is that instead of needing to report 7 GST boxes on the BAS, we will only need to report 3. The requirement to make sure that you are reporting the correct amount of GST still remains the same, and hence the importance of getting your bookwork reviewed by a professional BAS or Tax Agent has not changed.
The ATO’s claim that this is going to save small businesses time on compliance, I don’t actually think is true. The majority of our clients current bookwork processing (or our processing for them), will change very little – as mostly everyone codes transactions with GST or as GST Free (two options). The trick is still to know when a transaction should or should not have GST on it – and hence have someone checking that you are claiming the correct amount of GST. Which again is no different to what is currently happening. The reduced reporting of the GST on the BAS will make very little difference, because that is not the time consuming part of the process.
Here is a link to the ATO’s ‘simpler’ BAS/GST Bookkeeping Guide – just in case you now think your bookkeeping is going to be a ‘simple’ process!
What would help make the BAS simpler?
In our opinion, the ATO’s simpler BAS does very little to help small business – where they need to go with this ‘simpler BAS’ program is to actually make it easier for small businesses to know what has GST on it and was does not have GST on it. There are special rules for food, gift vouchers, deposits, government charges, car registrations, insurance, health services, education services, overseas purchases and the list goes on. So in order for the BAS to be truly ‘simpler’ the GST laws need to be changed so that businesses can easily identify what has and has not got GST on it!