Tax in Australia | Differentiating “BAS” & “IAS”

For better understanding of Tax in Australia, we need to understand “BAS & IAS”, in this article we’ll elaborate the differences between these two and also the procedures to lodging procedures.

BAS is the form used to report and pay any business GSTs and pay withholding liabilities for a period. It is used to pay income tax installment and fridge expenses. It allows companies to pay accrued liabilities throughout the year instead of incurring high costs at once at the end of a year. 

BAS reports are due quarterly or according to business schedules as they conduct their audit reports. BAS was introduced in 2000 as a part of the major tax reform. There are a number of BAS that an organization can compete with. It is usually issued quarterly or with different frequencies depending on the business income and can be reported annually. 

BAS involves a bit more details. It includes some of the following details. 

• Goods and services taxes (GST)
• Pay-as-you-go (PAYG) income tax installment 
• Pay-as-you-go (PAYG) withheld tax 
• Fringe benefits tax (FBT) installment 
• Luxury car tax (LCT)
• Wine equalization tax (WET)
• Fuel tax credits

How do companies prepare their BAS?

There are 5 main steps to prepare BAS,

1. Get everything up to date 
2. Print off MYOB reports
3. Check bank balance 
4. Create a profit and loss statement
5. Preparation breeds confidence 

Companies after deciding how to lodge a BAS statement, they complete the form.

Prepare information:

First, companies should make sure they got all the information and proceed with it. Double check the financial transaction, sales and expenses match up with the dates of the reporting period, and that everything they include is a business expense. 

Prepare BAS statement form:

Next, companies need to complete the BAS statement chosen lodgement method. 

Lodge BAS statement on time:

Then the company needs to lodge and pay the BAS statement, making sure to do before the BAS statement due date.

Tax in Australia | BAS Types:

There is a number of different BAS forms that an organization can complete. Business usually receives forms according to their business type. The form that a business receives depends upon the tax liabilities it has, referred to as a role.  

OPERATIONS: Every activity statement has its unique number. These statements can be submitted to the ATO on paper, by phone, electronically via fax, or through the business portal. 

How to lodge BAS statement?

There are a couple of ways to lodge a BAS statement.

Lodging online: companies can lodge their statements online via ATO’s business portal.

Lodging via email: It is also possible to lodge by mailing a completed BAS statement with the pre-addressed envelope included in the BAS package.

Lodging through a tax or BAS agent: If BAS or tax agent is registered, they can lodge or pay on the company’s behalf.

Nothing to report (Nill BAS): If any company doesn’t have anything to report for the period, then the company can lodge BAS as Nil over the phone or online.

Tax in Australia | IAS

IAS stands for Installment activity system, which is usually different from BAS and is used for companies that are not registered for GST. It is used to pay and report paying holdings from employees. Paying income tax installment and fringe benefits tax installment where necessary. 

It may also be necessary for businesses that are registered for GST but because they are considered medium withholders they are required to remit paying withholding monthly on an IAS along with their quarterly BAS obligations.

The IAS is the simpler of the two forms and is issued quarterly.

The IAS mainly applies to individuals with investment income such as rental income, dividends, or interest or to businesses with annual turnover below the minimum $75000 threshold for GST. 

It is very important to recognize that the installment activity statement and business activity statement are separate forms.

Types of IAS:

There are four types of IAS, which are,

IAS N:

This document is for taxpayers who have elected to report and pay an annual PAYG income tax installment.

IAS I:

This document is for taxpayers with the PAYG tax withheld only (Quarterly or monthly)

IAS B:

This document is for taxpayers with the PAYG income tax installment obligation only. Typical users include partners in the partnership and another individual taxpayers who report and pay PAYG income tax installments quarterly. 

IAS J:

This document is for taxpayers with PAYG income tax installment, PAYG tax withheld, and FBT obligations.

How IAS can be received?

The ATO sends the IAS to taxpayers before they need to lodge it.  The statement is personalized, with some parts already completed to save the taxpayer time and effort. 

How to pay IAS statements? 

Correctly complete IAS is mailed and attached is a cheque for any required payment. 

The payment options are.

• E bay 
• Credit card 
• Direct credit 
• Direct debit 
• Mail 
• At Australia Post outlets 
• Via email

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