BAS and GST Credits: Estimate Your Quarter

From your books to the GST labels

G1 Total sales is every sale of the period, GST included, taxable or not. 1A GST on sales is the GST in your taxable sales: one-eleventh of their GST-inclusive total. 1B GST on purchases is the credits you are entitled to: one-eleventh of the GST-inclusive cost of purchases made for your business from GST-registered suppliers, reduced to the business share when the purchase is also used privately. The net amount is 1A minus 1B. If 1B is larger, the ATO owes you the difference.

Under the simpler BAS reporting that most small businesses use, those are the GST labels you complete. Larger businesses report more detail about their purchases. The estimator follows the simpler layout.

What gives you a credit, and what does not

Section 11-5 of the Act defines a creditable acquisition: something you acquire for your business, that was a taxable supply to you, for which you paid or must pay, while you are registered. Each element removes a category of purchases from 1B:

• Not for the business: groceries for the family, a private holiday. No credit.
• Not a taxable supply: bank fees and interest (input-taxed), residential rent (input-taxed), GST-free items such as basic food or most medical services, purchases from a supplier who is not registered. No GST was paid, so none comes back.
• Used to make input-taxed sales: costs of letting a residential property, for instance. Section 11-15 denies the credit when the purchase relates to input-taxed supplies.
• Partly private: car, phone, home internet. Credit limited to the business share (section 11-30).

Keep a tax invoice for any purchase over $82.50 including GST: without it the credit can be refused. Below that amount, the docket is enough.

Quarterly, monthly or annual: the reporting cycle

Due dates of the quarterly GST return

The October to December quarter has a longer deadline, set in the table of section 31-8. Monthly returns are due on the 21st day of the month after the period (section 31-10). Business.gov.au adds that the ATO sends the activity statement about two weeks before the end of the period, and that a nil BAS can be lodged by phone.

Cash or accruals: which quarter a sale belongs to

On the accruals basis, a sale goes in the period you issue the invoice or receive payment, whichever comes first, and a purchase in the period you receive the invoice or pay. On the cash basis, both follow the money. Section 29-40 lets a small business entity choose the cash basis, and business.gov.au describes the concession as open to businesses with aggregated turnover under $10 million. Cash accounting avoids paying GST on invoices your customers have not settled yet, which matters when clients pay at sixty or ninety days.

Three checks before you lodge

1. 1A against sales. 1A should be close to one-eleventh of your taxable sales. If it equals ten per cent of them, the software treated inclusive amounts as exclusive.
2. 1B against tax invoices. Every purchase over $82.50 in 1B should have a tax invoice on file. Missing ones are the most common reason a credit is disallowed.
3. The private share. Car, phone and internet credits at 100% are a red flag unless the asset is genuinely used only for work.

For the GST in individual receipts, the reverse GST calculator separates GST-free items; for a whole invoice, the GST calculator takes each line.