Understanding the Simplified BAS legislation

Cheryl Knight
WiseClick Director
Partner Carbon Balcatta

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Simplified BAS – the new rules

The New Simplified BAS legislation commenced on the 1st July 2017, therefore affecting the Sept 17 quarter BAS lodgements.

I thought I would update you on what this mean for business owners and bookkeepers.

Why now after all this time?

The aim is to reduce time and stress and compliance costs for the business owner.

What are the changes?

From 1st July 2017 most small business will only need to report these fields in relation to the GST. All other fields such as Wages and FBT, Fuel Tax Credits will stay the same:

  • G1 – Total Income
  • 1A – GST Collected
  • 1B – GST Paid

What fields have been removed?

  • G2 – Export Sales
  • G3 – GST Free Sales
  • G10 – Capital Purchases
  • G11 – Non Capital Purchases

Do I have to make changes, I am happy with the way I am doing my BAS?

The main software packages that we are working with (MYOB, Xero) have let us choose how we want to print the BAS reports, in the old detailed format or as the new cut down version. So the answer is NO you don’t have to change anything in the way you prepare your BAS. You just might have a few less fields to type into your ATO Portal when you are ready to lodge

Some bookkeepers have decided to not change the tax codes that they use and to still work in detail so that they can better check the accuracy of the data.

When I have discussed with my staff and other bookkeepers I have gone with the option of “whatever is quicker at the time” . This change was enacted to save us all time and stress!

To explain more –

  1. For us to go into every client and change the software setup would take us a lot of work so we don’t make this change.
  2. If we have to make a decision on a transaction such as “Should this be coded as GST Free or Input Taxed?” Then my answer is to start to reduce the codes that you use. We would choose “GST Free”.
  3. I now see all transaction in bookkeeping as being either Taxable or Non Taxable but we are still using our existing software setups and will slowly change these over time as needed

What Tax Codes are now important to me?

As per my above explanation, if something is slowing you down with your data entry and you are not sure how to code the transaction then think of it like this. Keep it simple!!

  • Taxable (MYOB - GST, Xero - GST on Income, GST on Expenses)
  • Non Taxable (MYOB – N-T, Xero – BAS Excluded)

Who does the Simplified BAS apply to?

Any Small Business Entity* can now report using the Simplified BAS.

* On the  1st July 2017, the turnover limit for a Small Business Entity went up from a turnover of 2 million to now include all business with a turnover of up to 10 million.

Should my bookkeeping fees reduce?

Carbon Bookkeeping has been working within the New Simplified BAS system from 1st July. During our preparation of the September BAS we didn’t find any huge time savings. The reason for this was that all of our accounting software’s are already setup PLUS all of our staff are fully trained and understand the old complex system. In other words, we still need to have a tax code on each transaction that we enter so we are doing just as much work as before.

I do, however, see that calls from our clients regarding which tax code to use will reduce and save us some time in training hours for our existing clients. Effectively the tax codes that they need to pick from has now reduced from a choice of say eight tax codes down to a choice of two tax codes – Taxable or Non Taxable.

The real savings will be into the future as new business owners learn about the GST and how to code business transactions. Prior to the Simplified BAS, trying to explain the multitude of BAS; we came across a situation where their eyes glassed over once they saw the complexity of the BAS form. New business owners would also lose interest when we showed them a list of 6-10 tax codes to pick from when entering data. The new training scope for us will be just to train what is taxable and what transactions don’t have tax on them and how to deal with them.

Summary

Overall, any change for simplification is a very positive move. We deal with businesses every day and there are so many bases that the owners need to cover and understand as they are growing their business. It’s always the best idea to know how to do the bookkeeping for your own business even if you get someone else to do most of the work.  At the end of the day the owner has to learn these tax laws and how to report them, so we feel that this new legislation is a GREAT STEP FORWARD!!

Until next month, keep well.

Cheryl

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