If I have not made any sales, do I need to lodge a BAS return?

Yes. Even if you have not made any sales, you still need to lodge a BAS return.

Additionally, in just about all cases (including start up businesses) you will have expenses that you can include in your BAS return and get a refund of the GST included in those expenses. (The type of expenses that can be included in your BAS return is often broader than most people think – see more below).

The only exception to the last paragraph is businesses that have started up within a few days of the end of a quarter and have not incurred any expenses (or made any sales) yet. In this case, you still need to lodge a “zero return”. This is a BAS return that shows 0 in all relevant fields.

What is a BAS return?

A BAS return is a return that needs to be lodged with the Tax Office that includes the following information:

  • – Sales made and the GST included in those sales – called “GST on Sales”
  • Business expenses (also called purchases) and the GST included in those purchases – called “GST on purchases” or “GST credits”

Do I need to pay any money with my BAS return?

The difference between the above 2 figures (GST on Sales & GST on Purchases) will determine whether you need to pay money to the Tax Office or get a refund.

If the difference is POSITIVE, then you need to pay that amount to the Tax office.

if the difference is NEGATIVE, then you get a refund

When does a BAS return need to be lodged?

Most businesses need to lodge each quarter for the period to the end of each quarter (ie 31 March, 30 June, 30 Sept and 31 Dec)

The actual time when your BAS return is due in depends on whether you do it yourself or use a tax or bas agent. However, in our experience most businesses find it much easier to complete their BAS return shortly after the end of the quarter when they can still remember their financial transactions.

What is the difference between ‘GST on purchases” and ‘eligible tax deductions’ for tax purposes

Most expenses that can be claimed for tax purposes can also be included as ‘purchases’ in your BAS return with 2 main exceptions:

  1. GST-free goods include:
    • basic food
    • exports
    • some health services

    These purchses do not include GST so you cannot claim any GST back in your BAS return.

  2. Wages paid to employees do not include GST and should not be included as ‘purchases’ in your BAS return.

What are the type of expenses that can be included in your BAS return?

Many people underestimate or dont think about all the expenses that can be claimed or included in your BAS return.

The Tax Office states that:

“…the GST included in the price of things you purchase and use in your business”

Here is a modified version of a list provided by the Tax Office for tax deducitons (most of which apply for GST):

  • Communication – including phones and internet
  • Computers
  • Travel – including eligible motor vehicles
  • Home office
  • Certain education expenses
  • Staff amenities used in your office (including home office)
  • Promotional prizes that you purchase for prospects or clients
Running expenses Deductions for premises or assets you buy or use
Accounting, bookkeeping or BAS preparation
Advertising and marketing
Bank fees and charges
Cars, trucks or other vehicle costs (excluding private use)
Council rates and fees
Electricity, gas, fuel
Establishment costs
Franchise fees (not initial purchase) or royalties
Interest on business loans or overdrafts
Legal fees
Office expenses, stationery
Public liability or income protection insurance
Registrations and licences
Research and development (companies only)
Stock or materials
Phone, communications
Travel (excluding private portion)
Computers and related hardware
Computer operating software
Computer software applications
Depreciation of plant and equipment, cars and trucks
Home-office expenses
Insurances
Lease fees
Loan interest
Rent or lease of business premises
Service and repairs to plant and equipment

What if an expense is used for both business and private purposes?

The Tax office states:

“You are allowed a partial GST credit for the GST you pay in the price of things you use partly for business purposes and partly for private purposes.”

In other words, you need to apportion the expense.

What records do I need to keep to claim GST credits?

The Tax office states:

“To claim GST credits, you must have a valid tax invoice for the goods and services that you purchase for your business. However, you can claim GST credits for business purchases you make up to $82.50 without holding a tax invoice as long as you keep records that support the claim (for example, cash register dockets or receipts). These records will also help you keep track of any GST credits you can claim.”

Note that this is not as difficult as many people think

Motor Vehicles Expenses

For more on what motor vehicle expenses can be claimed, see:
http://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/Vehicle-and-travel-expenses/Car-expenses/

Home Office Expenses

For more on what home office expenses can be claimed, see:
http://www.ato.gov.au/Business/Deductions-for-business/Home-office-expenses/

For businesses that are registered for PAYG (ie employers) your BAS return also needs to show the wages paid to those people and the tax withheld from those wages.

For more on the services that we provide, check out our BAS Return Services