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Some businesses report GST (and other connected taxes) quarterly and some report monthly. In some circumstances, a business may only report annually. There are various reasons for the reporting cycle differences. In this blog, I will explain why a business may be directed to report monthly.
Monthly GST reporting means lodging a BAS every month, usually by the 21st of the following month. Even if there is nothing to report, a nil BAS still needs to be lodged. For businesses with GST turnover of $20 million or more, monthly reporting is compulsory. For businesses under that threshold, it is usually a choice, and some owners prefer it because smaller, more regular payments can be easier to manage.
The part catching attention right now is that the ATO can also direct a small business to move from quarterly to monthly GST reporting. This can happen where there is a poor compliance history, such as late lodgments, late payments or incorrect reporting. The ATO has already used this approach in its compliance campaign and has indicated it will continue doing so where appropriate. In other words, this is not something to brush off and hope disappears on its own.
If a letter from the ATO arrives, read it carefully and check the start date straight away. Make sure your bookkeeping is up to date, your BAS process can handle monthly lodgments, and your cash flow can cope with more frequent payments. If you think the decision is wrong, you generally have 60 days to lodge an objection, so it is important to act quickly rather than ignore the letter.
If the ATO moves your business to monthly reporting, the change must generally stay in place for at least 12 months. After that, you may be able to ask to return to quarterly reporting, but only if the reasons for the change no longer apply.
Note, if you receive a letter from the ATO directing you to move from quarterly to monthly reporting, don’t panic. This does not mean you are paying more GST. It simply means reporting and paying the same GST more often. For many business owners, that is the part that matters most — the rules may change, but the tax itself does not suddenly increase.
The big takeaway here is that monthly GST reporting is really about compliance, timing and staying organised. If you are unsure what the change means for your business, getting advice early can make the transition far less stressful. If you would like help reviewing your BAS cycle or bookkeeping processes, get in contact with us and book an appointment.
This blog post is general information only and is not personal tax, financial or legal advice.
