GST & BAS

The ATO has decided that small businesses with a history of non-payment, late or non-lodgement or incorrect reporting, will be moved from quarterly to monthly GST reporting i.e. a monthly BAS.

The ATO will begin this process from 1 April 2025 and will start with around 3,500 small businesses (and no, this is not an April’s Fool joke!). Those businesses affected will need to remain on the monthly cycle for a minimum of 12 months.

The ATO believes that this new protocol will help small businesses to comply with their tax obligations because they will need to be more organised in terms of bookkeeping to lodge a monthly BAS. The ATO also thinks that this will assist cash flow given business owners will need to pay smaller amounts more regularly.

If small business owners continue to ignore their tax debts and compliance obligations, it is not a question of “if” but “when” they will hear from the ATO. From the ATO Deputy Commissioner, Will Day:

‘We take our role seriously and are committed to supporting viable small businesses to comply with their ATO obligations, while also taking firmer action on those who are deliberately not complying to ensure they aren’t getting an unfair advantage. If you’re a small business who continues to deliberately disregard your obligations, you can expect the ATO to move you to more frequent GST reporting’.

The ATO will contact small business owners and their tax professionals if BAS reporting needs to move to a monthly cycle. There will be a review process in place for those small business owners who believe they do not have a history of non-compliance.

If you own a small business and are non-compliant, expect to move to monthly BAS lodgements soon. Contact your tax professional or the ATO ASAP to discuss, as the impact on your business finances and processes will be significant!

My Thoughts

I fully support the ATO’s efforts to recover long-standing tax debts and understand that non-compliance gives some an unfair advantage over those who follow the rules. However, this protocol might worsen the situation for some small business owners. Here are some issues I believe may arise from this ATO campaign:

• Monthly BAS lodgers must lodge and pay by the 21st of each month, losing the extension given to quarterly online lodgers, who get an extra month. While this could encourage better organisation in bookkeeping and cash flow, it might also lead to more disorganisation and increased tax debt for some. A better idea perhaps, would be to allow business owners to remain on a quarterly cycle but disallow the lodgement extension. That way, they are still forced to be more organised and pay more regularly, but without the onerous task of doing so monthly.
• Those business owners on a current ATO payment arrangement may need to re-negotiate if they are expected to pay a monthly BAS on top of other tax debt. This is because all current and future BAS must be paid on time in order to retain the payment arrangement. This may be quite difficult for some, but I guess this is what the ATO are trying to achieve – pulling in tax revenue more regularly and on time.
• Businesses using tax professionals will face higher costs, paying for 12 BAS lodgements per year instead of 4. This increase in bookkeeping/accounting fees will add further financial stress. Some business owners might choose to handle it themselves to save money. While this works for those familiar with accounting, it could result in messy accounts and BAS reporting errors for others.
• As a bookkeeper/BAS Agent, I’ve noticed that non-compliant clients are often not great business owners. They are disorganised and need constant reminders, which is already challenging on a quarterly cycle. Doing this monthly would be even more frustrating, likely leading to strained relationships and parting ways with clients.

I hope the ATO has considered these implications. While monthly reporting might help some, it could increase financial stress and non-compliance for others.

I do believe some business owners shouldn’t be in business, especially those who think they’re above the law. In my opinion, they should be closed down and made to repay their debts over time. This ATO measure might help, but perhaps more decisive action, like forced business closure (or the threat thereof), is needed.