The ATO has recognised that there are too many labels to complete on the BAS – you can see just how many if you check out my blog series on BAS Labels – way too many! So, to make things easier for small business, a new “simpler BAS” will be introduced from 1 July 2017. It has been designed to help businesses reduce the time spent on BAS compliance and its associated costs. So how exactly does the “Simpler BAS” work and will it actually simplify our business lives? I’m not so sure…….
Firstly, some facts – what you need to know about the Simpler BAS
- Simpler BAS will be introduced from 1 July 2017 (although newly registered businesses can opt-in from 19 January 2017).
- If your business is a small business i.e. has a turnover below $10M, then it will be eligible for Simpler BAS.
- Simpler BAS is NOT compulsory.
- The requirement to report Export Sales (G2), other GST Free Sales (G3), Capital Purchases (G10) and Non-Capital Purchases (G11) will be removed.
- The Simpler BAS will only require you to report GST on Sales (1A), GST on Purchases (1B) and your Total Sales (G1)
- In your chosen accounting software, you will only need to use two tax codes: GST or No GST
- Software providers like MYOB, Sage, Intuit Australia, Reckon and Xero are working with the ATO to ensure the transition for its users is as smooth as possible.
- Your software provider will make the relative changes required and will provide the necessary training and support to ensure you understand how to use the software for Simpler BAS purposes (Of course, if you engage the help of a wonderful BAS or Tax Agent like us, then that professional will no doubt assist you when the time comes!).
- Use of the Simpler BAS does not mean that you no longer need to engage a BAS or Tax Agent to prepare your BAS. From the Institute of Certified Bookkeepers May 2016 Newsletter – [highlight color=”yellow”] “The underlying GST law is not changing – only the reporting. Someone still has to explain to a business how GST applies to them and then check whether the business has been getting it right.” [/highlight]
- Like to see videos to help explain things? Okay, here’s a link to the ATO video about Simpler BAS.
And here’s what I think……
It’s great that the ATO are actively looking for ways to assist small business in terms of tax compliance. Businesses have long complained that dealing with GST and BAS is a burden they just don’t need and now the ATO are listening and making changes by way of introduction of the Simpler BAS. But is this enough? I’m not so sure.
Filling in the labels of a BAS is the easy part of the whole process. Whether you have 10 or only 3 labels to complete, the time involved is minimal, so I’m not sure how this actually saves small business time as claimed by the ATO. The process required to attain the figures for the BAS is still the same – data still needs to be processed and decisions made as to whether or not GST applies. Yes, having fewer tax codes to choose from will make the data entry aspect easier but essentially, the work involved has not changed, therefore the time element remains the same, so in my opinion, Simpler BAS does not help small business very much.
So what do I think would help reduce GST/BAS compliance stress?
MAKE GST LAW SIMPLER
If government truly wants to make GST and BAS simpler, then GST Law needs to change. It is just too complicated and convoluted. Applying and interpreting GST Law to business data and getting it right is the issue for small business, not filling in the BAS form – as I said, that’s the easy part and anyone can do it. The difficult part for business owners is knowing how/when to apply GST to their business data in order to produce correct BAS figures. I belong to various Facebook groups for bookkeepers and not a day goes by that I don’t see a bookkeeper or BAS Agent querying whether or not GST applies to this or that – so if professionals like me who are supposed to know this stuff can’t work it out, how the hell are small business owners supposed to get it right? There are special rules for food, government charges, car registrations, insurance, health services, education services and the list goes on. It’s just too hard. In my opinion, what would really help small business (and tax professionals too), is a drastic change to GST Law – instead of this complicated array of GST rules across so many variables and industries, it should just be
GST APPLIES TO EVERYTHING
Imagine how easy bookkeeping for small business would be if everything we purchased included GST. Suddenly only one tax code would be needed and the questions about whether GST applies or not would be irrelevant. The figures produced for the BAS would actually be correct! Yes, I can hear you say that if this happened, me and many other BAS Agents would probably be out of a job! However, that issue aside, I believe that if the ATO really wants to help small business in terms of GST tax compliance, then this is what needs to happen. Simpler BAS is just simpler in name in my opinion. What we really need is simpler bookkeeping/processing for BAS. What we really need is simpler GST Law.