BAS and reporting
Monthly BAS
A monthly BAS is a Business Activity Statement lodged every month, required for businesses above a high turnover threshold and available by choice to others who want faster refunds or tighter control.
A monthly BAS covers a single calendar month and is lodged and paid soon after the month ends, generally by the 21st day of the following month. Businesses with a very large GST turnover, set by the ATO and currently in the tens of millions of dollars, must report monthly. Other businesses may choose it, and some are required to move to monthly reporting by the ATO in particular circumstances.
Why would a smaller business choose to report monthly? The main reason is cash flow. A business that regularly pays more GST credits than it collects, such as an exporter, a new business buying lots of equipment or a business with seasonal stock purchases, is generally entitled to a refund each period. Reporting monthly gets those refunds back sooner than waiting for the end of the quarter.
Monthly reporting also helps businesses that want tighter control. Bookkeeping is done more often, errors are found earlier, and the GST liability never grows large enough to cause a cash shock. The trade-off is more frequent work, with twelve lodgments each year instead of four, and tighter deadlines. A solid bookkeeping routine or help from a registered agent is almost essential.
The mechanics are the same as for other cycles. You report GST on sales, GST credits on purchases, and any PAYG withholding for that month. Because the periods are short, the timing of invoices becomes more noticeable, particularly if you use accrual accounting where invoices fall into the month they are issued, rather than when they are paid.
To change to monthly reporting, you generally contact the ATO or update your registration details through online services, and the change takes effect from a set start date. Be aware that you may not be able to switch back immediately, and the rules for moving between cycles change from time to time. Check the current rules before deciding.
A common misunderstanding is that the monthly due date lines up with the quarterly one. It does not, and a missed monthly date can attract the same failure to lodge penalty and general interest charge as any other. Keep records for five years. This is general information only, so confirm the best cycle for your business with the ATO or a registered tax professional.
Worked example
Oscar imports specialty tea and buys large amounts of stock early in the year. In January he buys stock for $55,000 including GST, giving credits of $5,000 (55,000 divided by 11), while his sales for the month only include GST of $1,800. Reporting monthly, his net position is a refund of $3,200, which the ATO can process promptly, instead of waiting until the end of the quarter.
Practical tips
- Consider monthly reporting if you regularly receive GST refunds, since it brings the money back sooner.
- Only choose it if your bookkeeping can keep up, because twelve lodgments a year is more work than four.
- Check the current rules before switching, because you may not be able to change back straight away.