The ATO has responded to business owners’ concerns that the Simpler BAS initiative doesn’t make the process of tax reporting simpler at all.
Following a story on My Business about changes to BAS reporting coming into effect on 1 July 2017, a number of business owners questioned what impact the changes would actually deliver.
“This is a lot of garbage,” declared reader Hilary.
“You still need to record, journal and calculate G10, G11 and G3 to work out 1A and 1B and, of course, T7. So how is this reducing red tape?”
Reader Duncan Smith of Business Advice + Tax responded by saying, “I do agree with Hilary that the time saving may be somewhat insignificant. [However,] removal of the G10 and G11 boxes are a good idea, as these were often incorrectly reported.”
A spokeswoman for the ATO told My Business that Simpler BAS will deliver three key efficiencies for SMEs.
“For bookkeeping purposes, under Simpler BAS there will be fewer complex GST classification codes, and small business bookkeeping will move closer to a simple question of ‘does it have GST or not?’,” she said.
“[Additionally], purchases with both GST and no GST will be easier to capture as a single bookkeeping entry, [and] there will be no requirement to split purchases into capital and non-capital for GST.”
She also noted that taking up Simpler BAS bookkeeping settings is optional for those businesses eligible to use the intiative.
“If a business benefits from detailed GST classifications, they may wish to keep using their accounting software in its current format.”
The ATO spokeswoman also addressed the question of why Simpler BAS is only eligible to businesses with a turnover of less than $10 million.
“Consistent with government policy, the Simpler BAS eligibility threshold has to stay in alignment with the broader small business concession threshold of $10 million,” she said.
“Early consultation with the large market indicated that changes to GST reporting would have high cost impacts to in-house tailored systems.”
Another reader by the name of Victoria said more tangible benefits for SMEs would come from changing the due date for monthly activity statements than from Simpler BAS itself.
“I would find it extremely helpful if the date for reporting and payment of monthly BAS statements was 28th of each month for small business. In our business, we do not charge out a lot of GST, but we do pay a lot of GST, and as the ATO will not allow us to pay our PAYG component quarterly, we cannot afford to carry the cash flow burden this would impose,” said Victoria.
“So we have no choice but to do monthly BAS statements (the PAYG component and GST refund basically cancel each other out). But the impost of having this submitted by 21st or 22nd of each month is extremely stressful, as we are a small business with limited staff resources in the accounting department.”
The ATO spokeswoman declined to comment on why the deadline sits where it does, apart from restipulating the current deadlines “as per legislation”.