Navigating tax in Australia can often be a daunting task for businesses of all sizes.

Among the many terms and acronyms thrown around in the realm of tax, accounting, and bookkeeping, two that frequently surface are BAS and IAS.

While they may seem similar at first glance, understanding the nuances between BAS (Business Activity Statement) and IAS (Instalment Activity Statement) is crucial for businesses to fulfil their tax obligations accurately and efficiently.

In this blog post, we’ll delve into the fundamental differences between BAS and IAS, shedding light on their purposes, requirements, and implications for businesses. We hope that this blog will help educate and empower you to streamline your tax compliance processes.

If you have any questions or need a helping hand, we invite you to get in touch with our qualified BAS & IAS accountants.

Defining BAS & IAS

What is BAS?

The Business Activity Statement (BAS) is a key document used by Australian businesses to report and pay various taxes.

This includes Goods and Services Tax (GST), Pay As You Go (PAYG) withholding tax, and other tax obligations.

It’s typically lodged monthly or quarterly, depending on the business’s turnover and reporting requirements set by the ATO. The BAS provides a comprehensive snapshot of a business’s financial transactions during a specific period.

What is IAS?

The Instalment Activity Statement (IAS) is another essential document used by businesses to report and pay their PAYG withholding and/or income tax liabilities in instalments throughout the financial year.

It is typically lodged monthly, with the exception of PAYG which is reported quarterly.

The IAS allows businesses to manage their income tax obligations efficiently by spreading payments over the course of the year, helping to prevent large lump sum payments at tax time. If reported monthly wages are over the ATO determined threshold, PAYG withholding could also be reported on the IAS.

OK, so what’s the difference?

The main difference between BAS and IAS lies in the taxes they cover.

BAS primarily deals with reporting and paying taxes such as GST, PAYG withholding tax, and other indirect taxes.

On the other hand, IAS focuses specifically on reporting and paying income tax instalments throughout the financial year or PAYG withholding if over the monthly threshold.

While both are crucial for tax compliance, BAS addresses indirect taxes eg. GST, while IAS deals specifically with income tax instalments and PAYG withholding.

In short:

BAS:

• Covers GST, PAYG withholding tax, and other indirect taxes
• Can be lodged monthly or quarterly
• Provides a snapshot of a business’s financial transactions

IAS:

• Specifically addresses PAYG withholding and income tax instalments
• Similarly, can be lodged monthly or quarterly
• Helps businesses manage PAYG withholding and income tax payments throughout the year

Both the BAS and IAS can be lodged by you or your accountant.

How do accountants prepare and lodge BAS & IAS?

Lodging your BAS

Purpose: Reporting and paying various indirect taxes, including GST and PAYG withholding tax.

1. Gather financial records and transaction data for the reporting period
2. Calculate GST collected and paid, as well as PAYG withholding tax
3. Complete the BAS form online using the ATO’s Business Portal or through accounting software
4. Verify information and ensure all necessary fields are filled accurately
5. Lodge the BAS by the due date (either monthly or quarterly), along with any payment required

Lodging your IAS

Purpose: Reporting and paying PAYG withholding and income tax instalments throughout the financial year.

1. If applicable, review PAYG withheld on the payroll reports in accounting software
2. Estimate the business’s expected income and tax liability for the current financial year
3. Calculate the instalment amount based on the estimated tax liability and ATO guidelines
4. Complete the IAS on the ATO portal or use your qualified BAS agent to lodge this on your behalf
5. Verify the information and ensure all necessary fields are filled accurately, including income estimates and applicable credits
6. Lodge the IAS by the due date either monthly or quarterly

What else should you know about BAS & IAS?

1. BAS covers GST, PAYG withholding tax, and other indirect taxes, while IAS deals specifically with income tax instalments
2. BAS requires reporting on sales, purchases, and expenses, whereas IAS estimates future income tax liabilities and payments
3. BAS helps track and manage GST obligations
4. BAS is crucial for businesses with a GST turnover of $75,000 or more, whereas IAS is applicable to businesses with varying income tax obligations
5. BAS is filed based on actual financial data for a specific period, while IAS requires businesses to estimate their future income and tax liabilities periodically
6. Both BAS and IAS can be lodged monthly or quarterly, ensuring compliance with Australian tax laws and regulations

Choosing a BAS accountant

Navigating BAS and IAS requirements can be daunting for business owners – but it doesn’t have to be. Remember that not everyone has the time, knowledge, or desire to manage tax obligations independently. And that’s OK!

Our highly experienced BAS & IAS accountants offer expertise to alleviate the burden and ensure seamless tax compliance. Choose professional assistance for peace of mind.

If you’d like to speak to a tax and accounting professional, we invite you to get in touch with Bruce Edmunds & Associates today. Give us a call on (03) 9589 5488 or get in touch online – we’d love to chat.