INSTALMENT ACTIVITY STATEMENTS (IAS)

Transcription

1 Chapter 5: BAS & IAS INSTALMENT ACTIVITY STATEMENTS (IAS) What is an Instalment Activity Statement? Individual taxpayers, trustees with business income, and businesses not registered for use the Instalment Activity Statement (IAS) to report and pay their obligations and entitlements relating to: Pay As You Go (PAYG) amounts withheld from payments to others. PAYG instalments. Fringe Benefits Tax (FBT) instalments. An IAS is a single form you complete and return to the ATO to report these obligations and entitlements. The IAS replaced a wide range of forms which businesses and certain people not in business had to complete to report their tax obligations and entitlements to the ATO before the introduction of The New Tax System on 1 July However, taxpayers will still need to lodge an annual income tax return and an annual fringe benefits tax return, if applicable. Who should use an Instalment Activity Statement? All businesses and individuals with any of the above-listed tax obligations and entitlements must complete an IAS at the end of each reporting period. The IAS mainly applies to individuals with investment income such as rental income, dividends and/or interest, or to businesses with an annual turnover below the minimum 75,000 registration threshold. It is very important to recognise that the Instalment Activity Statement and Business Activity Statement are separate forms. The Instalment Activity Statement (IAS) is for those taxpayers who are not registered for the goods and services tax (), whereas the Business Activity Statement (BAS) is for taxpayers who are registered for. Also, if you have wine equalisation tax (WET) or luxury car tax (LCT) obligations you need to register for. Therefore, the ATO will then send you a Business Activity Statement (BAS) instead of an Instalment Activity Statement. 38

2 Chapter 5: BAS & IAS Types of Instalment Activity Statement There are four types of IAS. These are: IAS N - This document is for taxpayers who have elected to report and pay an annual PAYG income tax instalment. IAS I - This document is for taxpayers with a PAYG tax withheld only (quarterly or monthly). IAS B - This document is for taxpayers with a PAYG income tax instalment obligation only. Typical users include partners in partnerships and other individual taxpayers who report and pay PAYG income tax instalments quarterly. IAS J - This document is for taxpayers with PAYG income tax instalment, PAYG tax withheld and FBT obligations. Use this document for your record keeping purposes. How do you receive your Instalment Activity Statement? The ATO sends the IAS to taxpayers before they need to lodge it. The statement is personalised, with some parts already completed to save the taxpayer time and effort. Each activity statement has a unique document identification number, which is shown on the front of your IAS. The document ID is used by ATO systems to identify your activity statement during processing. How often do you lodge your Instalment Activity Statement? The ATO will pre-print information on your IAS to show when you have to lodge and the period covered by the activity statement for each of your obligations. Businesses and individuals not registered for with any of PAYG instalment, PAYG withholdings of FBT obligations and entitlements need to complete an IAS either monthly, quarterly or annually. The following tables provide a general summary of how often you need to lodge your IAS: PAYG withholding amounts Annual PAYG withholdings SMALL Up to 25,000. MEDIUM 25,000 up to 1m. LARGE Over 1m. Remittance due Quarterly: On or before the 21st of the month following the period end. Monthly: On or before the 21st of the month following the period end. Monthly: On or before the 21st of the month following the period end. Report required to accompany payment IAS quarterly. IAS monthly. Payments and IAS must be lodged electronically. 39

3 PAYG instalments Annual PAYG instalments Individuals with notional tax of less than 8,000. Individuals deriving primary production income or special professional income. All other entities not using annual instalment. Remittance due Quarterly: On or before the 28th of the month following the period end. i.e. 28 October, 28 February, 28 April and 28 July Quarterly: as above Quarterly: as above Report required to accompany payment IAS quarterly. IAS quarterly. IAS quarterly. FBT instalments FBT instalment. Quarterly: On or before the 28th of the month following the period end. i.e. 28 October, 28 February, 28 April and 28 July IAS quarterly. When do you lodge your Instalment Activity Statement? You need to lodge your completed IAS by the date shown in the top right-hand corner of the front of your activity statement. Make sure you allow enough time for your activity statement and any payment to reach the ATO by the due date. How do you lodge your Instalment Activity Statement? You can lodge your activity statement online via the Internet using the ATO's Business Portal or electronic commerce interface (ECI). These are both fast, convenient and secure ways to lodge your IAS. Registered tax agents and registered BAS service providers can help you prepare and lodge your activity statement. Most tax agents/bas service providers can lodge your activity statement electronically via the electronic lodgment service (ELS). By telephone if you have nothing to report at any label on the IAS. The ATO s telephone service accepts lodgments for activity statements that are up to six months overdue. Otherwise, you can mail your correctly completed IAS to the ATO using the preaddressed envelope provided. 40

4 Chapter 5: BAS & IAS When mailing your IAS, you must use the official form provided by the ATO. Many commercial accounting software products can produce a document very similar in appearance to the official activity statement. While this document is fine for purposes such as record keeping, it must not be mailed to the ATO as a substitute for the official form. How do you work out how much you owe or are owed by the ATO? In completing your IAS you work out a net amount which you either owe to the ATO or which the ATO owes you. These instructions will help you work out this amount correctly. What amounts do you show on your Instalment Activity Statement? When filling in your IAS show all amounts in Australian currency. For each amount to be shown on your activity statement, show only the whole dollar amount. Do not show the cents. For example, show 7, as 7,643. Do not write a minus sign ( ) to show a negative amount on your activity statement. How to pay Mail your correctly completed IAS to the ATO and attach a cheque for any required payment. The ATO also offers a range of convenient payment options, both in Australia and overseas. These are: BPAY credit card (conditions apply) direct credit direct debit mail at Australia Post outlets from overseas pay by BPAY, direct credit or mail. If you make a payment at Australia Post, or you pay electronically, you need to still send your completed IAS to the ATO either by mail or electronically. 41

5 What is the penalty if I lodge my activity statement late? The penalty for lodging the activity statement late is one penalty unit (110) for each 28 day period, or part of a period, that the activity statement is outstanding, up to a maximum of 5 penalty units (550). For a business with an annual turnover between 1 million but less than 20 million, the penalty is multiplied by two. For a large business with an annual turnover of 20 million or more, the penalty is multiplied by five resulting in a maximum penalty of 2,750. The Commissioner also has the discretion to remit this penalty. The circumstances of a business, such as the amount of tax payable, the past record of paying tax and lodging tax forms, and the effort made by the business in trying to meet its tax obligations, will affect whether penalties are remitted and the extent of the remission. What is the penalty if my activity statement is incorrect? If you make an honest mistake which results in a shortfall in the amount of tax properly payable, the ATO will only require that you adjust the activity statement to pay the correct amount plus a general interest charge. If the activity statement is incorrect because you made a false or misleading statement and this results in a shortfall in the tax paid, in addition to being required to pay the shortfall plus a general interest charge, you may be liable for a penalty. The amount of the penalty will vary depending on the cause of the shortfall amount. The base penalty amount, which can be increased or decreased depending on whether there are aggravating or mitigating factors, is a percentage of the tax shortfall amount as follows: 25% where the mistake is caused by you not taking reasonable care. 50% where the mistake is caused by you being reckless, and, 75% where the mistake is caused by you intentionally disregarding the law. However, you will still have to pay interest on any understated tax or overclaimed credit. 42

6 Chapter 5: BAS & IAS 1. Reporting periods are either every one month or three months. An entity has a choice in relation to a monthly or three monthly tax period, however, monthly tax periods can be compulsory in some circumstances. If the entity s annual turnover is below 20 million the entity s tax periods will be generally for 3 months ending on 31 March, 30 June, 30 September and 31 December. However, an entity may elect to have one month tax periods. 2. Monthly tax periods are compulsory if: The entity s tax period turnover threshold is 20 million or more. The entity has a history of not complying with taxation obligations. The entity has a substituted accounting period for income tax. The entity will be carrying on an enterprise in Australia for less than three months. 3. Adjustment events. Bad debts. A change in the extent of the creditable purpose. 4. Examples of where adjustment events arise includes: All or part of a supply or acquisition is cancelled (eg. goods are returned due to poor quality). The consideration for a supply or acquisition is altered (eg. a volume discount is given). A supply becomes, or stops being taxable. An acquisition becomes, or stops being creditable. A staff member makes an error calculating the liability or input credit. 5. tax periods: A monthly period A quarterly period An annual period may be used by entities with annual turnover of 2,000,000 or less that elect to pay the by instalments. There is limited choice as to which periods you may pay the. If monthly tax periods are not compulsory an entity may choose a quarterly period. 43

7 6. G1 = (a) 4,400 +(b) (d) (f) (g) 60 + (h) 8,800 +(i) 4,400 + (l) 2,200 + (m) 5,500 = 26, b, e, g, h and j. 8. (i) Receipts Amount incl Item G1 Item G2 Item G3 Item G4 Sales of -free foods 11,000 11,000 11,000 Export Sales to USA client 5,000 5,000 5,000 Sales of food including 15,400 15,400 Interest received Commercial rent received 4,400 4,400 Residential rent received Sale of used vehicle Sales returns: -free foods -1,560-1,560-1,560 Loan raised 15,000 Capital contributed by partners 20,000 TOTALS 35,030 5,000 9, (ii) T1= 10, , , , ,560 = 32, (a) T (b) T (c) T (d) T 10. G10 = 22, , ,210 = 24, (a) T (b) T (c) F (d) T (e) T (f) T g) T h) T (I) T (j) F (k) T (l) T 12. G10 = 2, , ,000 = 8,500 44

8 Chapter 5: BAS & IAS 13. Trev s Welding Works Purchase Amount including G10 G11 1B Office expenses Staff amenities (-free) Purchase of plant 6, Sale of old plant Supplies all including 7, Wages and salaries 6, Contractors fees including Cleaner (not registered for ) Rates (-free) TOTALS Rework Question 13 using a Calculation Worksheet. G10 Capital purchases 6600 G11 Non-capital purchases 9695 G12 = G10 + G G13 purchases for input-taxed sales G14 Purchases without in the price 1225 G15 Est private use or non-tax deductible G16 = G13+G14+G G17 Total purchases subject to G18 Adjustments G19 Total subject to after adjustments G20 & 1B on purchases Bob the Butcher. W1 12,000 W2 3,825 W3 930 W4 120 W5 4, ,875 45

9 15. Amounts owing to the ATO Amounts owed by the ATO on non-capital purchases 6,000 6,000 on capital purchases 2, on sales 9,000 9,000 Luxury car tax payable 1,000 1,000 Fuel tax credits FBT instalment 3,000 3,000 PAYG Income Tax Instalment 1,200 1,200 TOTALS 14,200 (8A) 8,500(8B) Item 9 5,700 Payable 16. T1 12,165 T2 8.2% T A (a) True (b) False (c) True (d) True (e) true (f) false (g) false 46

10 Chapter 5: BAS & IAS 18. Sales Worksheet (1) Adjustment for sales Cancellation of a sale Reduction in amount of sale due to discount or rebate Sale has stopped being taxable Increase in amount for a sale Sale has become taxable (2) Amount for sales (3) New amount for (4) Increasing adjustment (before sales Fill in this change occurred) included at column if (3) is more than (2). G1 Subtract (2) from (3). (5) Decreasing adjustment Fill in this column if (2) is more than (3). Subtract (3) from (2) Total 1,124 Transfer these amount to line 1 of adjustments summary worksheet. 47

11 Purchases Worksheet (1) Adjustment for purchases Cancellation of a purchase Reduction in purchase price due to discount or rebate (2) Purchase price (3) Changed purchase (4) Increasing adjustment (5) Decreasing adjustment (before price Fill in this Fill in this change occurred) included at column if (2) is more than (3). column if (3) is more than (2). G10 or G11 Subtract (3) Subtract (2) from (2). from (3) ,200 1, Purchase has stopped being creditable Increase in purchase price Purchase has become creditable Total 480 Transfer these amount to line 2 of adjustments summary worksheet. 48

12 Chapter 5: BAS & IAS Adjustments Summary Worksheet Line Reason for adjustment Increase Decrease Adjustments which you can work out using these instructions 1 Adjustments for sales following adjustment events 2 Adjustments for purchases following 480 adjustment events 3 Bad debts written off or recovered 4 Change in extent of creditable purchase 5 Goods used solely for private or domestic purposes Adjustments that may require more information 6 Insurance settlements 7 Company amalgamations 8 Sales of things used to make financial supplies or used privately 9 Sales of going concerns 10 Other adjustments 11 Total A 480 If A is more than B, subtract B from A and show amount at G7 If B is more than A, subtract A from B and show amount at G18 1,124 B 1, Abbot s Newsagency transfer the amount of 644 to G18 (adjustments) of their calculation worksheet. 49

13 Sales 459,870 Exports 74,220 Other free 28, , ,750 / 11 on Sales 32,432 add PAYG Tax Withheld 14,200 46,632 Capital Purchases 151,595 Non Capital Purchases 81, ,055 / 11 less on Purchases - 21,187 Amount Owing 25,445 G1 356,750 74,220 28, ,870 G10 132, , ,595 G11 41,080 1,340 39,050 81,470 1A G1 ( G2 + G3 ) 11 1B T1 W2 G10 + G11 11 G1 1A PAYG Withheld 1A 459,870 ( 74, ,900) = 32, B ( 151, ,080 +1, ,050 ) = 21, T1 459,870 32,431 = 427,438 W2 14,200 ( Note: Wages and salaries have been excluded from calculations, these are reported separately in PAYG withheld ). 50

14 Chapter 5: BAS & IAS Account Details Amount Sale Free Export Free Input Taxed Taxable Supply Capital Purchase Non Capital purchase Sales 356, , ,750 Exports 74,220 74,220 74,220 free sales 28,900 28,900 28,900 Capital purchases 151, , ,595 Non-capital purchases 81,470 81,470 81,470 Wages 78,200 78,200 PAYG 14,200 14,200 Commissioners rate 5.90% 459,870 74,220 28, , ,595 81, ,065 78,200 14,200 G1 G2 G3 G4 G6 G10 G11 G12 G13 G14 G15 W1 W2 Taxable Supply Input Taxed Free Private Use Wages PAYG 51

15 calculation worksheet (If you want to use the calculation sheet method to work out amounts) amounts you owe the ATO from sales G1 Total sales (including any ) G1 459,870 G1 on the BAS G2 Export sales G2 74,220 G2 on the BAS G3 Other -free sales G G3 on the BAS G4 Input taxed sales G4 G5 G2 + G3 + G4 G5 103,120 G6 Total sales subject to (G1 minus G5) G6 356,750 G7 Adjustments (if applicable) G7 0 G8 Total sales subject to after adjustments (G6 + G7) G8 356,750 G9 on sales (G8 divided by eleven) amounts the ATO owes you from purchases G9 32,432!A in summary on the BAS G10 Capital purchases (including any ) G10 151,595 G10 on the BAS G11 Non-capital purchases (including any ) G G11 on the BAS G12 G10 + G11 G12 233,065 G13 Purchases for making input taxed sales G13 G14 Purchases without in the price G14 G15 Estimated purchases for private use or not income tax deductible G15 G16 G13 + G14 + G15 G16 0 G17 Total purchases subject to (G12 minus G16) G17 233,065 G18 Adjustments (if applicable) G18 G19 Total purchases subject to after adjustments (G17 + G18) G19 233,065 G20 on purchases (G19 divided by eleven) G20 21,188 1B in summary on the BAS Amount Due 11,244 52

16 Chapter 5: BAS & IAS Option 1: Calculate and report quarterly Business Activity Statement (Extract) Total sales G1 459,870 Does the amount shown Yes No at G1 include? (indicate with an X) Export sales G2 74,220 Other -free sales G Capital purchases G10 151,595 Non-capital purchases G11 81,470 Go to summary over the page to report on sales at 1A and on purchases at 1B and then complete the PAYG sections PAYG tax withheld Total salary, wages and other payments W1 78,200 Amount withheld from payments shown at W1 W2 14,200 Amount withheld where no ABN is quoted W4 Other amounts withheld (excluding any amount shown at W2 or W4 W3 Total amounts withheld (W2 + W4 + W3) W5 14,200 Write the W5 amount at 4 in summary below 53

17 PAYG Income tax instalment Option 2: Calculate PAYG instalment using income x rate PAYG Instalment income T1 427,438 T2 5.90% % OR New varied rate T3 % T1 x T2 (or T3) T11 25,219 Write the T11 amount at 5A in summary below Reason code variation T4 Summary Amounts you owe the ATO on sales or instalment 1A 32,432 PAYG tax withheld 4 14,200 PAYG income tax instalment 5A 25,219 Deferred company/fund instalment 7 1A A +7 8A 71,851 T1 = G1 - G9 459,870 32,432 = 459,870 54

18 Chapter 5: BAS & IAS Amounts the ATO owes you on purchases 1B 21,188 Do not complete 1B if using instalment amount (option 3) Credit from PAYG income tax instalment variation 5B 1B + 5B 8B 21,188 Payment or refund? Is 8A more than 8B? (Indicate with an X) X Yes, then write the result of 8A minus 8B at 9. This amount is payable to the ATO. No, then write the result of 8B minus 8A at 9. This amount is refundable to you (or offset against any other tax debt you have). Your payment or refund amount 9 50,663 PAYMENT 20. Note: Wages and salaries have been excluded from calculations, these are reported separately in PAYG withheld G8 70,000 19,140 89,140 G11 6,534 5, ,156 14,830 1A ( 89,140-19,140) = 6, B ( 4, , , , ,090 ) = 5, T1 G1 1A = 82,776 W2 PAYG Withheld = 6,900 55

19 Account Details Amount Sale Free Export Free Input Taxed Taxable Supply Capital Purchase Non Capital purchase Input Taxed Free Private Use Taxable Supply Adjustments Cash Sales 70,000 70,000 70,000 free sales 19,140 19,140 19,140 Furniture & Fittings 4,180 4,180 4,180 Capital purchases 45,650 45,650 45,650 Non-capital purchases 5,260 5,260 5,260 free purchases 6,534 6,534 6,534 Wages 22,484 22,484 Other expenses Stationery & supplies 2,156 2,156 2,156 Bad Debts 2,090 2,090 PAYG 6,900 6,900 6,900 89,140 19,140 70,000 49,830 14,830 6,534 58,126 2,090 29,384 6,900 G1 G2 G3 G4 G6 G10 G11 G13 G14 G15 G17 G18 W1 W2 Wages PAYG 56

20 Chapter 5: BAS & IAS calculation worksheet for BAS ( If you want to use the calculation sheet method to work out amounts ) amounts you owe the ATO from sales G1 Total sales (including any ) G1 89,140 G1 on the BAS G2 Export sales G2 G2 on the BAS G3 Other -free sales G3 19,140 G3 on the BAS G4 Input taxed sales G4 G5 G2 + G3 + G4 G5 19,140 G6 Total sales subject to (G1 minus G5) G6 70,000 G7 Adjustments (if applicable) G7 G8 Total sales subject to after adjustments (G6 + G7) G8 70,000 G9 on sales (G8 divided by eleven) amounts the ATO owes you from purchases G9 6,363!A in summary on the BAS G10 Capital purchases (including any ) G10 49,830 G10 on the BAS G11 Non-capital purchases (including any ) G11 14,830 G11 on the BAS G12 G10 + G11 G12 64,660 G13 Purchases for making input taxed sales G13 G14 Purchases without in the price G14 6,534 G15 Estimated purchases for private use or not income tax deductible G15 G16 G13 + G14 + G15 G16 6,534 G17 Total purchases subject to (G12 minus G16) G17 58,126 G18 Adjustments (if applicable) G18 2,090 G19 Total purchases subject to after adjustments (G17 + G18) G19 60,216 G20 on purchases (G19 divided by eleven) G20 5,474 1B in summary on the BAS 57

21 Option 1: Calculate and report quarterly Business Activity Statement ( Extract ) Total sales G1 89,140 Does the amount shown Yes No at G1 include? (indicate with an X) Export sales G2 Other -free sales G Capital purchases G10 49,830 Non-capital purchases G11 14,830 Go to summary over the page to report on sales at 1A and on purchases at 1B and then complete the PAYG sections PAYG tax withheld Total salary, wages and other payments W1 29,384 Amount withheld from payments shown at W1 W2 6,900 Amount withheld where no ABN is quoted W4 Other amounts withheld (excluding any amount shown at W2 or W4 W3 Total amounts withheld (W2 + W4 + W3) W5 6,900 Write the W5 amount at 4 in summary below 58

22 Chapter 5: BAS & IAS PAYG Income tax instalment Option 2: Calculate PAYG instalment using income x rate PAYG Instalment income T1 82,777 OR T2 4.20% % New varied rate T3 % T1 x T2 (or T3) T11 3,477 Write the T11 amount at 5A in summary below Reason code variation T4 BAS Summary Amounts you owe the ATO on sales or instalment 1A 6,363 PAYG tax withheld 4 6,900 PAYG income tax instalment 5A 3,477 Deferred company/fund instalment 7 1A A +7 8A 16,740 T1 = G1 - G9 89,140 6,363 = 82,777 59

23 Amounts the ATO owes you on purchases 1B 5,474 Do not complete 1B if using instalment amount (option 3) Credit from PAYG income tax instalment variation 5B 1B + 5B 8B 5,474 Payment or refund? Is 8A more than 8B? (Indicate with an X) X Yes, then write the result of 8A minus 8B at 9. This amount is payable to the ATO. - No, then write the result of 8B minus 8A at 9. This amount is refundable to you ( or offset against any other tax debt you have ). Your payment or refund amount 9 11,266 PAYMENT 60

24 Chapter 5: BAS & IAS 21. G8 44,562 15,500 60,062 G11 22,600 22,600 1A ( 60,062-15,500) = 4, T1 G1 1A = 56,010 W2 PAYG Withheld = 2,300 ( Note: Wages and salaries have been excluded from calculations, these are reported separately in PAYG withheld ) 61

25 Account Details Amount Sale Free Export Free Input Taxed Taxable Supply Capital Purchase Non Capital purchase Sales 44,562 44,562 44,562 Exports 15,500 15,500 15,500 Capital purchases 3,630 3,630 3,630 Non-capital purchases 22,600 22,600 22,600 Wages 10,500 10,500 PAYG 2,300 2,300 2,300 60,062 15,500 3,630 22,600 26,230 12,800 2,300 G1 G2 G3 G4 G6 G10 G11 G13 G14 G15 G17 W1 W2 Input Taxed Free Private Use Taxable Supply Wages PAYG 62

26 Chapter 5: BAS & IAS calculation worksheet (If you want to use the calculation sheet method to work out amounts) amounts you owe the ATO from sales G1 Total sales (including any ) G1 60,062 G1 on the BAS G2 Export sales G2 15,500 G2 on the BAS G3 Other -free sales G3 G3 on the BAS G4 Input taxed sales G4 G5 G2 + G3 + G4 G5 15,500 G6 Total sales subject to (G1 minus G5) G6 44,562 G7 Adjustments (if applicable) G7 0 G8 Total sales subject to after adjustments (G6 + G7) G8 44,562 G9 on sales (G8 divided by eleven) amounts the ATO owes you from purchases G9 4,051!A in summary on the BAS G10 Capital purchases (including any ) G10 3,630 G10 on the BAS G11 Non-capital purchases (including any ) G G11 on the BAS G12 G10 + G11 G12 26,230 G13 Purchases for making input taxed sales G13 G14 Purchases without in the price G14 G15 Estimated purchases for private use or not income tax deductible G15 G16 G13 + G14 + G15 G16 0 G17 Total purchases subject to (G12 minus G16) G17 26,230 G18 Adjustments (if applicable) G18 G19 Total purchases subject to after adjustments (G17 + G18) G19 26,230 G20 on purchases (G19 divided by eleven) G20 2,385 1B in summary on the BAS Amount Due 1,667 63

27 Option 1: Calculate and report quarterly Business Activity Statement (Extract) Total sales G1 60,062 Does the amount shown Yes No at G1 include? (indicate with an X) Export sales G2 15,500 Other -free sales G3 0 Capital purchases G10 3,630 Non-capital purchases G11 22,600 Go to summary over the page to report on sales at 1A and on purchases at 1B and then complete the PAYG sections PAYG Income tax instalment Option 2: Calculate PAYG instalment using income x rate PAYG Instalment income T1 56,011 T2 3.80% % OR New varied rate T3 % T1 x T2 (or T3) T11 2,128 Write the T11 amount at 5A in summary below Reason code variation T4 64

28 Chapter 5: BAS & IAS PAYG tax withheld Total salary, wages and other payments W1 12,800 Amount withheld from payments shown at W1 W2 2,300 Amount withheld where no ABN is quoted W4 Other amounts withheld (excluding any amount shown at W2 or W4 W3 Total amounts withheld (W2 + W4 + W3) W5 2,300 Write the W5 amount at 4 in summary below T1 = G1 - G9 60,062 4,051 = 56,011 Summary Amounts you owe the ATO on sales or instalment 1A 4,051 PAYG tax withheld 4 2,300 PAYG income tax instalment 5A 2128 Deferred company/fund instalment 7 1A A +7 8A 8,480 65

29 Amounts the ATO owes you on purchases 1B 2,385 Do not complete 1B if using instalment amount (option 3) Credit from PAYG income tax instalment variation 5B 1B + 5B 8B 2,385 Payment or refund? Is 8A more than 8B? (Indicate with an X) X Yes, then write the result of 8A minus 8B at 9. This amount is payable to the ATO. No, then write the result of 8B minus 8A at 9. This amount is refundable to you (or offset against any other tax debt you have). Your payment or refund amount 9 6,095 66

30 Chapter 5: BAS & IAS 22. G11 3,000 1, ,560 1A 19,800 = 1, B ( 10, , , ) = 1, T1 G1 1A = 18,000 W2 PAYG Withheld = 760 ( Note: Wages and salaries have been excluded from calculations, these are reported separately in PAYG withheld ). Account Details Amount Sale Free Export Input Taxed Taxable Supply Capital Purchase Non Capital Purchase Sales 19,800 19,800 19,800 Capital purchases 10,200 10,200 Non-capital purchases 3,000 3,000 Rent 1,600 1,600 Cleaning Phone Stationery Advertising Wages 4,000 PAYG 760 Input Taxed Free Private Use 19,800 19,800 10,200 5,560 G1 G2 G4 G6 G10 G11 Taxable Supply Wages PAYG 10,200 3,000 1, , ,760 4, G13 G14 G15 G17 W1 W2 67

31 calculation worksheet (If you want to use the calculation sheet method to work out amounts) amounts you owe the ATO from sales G1 Total sales (including any ) G1 19,800 G1 on the BAS G2 Export sales G2 G2 on the BAS G3 Other -free sales G3 G3 on the BAS G4 Input taxed sales G4 G5 G2 + G3 + G4 G5 0 G6 Total sales subject to (G1 minus G5) G6 19,800 G7 Adjustments (if applicable) G7 0 G8 Total sales subject to after adjustments (G6 + G7) G8 19,800 G9 on sales (G8 divided by eleven) amounts the ATO owes you from purchases G9 1,800!A in summary on the BAS G10 Capital purchases (including any ) G10 10,200 G10 on the BAS G11 Non-capital purchases (including any ) G G11 on the BAS G12 G10 + G11 G12 15,760 G13 Purchases for making input taxed sales G13 G14 Purchases without in the price G14 G15 Estimated purchases for private use or not income tax deductible G15 G16 G13 + G14 + G15 G16 0 G17 Total purchases subject to (G12 minus G16) G17 15,760 G18 Adjustments (if applicable) G18 G19 Total purchases subject to after adjustments (G17 + G18) G19 15,760 G20 on purchases (G19 divided by eleven) G20 1,433 1B in summary on the BAS Amount Due

32 Chapter 5: BAS & IAS Option 1: Calculate and report quarterly Business Activity Statement (Extract) Total sales G1 19,800 Does the amount shown Yes No at G1 include? (indicate with an X) Export sales G2 0 Other -free sales G3 0 Capital purchases G10 10,200 Non-capital purchases G11 5,560 Go to summary over the page to report on sales at 1A and on purchases at 1B and then complete the PAYG sections PAYG tax withheld Total salary, wages and other payments W1 4,760 Amount withheld from payments shown at W1 W2 760 Amount withheld where no ABN is quoted W4 Other amounts withheld (excluding any amount shown at W2 or W4 W3 Total amounts withheld (W2 + W4 + W3) W5 760 Write the W5 amount at 4 in summary below 69

33 PAYG Income tax instalment Option 2: Calculate PAYG instalment using income x rate PAYG Instalment income T1 18,000 T2 5.60% % OR New varied rate T3 % T1 x T2 (or T3) T11 1,008 Write the T11 amount at 5A in summary below Reason code variation T4 Summary Amounts you owe the ATO on sales or instalment 1A 1,800 PAYG tax withheld PAYG income tax instalment 5A 1008 Deferred company/fund instalment 7 1A A +7 8A 3,568 70

34 Chapter 5: BAS & IAS T1 = G1 - G9 19,800 1,880 = 18,000 Amounts the ATO owes you on purchases 1B 1,433 Do not complete 1B if using instalment amount (option 3) Credit from PAYG income tax instalment variation 5B 1B + 5B 8B 1,433 Your payment or refund amount 9 2,135 PAYMENT 71

35 Activity 1 Worksheet method Account Details Amount Sale Free Export Free Input Taxed Taxable Supply Sales of goods 60,000 60,000 60,000 Sales of services 17,000 17,000 17,000 Residential rent received 11,000 11,000 11,000 Commercial rent received 9,900 9,900 9,900 Interest received Capital purchases Non-Capital Purchases Commercial rent expenses Export sales 26,000 26,000 26,000 Stationery 6,600 6,600 6,600 Bank fees Accounting fees 4,400 4,400 4,400 Depreciation 3,000 3,000 Electricity Business Ins. premiums Interest paid Motor vehicle costs 1,100 1,100 1,100 Purchase of trading goods 13,000 13,000 13,000 Rates - Council & W Residential rent exp Superannuation paid 2,250 2,250 NIA Subscriptions Telephone Wage ( gross ) 55,000 55,000 PAYG tax withheld 22,000 22,000 Promotional Expenses 1,320 1,320 1,320 Purchase of printer 2,860 2,860 2,860 Sale of Printer 1,100 1,100 1,100 Input Taxed Free Taxable Supply PAYG Gross Wages Excluded 125,550 26, ,550 88,000 2,860 30, ,116 55,000 22,000 5,250 G1 G2 G3 G4 G6 G10 G11 G13 G14 G17 W1 W2 72

36 Chapter 5: BAS & IAS calculation worksheet for BAS (If you want to use the calculation sheet method to work out amounts) amounts you owe the ATO from sales G1 Total sales (including any ) G1 125,550 G1 on the BAS G2 Export sales G2 26,000 G2 on the BAS G3 Other -free sales G3 0 G3 on the BAS G4 Input taxed sales G4 11,550 G5 G2 + G3 + G4 G5 37,550 G6 Total sales subject to (G1 minus G5) G6 88,000 G7 Adjustments (if applicable) G7 G8 Total sales subject to after adjustments (G6 + G7) G8 88,000 G9 on sales (G8 divided by eleven) G9 8,000 amounts the ATO owes you from purchases 1A in summary on the BAS G10 Capital purchases (including any ) G10 2,860 G10 on the BAS G11 Non-capital purchases (including any ) G11 30,730 G11 on the BAS G12 G10 + G11 G12 33,590 G13 Purchases for making input taxed sales G G14 Purchases without in the price G G15 Estimated purchases for private use or not income tax deductible G15 0 G16 G13 + G14 + G15 G16 1,474 G17 Total purchases subject to (G12 minus G16) G17 32,116 G18 Adjustments (if applicable) G18 0 G19 Total purchases subject to after adjustments (G17 + G18) G19 32,116 G20 on purchases (G19 divided by eleven) G20 2,920 1B in summary on the BAS 73

37 Business Activity Statement (Extract) Option 1: Calculate and report quarterly Total sales G1 125,550 Does the amount shown X Yes No at G1 include? (indicate with an X) Export sales G2 26,000 Other -free sales G3 0 Capital purchases G10 2,860 Non-capital purchases G11 30,730 Go to summary over the page to report on sales at 1A and on purchases at 1B and then complete the PAYG sections PAYG tax withheld Total salary, wages and other payments W1 55,000 Amount withheld from payments shown at W1 W2 22,000 Amount withheld where no ABN is quoted W4 Other amounts withheld (excluding any amount shown at W2 or W4 W3 Total amounts withheld (W2 + W4 + W3) W5 22,000 Write the W5 amount at 4 in summary below 74

38 Chapter 5: BAS & IAS PAYG Income tax instalment Option 2: Calculate PAYG instalment using income x rate PAYG Instalment income T1 116,550 T2 % OR New varied rate T3 % T1 x T2 (or T3) T11 Write the T11 amount at 5A in summary below Reason code variation T4 Summary Amounts you owe the ATO on sales or instalment 1A 8,000 PAYG tax withheld 4 22,000 PAYG income tax instalment 5A Deferred company/fund instalment 7 1A A +7 8A 30,000 75

39 Amounts the ATO owes you on purchases 1B 2,920 Do not complete 1B if using instalment amount (option 3) Credit from PAYG income tax instalment variation 5B 1B + 5B 8B 2,920 Payment or refund? Is 8A more than 8B? (Indicate with an X) X Yes, then write the result of 8A minus 8B at 9. This amount is payable to the ATO. - No, then write the result of 8B minus 8A at 9. This amount is refundable to you (or offset against any other tax debt you have). Your payment or refund amount 9 27,080 76

40 Chapter 5: BAS & IAS Activity 1 Accounts Method. Note: The Preparation for the BAS is different, the resultant BAS is the same. CASH RECEIPTS BK Date Account Details Receipt/ Invoice Number Total Receipts Total Sales ( Incl ) Collected Non-capital amount ( excl ) Capital Sales amount ( excl ) Free Export Free Sales Input Taxed Sales Other Receipts Bank January 1st Sales of goods 60,000 60,000 5,455 54,545 60,000 Sales of services 17,000 17,000 1,545 15,455 17,000 Residential rent received 11,000 11,000 11,000 11,000 Commercial rent received 9,900 9, ,000 9,900 Interest received Export sales 26,000 26,000 26,000 26,000 31st March Sale of Printer 1,100 1, ,000 1,100 TOTALS 125, ,000 8,000 79,000 1,000 26,000 11, ,550 ACTIVITY STATEMENT REFERENCE G1 1A G2 G3 77

41 CASH RECEIPTS BK Date Account Details Receipt/ Invoice Number Total Receipts Total Sales ( Incl ) Collected Non-capital amount ( excl ) Capital Sales amount ( excl ) Free Export Free Sales Input Taxed Sales Other Receipts Bank January 1st Sales of goods 60,000 60,000 5,455 54,545 60,000 Sales of services 17,000 17,000 1,545 15,455 17,000 Residential rent received 11,000 11,000 11,000 11,000 Commercial rent received 9,900 9, ,000 9,900 Interest received Export sales 26,000 26,000 26,000 26,000 31st March Sale of Printer 1, ,000 1,100 TOTALS 125, ,550 8,000 79,000 1,000 26, , ,550 ACTIVITY STATEMENT REFERENCE G1 1A G2 G3 AYG Income tax instalment Option 2: Calculate PAYG instalment using income x rate PAYG Instalment income T1 117,550 OR T2 2.50% % New varied rate T3 % T1 x T2 (or T3) T11 2,938 Reason code variation Write the T11 amount at 5A in summary below T4 78

42 Chapter 5: BAS & IAS Account Details January Payment Type Total Payments Total Non-capital Purchases ( Incl ) Total Capital Purchases ( Incl ) Claimable Stationery Electricity Motor Vehicle Trading Goods Teleph Sundries Gross Wages PAYG Comments Stationery 6,600 6, ,000 Bank fees Free Commercial rent expenses Accounting fees 4,400 4, ,000 Electricity Business Insurance premiums Interest paid Free Motor vehicle costs 1,100 1, ,000 Purchase of trading goods 13,000 13,000 1,182 11,818 Rates - Council and Water Free Residential rent expenses Input Taxed Superannuation paid 2,250 2,250 No NIA Subscriptions Telephone Wage & salaries ( gross ) 55,000 55,000 PAYG tax withheld 22,000 22,000 No Promotional Expenses 1,320 1, ,200 No Purchase of new printer 2,860 2, ,600 TOTALS 112,840 30,730 2,860 2,920 6, ,000 11, ,702 55,000 22,000 ACTIVITY STATEMENT REFERENCE G11 G10 1B W1 W2 79

43 Summary Amounts you owe the ATO Amounts the ATO owes you on sales or instalment 1A 8,000 1B 2,920 on purchases Do not complete 1B if using instalment amount (option 3) PAYG tax withheld 4 22,000 PAYG income tax instalment 5A 2,938 Credit from PAYG income tax instalment variation 5B Deferred company/fund instalment 7 1A A +7 8A 32,938 1B + 5B 8B 2,920 Payment or refund? Is 8A more than 8B? (Indicate with an X) X Yes, then write the result of 8A minus 8B at 9. This amount is Your payment or refund amount payable to the ATO. 9 30,078 No, then write the result of 8B minus 8A at 9. This amount is PAYMENT 80