Calculating Tax

How to Calculate Your Own BAS – A Simple Guide for Tradies

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When it comes to Business Activity Statements (BAS), many tradies assume they need to rely on their bookkeeper or accountant. But the truth is, you can calculate it yourself—and it’s actually pretty simple! By understanding a few key reports in your accounting software (like Xero, QuickBooks, or MYOB), you can stay on top of your finances and be well-prepared for tax time.

What You Need to Know:

To calculate your BAS, there are three key figures you need to check:

1. GST Reconciliation

This report shows how much GST you’ve collected from customers and how much GST you’ve paid on expenses. Your BAS will require you to pay the difference. To find this, simply run the GST Reconciliation Report in your accounting software.

 

2. Withholding Tax – Payroll Activity Statement

If you have employees, you need to report the tax you’ve withheld from their wages. In Xero, this information is found in the Payroll Activity Statement. Look for the PAYG withholding amount—this is what you need to include in your BAS.

3. Company Tax Instalment Rate

This is an estimate of how much company tax you’ll need to pay each quarter. The ATO usually sends you a letter with your installment rate based on your last tax return. If you haven’t received it, check with your accountant or look it up in your ATO online account. You can adjust this rate if your business income changes significantly.

Check These Reports Before the Quarter Ends! It’s a good habit to review these reports before your BAS is due. That way, you’re not caught off guard by a big tax bill.

If you’re unsure about any of the numbers, double-check with your accountant—but by doing this yourself, you’ll have a much clearer picture of your cash flow.

Need help? I work with Xero, QuickBooks, and MYOB every day, so feel free to reach out if you have any questions.

Thanks

Hugh Bowman
Business Coach
0409 402 747

Business Activity Statement (BAS) – What Is It?

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In this video, business coach Hugh Bowman from ActionCOACH Geelong explains the key components of a Business Activity Statement (BAS) and why understanding it is essential for business owners.

A BAS is a report that businesses submit to the government to account for three main tax components:

1. Goods and Services Tax (GST)

GST is the tax collected on sales (typically 10%) minus the GST paid on purchases. The final amount payable depends on the difference between collected and paid GST. Businesses often see higher GST obligations in the final quarter of the year when work volume increases before Christmas.

2. Withholding Tax

This is the tax deducted from employees’ wages before they are paid. If a business increases staffing or incurs high overtime costs, withholding tax will also rise accordingly.

3. Company Instalment Tax

This is a forecasted tax amount based on the business’s previous taxable profit. The government estimates quarterly tax obligations based on the last financial year’s profit, typically applying a 25% company tax rate.

By adding GST, PAYG withholding, and company instalment tax, businesses arrive at their BAS amount.

For any further questions about BAS, feel free to reach out to Hugh Bowman.

Phone: 0409 402 474

www.actioncoachgeelong.com.au